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30 November 2016 – Cuatro.com
The Socimi RREF II Al Breck will debut on the MAB today (Wednesday 30 November) at a price of €5.40 per share.
The fund Al Breck will debut its new Socimi on the Alternative Investment Market (MAB) today, Wednesday 30 November. The Socimi was constituted with a stock of around 300 rental homes, located in the centre of Madrid. The fund acquired the properties from the Spanish fund Segurfondo Investion in December 2014.
The firm, known as RREF II Al Breck Socimi, will debut on the stock market at a price of €5.40 per share, which represents a company valuation of €28.8 million, according to the BME.
Specifically, the new Socimi owns a stock of 293 homes located in the centre of Madrid (in the following neighbourhoods: Centro, Salamanca, Chamberí and Chueca), as well as in La Moraleja (Alcobendas) and in towns close to Alcobendas and Torrejón de Ardoz. It also owns twelve retail premises and one office.
According to the prospectus for the IPO, the market value of this portfolio of assets, calculated by an independent firm, amounts to €110.52 million.
On the other side, the company’s debt amounts to €70.03 million, and comprises a participative loan granted by the parent fund, i.e. a liability equivalent to 63% of the value of the portfolio. In addition, all of the homes are mortgaged in favour of Banco de Sabadell, the entity that financed their acquisition.
The Socimi will debut on the stock market with a business plan that involves generating value from its portfolio, in other words, forecasts selling all of the homes within a five-year period, which will end in December 2020.
Aggressive strategy
Specifically, the plan involves investing in improvements in the homes “to increase returns and improve occupancy rates to stable levels, implementing an aggressive rental strategy that includes, where necessary, lowering rents and making concessions to tenants to improve their cash flows”.
Subsequently, “once the occupancy rates have increased, we will ensure they remain stable and start to progressively increase rental income, in accordance with the improvements made at the properties and market prices”.
Finally, the Socimi expects “to optimise the value of the portfolio by selling the assets either individually or in batches, when demand and price make such a decision worthwhile and only after the minimum holding period of three years (applicable to all Socimis) has been exceeded”, according to the prospectus.
Original story: Cuatro.com
Translation: Carmel Drake