Tag: REITs

Merlin Properties Closes the Logistics Deal of the Year in Spain

2 November 2017

The socimi owned by Santander and BBVA signed a lease with Leroy Merlin to occupy 100% of its Meco logistics platform.

The real estate investment company Merlin Properties has closed the largest rental operation of a logistics asset in the Spanish market in 2017, after leasing its Meco logistics platform. The tenant that will occupy the logistical platform, located in the northeast area of the Community of Madrid, will be the furniture and decoration firm Leroy Merlin, which will take over the platform’s almost 60,000 square meters. Formed by three warehouses totalling 59,814 square meters on an 87,974 sqm plot of land, the complex was developed, built and marketed by Merlin, which, after months of construction, has just been completed.

The company invested 29.4 million euros in its development, and it will be the first logistics platform in Spain with Leed Platinum efficiency and sustainability certification.

Merlin Properties and Leroy Merlin’s record deal underlines the impressive moment that the real estate logistics market is going through, triggered by the growth of consumption and the rise of e-commerce. Thus, contracted space in the logistics sector in the Madrid market and its area of influence reached 233.357 square meters in the third quarter of 2017, which is one of the highest occupancy rates, together with the previous quarter’s figure, in the historical series, BNP Paribas Real Estate explained.

In total, throughout 2017, the hiring of logistics space in the Madrid market reached 633,438 square meters, a historic high for the series.

Between January and June, Merlin Properties had a turnover of 243 million euros, of which 235 million came from rental income, 53% more than in the same period of 2016. The socimi’s Ebitda increased by 47% to €198.6 million, while net profit went from €211.14 million to €421 million this year.

Original Story: Expansión – Rocío Ruiz

Translation: Richard Turner

Lar Negotiates the Sale of Two Office Buildings in Madrid to Colonial

 

23 August 2017

 The Egeo office building, on Parthenon Avenue in Madrid

The buildings are in the north of Madrid and have a gross leasable area of almost 27,000 square meters.

The turnover of assets between socimis (Spanish REITs) is picking up pace and boosting the real estate sector. Lar España is in negotiations with Colonial for the sale of two office buildings, both located in the north of Madrid, which together have a current market valuation of more than 100 million euros, Expansión learned from market sources.

The socimi, which is owned by the U.S. investment manager Pimco, is negotiating the sale of a building located at 336 Calle Arturo Soria in Madrid. This asset has a gross rentable area of 8,663 square meters distributed over nine floors and has 193 parking spaces. The building is occupied by, among other tenants, Clear Channel, Banco Santander and Segurcaixa Adeslas.

Lar España bought the building in July 2014 from the German real estate fund manager IVG Institutional Funds (now Triuva) for €24.2 million. According to the latest available information, on July 30, this asset had a market valuation of 28.9 million euros.

The other building under negotiation is located on Parthenon Avenue in Campo de las Naciones. The property, known by the name Egeo, has an area of 18,252 square meters distributed on six floors above ground level and has 350 parking spaces. The socimi acquired the building in December 2014 from the German company MEAG for €64.9 million. Currently, the asset is valued at €76.1 million.

Shopping Centres

These divestments are part of Lar España’s strategic plan, which aims to focus on shopping centres and take advantage of the favourable moment the sector is experiencing to divest non-strategic assets such as offices. Currently, Lar España has 31 real estate assets worth 1.448 billion euros. The company has four office buildings in Madrid and one in Barcelona with a total value of €179 million.

Meanwhile, Colonial, whose board in June approved the company’s conversion to a socimi tax structure, with retroactive effect to January, has increased the gross value of its assets by nearly 15% in the last twelve months, to €8.666 billion. This deal will allow the group to strengthen its presence in Madrid. The real estate company has 23 properties in the capital, valued at €1.445 billion.

Madrid is the company’s second largest market, behind Paris, where it has 21 properties valued at €6.144 billion, and Barcelona, where it has 19 assets valued at 908 million. In addition, the group’s stake in Axiare was valued at €169 million at the end of the half year.

Original Story: Expansión – Rebeca Arroyo

Translation: Richard Turner

Sareb Will Launch Its Socimi with a Selection of More Than 1,500 Properties for Rent

 

20 August 2017

 

The aim of Témpore Properties, the name chosen for the future listed real estate investment company, is to attract the largest possible number of investors and, to that end, properties were chosen that offered the highest possible returns.

Jaime Echegoyen, the CEO of Sareb, announced that the socimi (Spanish REIT) that the company plans to launch later this year will have a selection of 1500 of its best rental properties and a volume of assets worth more than 200 million euros.

The aim of Témpore Properties, the name chosen for the future socimi (listed real estate investment company), is to attract the largest number of investors and, according to Echegoyen in an interview, to that end, Sareb’s most attractive rental properties were chosen for the socimi.

The real estate company, which has a portfolio of almost 5,000 rental properties, selected around 1,500 assets in areas with high demand for rental housing, in, for example, the large capitals of Madrid and Barcelona, ​​as well as in other large cities in Andalusia, the Valencian Community, Castilla-La Mancha and Aragon.

These are properties with attractive rental yields, above 3% per annum, which the real estate consultancy CBRE evaluated one by one throughout the month of July, to determine which assets Sareb will include in the socimi, and sold to future shareholders in Témpore.

Echegoyen intends to debut Témpore Properties on the MAB Alternative Stock Exchange, under which a large number of socimis incorporated over the last year. But the idea is to switch the socimi’s listing to the continuous market in the future, where companies with more visibility are listed.

With a volume of assets close to 200 million euros, Sareb’s socimi would be among the top five companies listed on MAB, behind General de Galerías Comerciales, GMP Properties, Zambal and Fidere.

An advantage of Témpore Properties to investors is that, in the future, if the shareholders of the company consider it appropriate, the size of the listed company can continue to increase thanks to Sareb itself, which has recently begun to bet on development.

Echegoyen recognizes that real estate development is very important for Sareb, which has gone from being almost exclusively focused on divesting its assets to investing in projects that can be highly lucrative if done right.

The real estate company already has 4,000 homes in progress, some in initial phases and some close to delivery and its development operations are being conducted at the same time as other assets continue to be liquidated.

In some cases, developments will be constructed on land owned by Sareb and in others, Sareb will complete construction on properties that are already at an advanced stage and which have economic viability, i.e., where it makes more sense to finish construction and thereby increase the value of the assets.

The completion of construction not only adds greater value to real estate assets and optimizes the investments that Sareb has, but also allows the company to collaborate with the estate development sector, contributing to the revitalization of that part of the economy.

Once the size of the socimi has been decided upon, Sareb will dedicate August to preparing the new company’s business plan and will choose a manager through a bidding process before starting, after the summer, the first talks with potential investors.

Despite the avalanche of socimis that have been listed in the last year, the president of Sareb believes that the real estate market has taken off in Spain and investors still want to benefit from it, whether buying property or investing through a socimi, which is “a very valid financial alternative.”

Original Story: EFE/Expansión

Translation: Richard Turner

Spanish REITs Assets Soar in Value to €24.2 Billion

 

15 August 2017

UP 40% IN THE YEAR

Merlin, Colonial, Hispania, Axiare and Lar Espanã increased their stock market values by almost 25% and have put real estate worth more than 1.7 billion euros on the market since the end of 2016.

The socimi’s rise this year has been meteoric and their prominence in the Spanish real estate market is indisputable.  In just one year, Merlin, Colonial, Hispania, Axiare and Lar España have increased their total gross asset value by almost 40% to €24.2 billion. This compares to a 25% increase in the Spanish stock market in general.

Colonial, which in June converted itself to a socimi structure with retroactive effect to January, conferring special tax status, has increased the gross value of its assets in the last twelve months by almost 15%, to 8.66 billion euros. This has led the company to increase its profits by 90%, to 437 million euros. The share price of the group chaired by Juan José Bruguera, which has appreciated by 36% since the end of 2016, is at all-time highs, with a total market capitalization of 3.174 billion euros.

According to the latest available data, Merlin, which will submit its semi-annual accounts on September 22, ended March with a gross asset value of 10.026 billion euros, up 62%. So far this year, the company has increased its stock market value by 12% to 5.430 billion euros, making it the largest listed real estate company in Spain.

One of the most active socimis this year in terms of acquisitions has been Axiare. The group, led by Luis López de Herrera-Oria, ended the first half of the year with a portfolio valued at €1.709 billion, up 63%. Just in the first half of the year, Axiare acquired six office and logistics assets in Madrid and Barcelona for a total of €215 million. The company has a market capitalization of €1.294 billion, 30% more than the €993 million it was valued at in December 2016.

Hispania added almost €2.340 billion in assets in the year to June, up 44% compared to the same period in 2016. The company owned by George Soros increased its net profit by 35% to €185 million, and its value on the IBEX stock exchange is close to 1.700 billion euros, compared to €1.213 billion at the close of last year.

For its part, Lar España finished the semester with 31 assets in its portfolio whose value reached 1.448 billion euros, up 38%. The company, which counts Pimco as an investor, had its profits go up by 50% in the first half of the year, to 65 million euros, and its market capitalization already exceeds 750 million euros, 22% more than at the end of 2016.

After the intense investment activity of the last three years, the Spanish REITs have entered a new phase in their strategy, accelerating turnover in their assets to lock in gains on their original investments, at a time when investors are eager for opportunities and the market is in full swing. With the asset sales, the socimis are looking to bring in new capital to make new purchases.

In addition, these investment vehicles can now take advantage of the fact that some of their assets have already met the minimum requirement to hold onto investments for three years before they can be sold to generate capital gains.

The socimis have sold or are planning to sell assets in the coming months for a combined value of more than 1.7 billion. Just a few weeks ago, Colonial sold the OECD’s headquarters in Paris. SLF, a French branch of the real estate company, reached an agreement for the sale of the property known as In&Out. Although the group did not disclose the amount of the transaction, market sources put it at around 450 million euros, a premium of more than 25% over its last sale price. The transaction is expected to be officially registered during the second half of the year. Colonial “continuously” revises the value creation potential of each property with a view to future disinvestments.

Merlin has been one of the most active Spanish REITs in terms of asset turnovers. After selling off its residential investments after its merger with Metrovacesa, and selling office buildings and branches in France last year for an aggregate amount of 226 million euros, the company agreed, at the end of 2016, to sell 19 hotels to the French real estate company Foncière des Regions for €535 million.

New opportunities

Hispania, the socimi managed by the Azora Group, reached an agreement in June to sell its Aurelio Menéndez office building for €37.5 million, an increase of 39% in its valuation since December 2016. In parallel, it has continued with its plan to sell off its residential portfolio, selling 25 assets in the Isla del Cielo and Sanchinarro buildings. Hispania also finalized the sale of its office assets to Swiss Life, including 25 assets in Barcelona, Madrid and Málaga, for 510 million euros, as reported by Expansión on August 8.

Hispania, which plans to liquidate itself by March 2020, six years after listing, will focus on its hotel portfolio, in which it continues to invest to reposition assets. Shareholders voted to extend the investment period until December 31 for this reason.

Lar España will also begin to rotate assets in the coming months to obtain new funds with which to undertake acquisitions in retail, its main business, and logistics. It expects to deliver a luxury real estate development in Madrid, on 99 Lagasca street, which it owns together with its largest shareholder, Pimco. The delivery of this development should generate sales of about 210 million euros, half of which will go to Pimco.

The luxury development’s units are being sold at an average price of 11,000 euros per square meter and the asset has a surface area of 21,000 square meters. At the end of June, pre-sales had reached 65%. Company sources indicated that Lar España will continue to focus on asset turnovers to generate value and focus on offices, where it believes that there are more opportunities.

Axiare stated that it will analyse new opportunities at the end of 2017, when some of its assets will start to reach the three-year mark on its portfolio. “Turnover will be selective, just as our purchases were. Assets will be analysed on a case by case basis and any decisions will be based on market opportunities,” it added.

Original Story: ProOrbyt Expansion – Rebeca Arroyo

Translation: Richard Turner

Real Estate Rally Leads Colonial, Hispania, Merlin and Axiare to Surpass Their Book Values

 

11 August 2017

The four largest companies are quoted above the net value of their assets.

Shares of the four largest Spanish Socimis (REITs) are worth more than their net asset values (NAV) for the first time ever, and analysts continue to mostly recommend buying these securities

The fierce appetite for Spanish real estate has led the four largest Spanish socimis to trade above their net asset values (NAV), something that hasn’t been seen since the financial crisis.

Over the last few weeks, one after another, the shares of Colonial, Merlin, Hispania and Axiare have exceeded the price of the assets in their portfolios, an indicator of the interest that exists for this type of investment vehicle. This, moreover, has occurred even after the significant appreciations their portfolios seen in recent times.

Axiare, historically better regarded by investors, is trading at 5% above its estimated EPRA net asset value of 15.3 euros per share (June 2017). This measure reflects the net value of the assets of a company that corresponds to each security and serves as a barometer of market perception: if shares are trading above the measure, then investors believe that the company’s assets will appreciate further.

In the case of Hispania, its share is quoted at 2.2% above NAV; while for both Merlin and Colonial, the only two companies in the list that are included in the Ibex 35 index, and can, therefore, be a target of investment by those institutions that are limited to investing in reference indices, this difference in their favour is 1.5% and 0.8%, respectively.

SocimiEPRA NAV per share (€)Market Price (€)Difference (%)
Axiare15,316,054,9
Hispania15,1215,462,2
Merlin Properties11,3611,531,5
Colonial8,078,140,8
Lar España9,288,44-9

 

The exception to this rule, among the companies in the Spanish Continuous Market, is Lar España, which continues to trade 9% below the value of its assets. The company, headed by José Luis del Valle, is the only one in the sector focused on the shopping centre segment, although it also has residential and logistical assets, representing around 11% of its portfolio. Its forthcoming sale is seen as a given in the sector.

A history of consolidation

Since they began to arrive on the scene in the spring of 2014, these vehicles have been placing ever greater bets on specialization and size, strategies that have led three of the socimis, Merlin, Colonial and Axiare, to concentrate most of their assets in offices.

Precisely, one of the factors motivating investors and that explains part of the strong appreciations is their confidence in future increases in incomes from office spaces. “Income will continue to grow consistently in Madrid and Barcelona both in CBDs (central business districts) and in new districts,” Bankinter said in its latest semi-annual property market report.

Hispania is the only company of its kind to specialize in hotels, and its portfolio is already the largest in Spain, making it a unique platform to take advantage of the historic highs that tourism is reaching in Spain (80 million tourists are expected to visit Spain in 2017).

In addition, the real estate market is experiencing extremely benign conditions, as low interest rates, excess liquidity and the gradual recovery in housing has in turn triggered renewed investment appetite for Spanish real estate, contributing to the strong increase in assets prices in these companies’ portfolios.

“After many years of negativity, it is nice to be optimistic about the Spanish economy and real estate sector, and it is why we have invested in some companies that are able to take advantage of it,” said Cobas, the investment fund managed by Francisco García Paramés, in its latest quarterly report.  The fund recently took positions in Merlin and Lar, in addition in several developers.

The question now is whether, after this rally, these companies have exhausted their potential or if they still have room to grow. According to the majority of analysts at Bloomberg: the party isn’t over.

CompañíaBuy (%)Hold (%)Sell (%)
Merlin Properties52,243,54,3
Colonial403525
Hispania61,928,69,5
Axiare58,829,411,8
Lar España53,838,57,7
Source: Bloomberg

 

52.2% of experts recommend buying in the case of Merlin, compared to 4.3% that recommend selling; for Hispania, the balance is 61.9% compared to 9.5%; for Axiare, it is 58.8% compared to 11.8%; for Lar España, positive recommendations reached 53.8%, with negative ones limited to 7.7%; while Colonial received the most half-hearted recommendations, though 40% of analysts still recommended buying shares, versus 25% that suggested selling shares.

These forecasts that go hand in hand with the positive expectations surrounding the Spanish economy. Socimis are one of the main routes that investors are using to take advantage of this scenario: “to ride the recovery in GDP, invest in offices, and take advantage of the hotel and tourism boom, you should buy shares in Hispania, and to take advantage of the recovery of consumption, you should buy Lar, which is a specialist in shopping centres, “says Antonio Fernández, president of Armabex.

Original Story: El Confidencial – Ruth Ugalde

Translation: Richard Turner

Bankinter’s Socimi Invests 61 Million in Its First Six Months as Listed Company and Already Owns Seven Assets

 

9 August 2017

Ores Real Estate Socimi, the real estate investment vehicle owned by Bankinter and the Portuguese real estate company Sonae Sierra, is about to complete its first six months as a listed company and has already closed deals in which it has acquired seven assets.

 

Though this company was launched on the Alternative Securities Market (MAB) on February 22 without owning a single asset, it has already invested 60 million euros in its first six months, 15% of the target until the end of 2018. This investment has gained the Spanish REIT ownership of a total area of 32,353 square meters, distributed throughout the Iberian Peninsula.

The most recent asset to be added to its portfolio is a 2,200-square meter supermarket located in Lisbon, which is operated by the Pingo Doce chain and cost €5.9 million.

In Portugal, the REIT also controls a roughly 5,000-square meter shopping centre in Braga, which was acquired for 5.7 million euros, and which counts the Media Markt chain as a tenant; and a nearly 12,000-square meter business park in Portimão (in the Algarve region), which cost 20 million euros and has nine tenants, including Worten, Burger King and Sportzone.

The other four properties that the company acquired are in the north of Spain. The first acquisition was two medium-sized parks: Artea (in Bilbao) and Galaria (Pamplona), at a cost of 18.7 million euros. Between them, they have a gross leasable area of 8,400 square meters and are leased to the sporting goods chain Forum Sport.

Ores also owns an asset in Oviedo, the Asturian capital in the north of Spain. It is a 2,715-square meter supermarket operated by Mercadona which cost 5.8 million euros.

The last asset in the socimi’s portfolio is in Sanlúcar de Barrameda (Cádiz). This is another supermarket, operated by the Aldi chain, with an area of 2,085 square meters, for which it paid 4.75 million euros.

What makes the real estate operations that Ores has carried out to date distinctive is that they have been carried out with its own resources (the REIT raised 195 million euros via a capital increase before going public). Once the company has invested all its capital, it plans to finance operations via bank loans (having set a maximum indebtedness of 50%). The socimi’s objective is to invest 400 million euros by the end of 2018.

What Assets It is Looking for and How It Works

The vehicle is expected to focus on very specific assets: to begin with, the assets must be in the Iberian Peninsula and, in addition, must be high-street commercial premises, supermarkets and hypermarkets, medium-sized parks (less than 20,000 m2), bank branches or unitary assets with long-term rents and solvent tenants.

Ores was created in mid-December 2016 and took less than two months to go public (real estate investment companies should be listed in the stock market within a maximum of two years from their inception). Thus, the team in charge managed to create the vehicle, raise capital and obtain MAB’s approval to go public in just a few weeks. Asset and administrative management is carried out by Sonae Sierra, while executive and strategic management will be in the hands of Bankinter.

The Spanish bank owns 10% Ores’ capital, while 4% is in the hands of Sonae Sierra and the remaining 86% is in the hands of private banking clients and institutional investors.

The company debuted at a price of one euro per share and a market value of 196.6 million euros. And currently, almost six months later, its securities are exchanged at 1.04 euros, which puts Ores’ capitalization at 204.5 million euros and translates into a modest appreciation of 4%.

Original Story: Idealista – Ana P. Alarcos

Translation: Richard Turner

Deloitte: Hotel Inv’t Amounted To €2,000M In 2016

28 April 2017 – El Economista

Hotel investment in Spain amounted to €2,000 million in 2016, for the second year in a row, according to a study conducted by Deloitte.

According to the report, this good trend is expected to continue in 2017, supported by positive economic outlooks in the main originating countries: the United Kingdom, France and Germany.

By type of investment, real estate investment vehicles (Socimis, REITs and specialist funds) acquired the most hotel-related assets in 2016, accounting for almost 48% of the total investment volume.

By geography, Madrid was the region that recorded the highest volume of investment, accounting for 43% of the total, followed by the Canary Islands and Cataluña. In addition, 28% of the CEOs consulted by Deloitte expect the level of growth recorded in 2016 to be maintained this year. The outlook is even more encouraging according to 67% of those surveyed, who indicate that they expect 2017 to be even more positive than 2016.

On the other hand, the results of the survey reveal a general view that the leisure and business segments will grow by at least as much as they did in 2016. In this sense, more than 60% of the directors expect to exceed the growth rate in 2016 and think that 2017 will see sustained expansion in terms of executive tourism and the consolidation of leisure tourism.

Original story: El Economista 

Translation: Carmel Drake

Meridia Converts New RE Fund Into A Socimi

19 May 2016 – Expansión

The private equity manager Meridia has decided to convert its latest real estate fund, Meridia Real Estate III, into a Socimi, which will be listed on the Alternative Investment Market (MAB) within a maximum period of two years, according to sources at the company led by Javier Faus (pictured above).

The fund, which was constituted last year, has available resources of around €250 million, but its investment capacity increases to €600 million including its bank debt.

The same sources explained that the conversion into a Socimi comes in response to the fact that, unlike its predecessors, large institutional players have invested in this fund – together with a family office. Such players tend to employ the REIT structure for their operations in the real estate sector. REITs are very similar companies to the Spanish Socimis, with significant tax incentives and the obligation to list on the stock exchange.

Meridia Real Estate III debuted in April with the acquisition of a batch of eight office buildings and a logistics warehouse located in Madrid and Barcelona. The package, which belonged to the real estate fund Segurfondo Inversión, managed by Inverseguros, was sold for €52.45 million. It is a diversified portfolio with great potential.

Original story: Expansión (by J.Orihuel and M.Anglés)

Translation: Carmel Drake

Investment Funds & Socimis Revolutionise RE Sector

26 October 2015 – Expansión

The real estate sector is recovering well. During the first nine months of 2015, purchases of offices, commercial and logistics assets, hotels and residential properties amounted to €10,800 million, representing an increase of 57% compared with the same period last year. After more than five years of severe economic difficulties, the return of investment, at the hands of investment funds and Socimis has breathed a new wave of optimism into the sector.

“After a really tough economic crisis, we were almost in a coma and the arrival of these funds is invigorating the market”, said Juan Antonio Gómez-Pintado, President of the Association for Real Estate Developers in Madrid (‘Asociación de Promotores Inmobiliarios de Madrid’ or Asprima), who together with Rafael González-Cobos, President of Grupo Inmobiliario Ferrocarril and Gecopi; Alberto Fernández-Aller, Corporate Director of Prinex Real Estate; and Manuel del Pozo, Assistant Director of Expansión, were responsible for opening the forum ‘The New Era of the Real Estate Sector in Spain: Investment funds and Socimis’.

The event, organised by the newspaper Expansión, in collaboration with Drago Capital, Gómez-Acebo & Pombo, JLL, Neinor Homes and Merlin Properties, and with Prinex as the technological partner, served to highlight the evolution of the market in recent years and the impact the Socimis have had on the strong investment figures recorded in the sector.

46% of the capital invested in Spain so far this year has come from Socimis, an investment vehicle inspired by the REITs in the USA, first launched in the 1960s, which did not arrive in Spain until 2009. As the Corporate Director of Prinex Real Estate explained, they are “a mechanism that allow us to hold much more open asset portfolios, without any major legal or regulatory obligations and with great tax advantages”.

Partnerships

Moreover, the entry of international capital is also helping to professionalise the sector, as well as to support the recovery of Spanish property developers and real estate companies, hit hard by years of paralysis and lack of investment. “All of the funds coming into Spain are looking for support from companies that already know the environment. They are using their capital to undertake operations with Spanish developers”, said Fernández-Aller. “They generate capital movement, investment and jobs. The Socimis are helping to create a professionalised stock of homes for rent”, added the President of Grupo Inmobiliario Ferrocarril. (…).

Meanwhile, the participants highlighted the threat that political instability poses to the recovery of the real estate sector. One example, they indicated, is Madrid, where all of the major urban planning operations (Canalejas, Chamartín and Edificio España) are currently on hold.

Large cities

The recovery of the real estate market is happening in a very uneven way and, for the time being, is limited to the major cities only, such as Madrid and Barcelona, and some coastal regions. (…).

Meanwhile, Juan Velayos, CEO of Neinor Homes, emphasised the profound transformation that the Spanish real estate market has experienced over the last 18 months and said that he was convinced that the mistakes that led this sector – which accounted for 25% of the country’s GDP at its height – to the brink of disaster, will not be repeated.

“What we are seeing in Spain is an absolute transformation of the industry. I do not think that the banks will let what happened before with the RE bubble happen again. We are not going to see any projects without equity. It is going to be a sector that, for the first time, builds what customers actually want. If we do not understand that (basic premise), then customers are not going to buy homes from us”, concluded Velayos.

Original story: Expansión (by Javier G. Fernández)

Translation: Carmel Drake

The Assets Of The SOCIMIs Shoot Up By More Than 80% This Year

2 September 2015 – Expansión

The assets of the SOCIMIs shoot up by more than 80% this year

If 2014 was the year of creation of large listed real estate investment trusts (SOCIMIs/REITs), 2015 is the year of their consolidation.

Merlin Properties, Hispania, Axiare and Lar España have continued to increase their property portfolios and, 12 months after their flotation, already accumulated assets valued at 8.005 billion euros, having earned 181 million in the first semester.

These four large SOCIMIs debuted in Madrid between March and July 2014 without any property on their balance sheets. Therefore, they quickly began to invest 2.560 billion obtained from international investors for their stock market debuts. The investment rage helped them to greatly exceed the initial amount, and so they began financing their acquisitions.

In total, by December 31, 2014, Merlin, Hispania, Lar España and Axiare had assets worth 3.541,9 billion euros.

By size, the most important is the portfolio of Merlin Properties. The Socimi, created by the management team of the Magic Real Estate company, by the end of last year had invested €2,291,000.

Among the most notable purchases are the acquisition of Tree Inversiones (company with 880 branches and five buildings leased to BBVA) in June, for 739,5 million, and the Marineda City shopping center in La Coruña for 260 million. At the year end, Merlin formalized its first purchase of offices in Madrid, five buildings for 130 million.

Testa Purchase

Despite all these operations, it was 2015 when the company has carried out the most important operation in the sector: the purchase of Testa. In June Merlin agreed the acquisition of the real estate company with Sacyr, then its owner.

For the company, with assets valued at 3.202 billion as of June 30, Merlin will pay the construction group 1.790 billion, through a phased purchase operation. At present, the Socimi is already the majority shareholder in Testa, with 77.01% stake, which means control over a portfolio worth 5.616 billion euros.

To tackle this purchase, Merlin conducted a capital increase of 1,034 billion, which together with the revaluation of its own securities, placed its current market capitalization at about 3.322 billion, compared to 1.250 billion with which it debuted in March 2014.

Until June, the assets of Merlin had a gross asset value (GAV) of 2861.3 billion, including then owned 25% of Testa, two office buildings, two ships and the grounds acquired in 2015. In the first half, company earned 119,6 million, via investment of 65.4 million coming from rentals.

Next Socimi that raised the purchase of another real estate to get hold of a large portfolio of assets was Hispania. Although having a subsidiary Socimi, it is listed through the company which channels most of its investments. In November 2014 Hispania made a takeover bid to Realia, which was subsequently superseded by a counter-offer from Carlos Slim.

While the bidding for Realia was being resolved, Hispania has continued to work on expanding of its portfolio. Not being the parent Socimi, the company is not subject to the limitation of investing 80% in rental assets, for which reason it has the most diverse portfolio compared to its competitors, with hotels and homes, among others.

In 2015, Hispania has expanded its portfolio from 422 million to 710 million. Among its most  prominent operations are several hotel investments closed this summer: the Gran Hotel Atlantis Bahia Real and Suite Hotel Atlantis Fuerteventura Resort, for a total of 105 million. It recently bought two offices worth 54,5 million.

It has also created a hotel Socimi, named Bay, with the Barceló chain, through which it will initially buy 11 hotels and a shopping center, with an option to acquire another six properties. Overall it will invest 340 million in the new Socimi, of which it will have 80.5% of the capital. In the first half, Hispania made a profit of 10,7 million euros.

Investments

Lar España has been the most active Socimi in the last two months. The highlights of this period are the purchase of the Megapark business park in Bilbao, for 170 million, and of the shopping center El Rosal in Ponferrada (León). Currently, its portfolio is valued at 873 million euros, compared to 593 million of the valuation made at the end of the first semester. Until June, Lar España earned 19,300,000 and a gross operating profit (EBITDA) of 8.3 million.

As for Axiare, which went public in July 2014 with no assets and 360 million of capital, this year it also accelerated its investments and, in just two months, closed purchases worth 229 million, equivalent to 58% of the proceeds from the capital increase launched in June with the goal of doubling the size of the company. In the first half, Axiare had a profit of 31.3 million.

Original story: Expansión

Translation: Lee La