Testa Compensates Merlin with 4.2% of its Share Capital in Exchange for Management Freedom

27 March 2018 – El Economista

Testa is starting to go it alone. The Socimi has decided to terminate the management contract that it had with Merlin Properties, which has been in force since 2016. Following the recent incorporation of the new CEO, Wolfgang Beck, the real estate firm considers that it has the structure and staff necessary to carry out the management of its portfolio itself internally. Thus, at the last extraordinary general shareholders’ meeting, a decision was taken to cancel the contract with Merlin, which will receive new shares in Testa by way of compensation.

Specifically, Testa is going to carry out a capital increase amounting to €89 million, which the Socimi led by Ismael Clemente will subscribe to in its entirety, whereby increasing Merlin’s stake in Testa from its current level of 12.7% to 16.9%.

The rental housing Socimi notified Merlin of its decision in January. Until now, it had been receiving annual remuneration of €7.7 million for advisory and management services.

Merlin, which is Testa’s fourth-largest shareholder, behind Santander (38.8%), BBVA (26.9%) and Acciona (21%), already announced, at its results presentation, its intention to divest its position in the Socimi when it makes its stock market debut, a step that it is expected to take place between May and June this year.

Within the framework of procedures to complete prior to its stock market debut, Testa also approved the execution of a counter split of one new share for every 100 existing shares. Thus, it will give its four existing shareholders one new share with a nominal value of €1 each for every 100 shares that they currently own, which have a nominal value of €0.01 each. Moreover, the new shares will be represented by book entries.

With a workforce comprising more than 80 employees, Testa has positioned itself as the largest owner of rental homes in Spain with a portfolio of 10,702 units in less than two years.

It closed its most recent purchase last week after reaching an agreement with the BuildingCenter, the real estate subsidiary of the CaixaBank group, for the acquisition of 1,458 homes for around €228 million.

Original story: El Economista (by Alba Brualla)

Translation: Carmel Drake

GMP Becomes 3rd Largest Socimi In Spain

21 July 2016 – El Confidencial

(…) In the audit report just realised by the group owned by the Montoro family, the Socimi GMP confesses that the real estate consultancy Savills has granted its real estate investments a fair value of €1,349 million, representing an increase compared to their value last year (€1,192 million). That figure places the Socimi at the same level as Hispania, and as such, means that it is competing directly with the company led by Concha Osácar and Fernando Gumuzia for third place in the national ranking of the large listed real estate companies in Spain, behind Merlin-Metrovacesa and Colonial.

The company owns several major office buildings, including its own headquarters, located on Luchana 23, as well as the following properties: Parque Norte, Castellana Norte, Iberia Mart I and II, Génova 27, Hermosilla 3-Ayala 8, Alcalá 16, Castellana 81, Castellana 77, Goya 14, Puerto de Somport 8, Eloy Gonzalo 10, Velázquez 164, Condesa de Venadito 1, Titán 4, Llano Castellano 51 and Trespaderme 29.

In order to build up this portfolio, the company has benefitted from the invaluable assistance of the Singapore Sovereign Fund (GIC) since October 2014, following the fund’s acquisition of 32.9% of its share capital, as part of an agreement to spend €61.5 million on the shares. It has also committed to invest another €67 million before the end of March, which will allow GMP to maintain its pace of investment during its first few months as a listed company.

Given that the Socimi was constituted two years ago…the company is obliged to debut on the stock market before 30 September 2016. Nevertheless, as the company itself acknowledges in its audit report, its aim is to complete this process before it goes on holiday in August. This means that, if it obtains all the necessary authorisations, it may join the MAB – the Alternative Investment Market – within the next two weeks.

Financial situation

Despite the spectacular valuation of its assets, GMP has debt with credit institutions amounting to €800 million. The first key date in this regard will come in 2017, when debt amounting to €741.9 million is due to mature; that gives the company enough time to adapt its financial commitments, especially its syndicated mortgage loan with Société Générale.

At the end of 2015, the Socimi’s share capital amounted to €9.4 million, represented by 1.9 million shares with a nominal value of €4.92, although three weeks ago the company approved a split of the nominal value of its shares, as a preliminary step ahead of its debut on the stock market.

GMP Property’s revenues from rental income amounted to €57.35 million in 2015, compared with €65.83 million in 2014. The decrease was driven by the remodelling of some of its properties, which the company is currently engaged in, such as BBVA’s former headquarters on Castellana 81. In addition, the company received turnover of €4.35 million from the renting of car parks and €9 million from the provision of services, taking its total operating income to €59.8 million, compared with €65.8 million in 2014.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake