Tag: Socimis

Up To 15 Socimis Are Planning To Go Public In 2015

12 February 2015 – El Economista

Since the first Socimi debuted on the stock exchange – Entrecampos was the pioneer at the end of 2013 – seven companies of this kind have now floated on the stock market. And according to Jesús González Nieto, the Vice-President and CEO of the Alternative Investment Market (el Mercado Alternativo Bursátil or MAB) the number of listed Socimis will increase this year to include seven or eight more, with two of them planning to go public this quarter.

Nevertheless, market sources close to these transactions claim that the number of vehicles of this kind preparing to go public is even greater: with “up to fifteen” (currently involved in the process).

“Around fifteen Socimis are planning to go public within the next year, with assets ranging from €20 million to €400 million”, said one of the people responsible for placing the shares of these new real estate companies in the market. “Most of them are investments being made by foreign funds in Spain, which are buying up premium assets (hotels and above all, shopping centres). In parallel, there is a stream of hoteliers, who are seeing the benefits of putting their hotels into these vehicles because it allows them to dissociate the business from the properties”, he added.

According to the same source, there are two main reasons as to why non-residents above all are incentivised to constitute Socimis. Firstly, it is easier to exit an investment in one of these type of companies than it is to exit an investment in a specific building, “Socimis represent an easier way of buying (when you have a view) to sell”, he said. And secondly, there are tax advantages: Socimis are exempt from paying corporation tax, and also receive a 95% discount oon property transfer tax. For investors, however, the main appeal of these companies is that the rules require them to distribute 80% of the companies’ gross operating profits in the form of dividends, although at the moment, none of them are expected to make a profit this year.

“For these types of Socimis, those that are businesses, the average IRR of their portfolios is at least 8%”, say a number of financial sources. But amongst the fifteen Socimis that are preparing to float, there are also some property managers. As such “families are using these vehicles as a way of organising their assets to convert immovable property into movable property, whereby allowing it to be easily distributed”, they explain.

The regular stock market or MAB?

What remains to be seen is the market they will choose to list on – namely, the regular stock market or the MAB? The latter allows these types of companies to be valued on a discounted cash flow basis rather than on the basis of their NAVs (net asset values), which is the more accurate ratio used for valuing real estate assets in general and REITs (the US version of Socimis) in particular.

To date, the stats are as follows: of the seven Socimis that have debuted on the stock market in recent years, three have done so on the MAB (Entrecampos, Mercal and Promorent). And the other four have listed on the regular stock exchange: Lar España, Merlin Properties, Hispania and Axia. But, what determines whether these companies list on one market or another? “In reality, all of the Socimis that list today should do so on the MAB. Nevertheless, some of them have jumped onto the regular stock exchange because the investment funds behind them are subject to regulation 401k, which requires them to list on an official exchange, and MAB does not quality; it is regulated but not official. This means that some Socimis were forced to list on the regular stock exchange”, say market sources.

For the time being, the only thing we know about the six or eight companies on MAB’s radar (where they may list, according to comments made by MAB’s Vice President on Wednesday) are their timelines. “Two this quarter” and another “three or four before the summer”. One of them is “a very big player, with a large volume of capital”.

González Nieto explained that he regrets the slow speed of the mechanisms that process the files of these companies; a Socimi has two years from when it first registers to fulfil all of the conditions required to begin its activity, which means that this year is the deadline for those that first signed up in 2013. It is time for the interested parties to “get on with their homework if they regard it as a good opportunity”, he said.

Original story: El Economista (by C. García and J. Gómez)

Translation: Carmel Drake

Lone Star Aspires To Become The Largest Property Developer In Spain

12 February 2015 – Cinco Días

The American fund plans to make the most of the land and assets it acquired last year from Kutxabank and Eurohypo

“We are working to become the leading residential developer in Spain, the largest home builder in the country”, said the European Director of the American fund Lone Star, the Argentinian Juan Pepa, on Wednesday. “We are buying land directly”, he said, explaining that although “in 2012, everyone said that land was worthless”, we are now beginning to see opportunities for obtaining profits from its development.

“We do not regard ourselves as a foreign investor, but as an industrial agent that invests its dividends in the construction of homes”, said Pepa, claiming that 50% of the group’s efforts in Spain over the next decade will focus on the creation of thousands of jobs in the sector, which suffered significant job cuts during the crisis. Pepa was speaking at the presentation of a study conducted by PricewaterhouseCoopers (PwC) about trends in the real estate sector in Europe, which show that the appetite for residential assets is growing.

To achieve its objectives, Lone Star will rely on the two large transactions that it has signed since entering the Spanish market in 2012: the mega-purchase of Eurohypo’s assets and the acquisition of Kutxabank’s real estate arm, Neinor; these were the two largest transactions in their respective fields during the crisis.

The first transaction, signed with JP Morgan last spring, enabled Lone Star to purchase Eurohypo’s mortgage portfolio from Commerzbank for €3,500 million, when the bank valued the portfolio on its own books at €4,500 million. The acquisition will allow the fund to access significant portfolios of land and property that serve as collateral for the loans.

The second transaction, which was signed last December, for €930 million, gave the fund control of Kutxabank’s property management platform, including 90 dedicated employees, as well as 50% of the entity’s real estate assets. The assets mainly comprise land, as well as some completed developments primarily located in the Pais Vasco, Madrid, Barcelona, Murcia and Andalucía.

“The cycle in Spain is just beginning” said Juan Pepa, who spoke about a promising period lasting 10 years…; it is “becoming increasingly difficult to enter the market” and exit as a winner. “We almost missed out completely in Spain” he admits, explaining that the fund arrived in the country in 2012 but did not invest until last year, even though 2013 was “a very good year to make investments”.

For PwC partner Enrique Used, Lone Star’s project is a clear example that investments made two years ago are now beginning to bear fruit,  “cranes are the best sign that activity is returning”. In this context….we are beginning to detect interest from new investors – although interest from opportunistic funds is still evident – and the appetite for residential assets is growing, in the face of the thriving office market.

Meanwhile, the vice-president and CEO of the Alternative Investment Market (Mercado Alternativo Bursátil or MAB), Jesús González, said that he expects to see six new real estate investment companies (Socimis) float their shares before the summer.

Original story: Cinco Días (by Juande Portillo)

Translation: Carmel Drake

Talus To be Ortega’s Neighbour On Gran Vía

29 January 2015 – Cinco Días

Two buildings on the same street in Madrid have changed hands within just over a week of each other. The fund Talus Real Estate has agreed the acquisition of the building on Gran Vía 30 (on the corner of Calle Valverde) for €42 million. On Monday, the company Drago Real Estate announced the sale of its building on Gran Vía 32 to Pontegadea, the company that owns Inditex’s real estate assets and receives its dividends on behalf of Amancio Ortega, the founder and primary shareholder of the fashion group.

According to sources close to the negotiations, JLL and Aguirre Newman have participated in the sale of the property on Gran Vía 30, as advisory consultants. However, the companies involved did not want to confirm this information yesterday.

The same sources said that the buyer plans to refurbish the property. The fashion chain Sfera, owned by El Corte Inglés, has a store that occupies two floors of the building.

Talus Real Estate’s main executives are David Finkel and Jordi Moix and its headquarters are located in Madrid. According to the company’s website, before joining Talus, Finkel worked for Westbrook Parners, where he co-directed their business in London. Westbrook Partners is a real estate investment group that was founded in 1994, has offices in the US, London, Munich, Paris and Tokyo and has invested USD 10,000 million to date. Prior to that, he worked for the Japanese entity, Nomura and for iStar Financial, another international real estate investment group.

Moix has held senior positions in the Spanish real estate companies Reyal Urbis, Metrovacesa, Layetana and Habitat; he has also worked for IAG and Citibank. Currently, he is vice-president of FC Barcelona’s real estate business.

Gran Vía is trading up

The sale of the property on Gran Vía 30 is the latest in a series of transactions undertaken on the Madrid street that will change its appearance as it approaches its 105th birthday.

The fashion group Primark will occupy several floors of Gran Vía 32, when it opens its largest store in Spain there. Talus Real Estate will also refurbish the Gran Vía 30 building. In Plaza de España, the Chinese group Wanda will convert the Edificio España into a luxury hotel and shopping centre. Next to the building sold by Santander, the hotel chain Barceló will take over some of Torre Madrid to open another hotel.

Late last year, Axa Real Estate, a subsidiary of the insurance company Axa, acquired Gran Vía 37, where the fashion retailer H&M has its largest store in Spain and which used to house the Avenida cinema, for €80 million. Also last year, the Community of Madrid sold Gran Vía 20 for €20 million to Caja Rural de Almendralejo Sociedad Cooperativa de Crédito.

2015, another big year for real estate investment

With the sale of Gran Vía 32 and the upcoming sale of the Plenilunio shopping centre, the amount of investment in Madrid will amount to €800 million. According to sources familiar with the transaction, the sale of the shopping centre will reach a figure close to €400 million.

In 2014, investment in real estate in Spain amounted to between €6,000-€9,000 million, almost twice the figures recorded in the previous three years.

During the year ahead, Socimis, which revolutionised the sector in 2014, will continue to invest, as will investment banks, whereby replacing opportunistic funds. The liquidity injection announced by the ECB will boost the sector. The expected sale of Realia will be another major transaction. Industry experts are also drawing attention to investment in logistics platforms.

Original story: Cinco Días (by Alberto Ortín Ramón)

Translation: Carmel Drake

Blackstone Drives Boom In The Purchase Of Logistics Assets

26 January 2015 – Expansión

Investors spent €620 million on logistics assets in 2014, compared with €100 million in 2013 / The total spend on warehouses amounted to more than €500 million for the first time since 2008.

From €100 million to €600 million in twelve months. That was the trajectory of the investment market in industrial and logistics assets in Spain in 2014.

Interest from large international funds and the launch of Socimis drove the volume of investment in the logistics sector through the roof in 2014, in a similar way to shopping centres. From minimal levels in recent years, the figures have increased sixfold.

According to data published by the property consultant JLL, €620 million was invested in logistical and industrial assets in Spain last year. In 2013, this figure was €100 million. “Investment in these types of assets has exceeded €500 million for the first time since 2008”, comments JLL.

The turnaround has been characterised not only by an increase in the number of transactions, but also in their size. Blackstone closed one transaction amounting to more than €60 million, and another for €132.8 million. “Blackstone closed 35% of all the transactions in the market, followed by the Socimis, which accounted for 36% of total volumes”, highlights the report. In just two years, the US investment fund has acquired a portfolio of logistics assets in Spain covering 600,000 square metres.

The listed property companies Axia Real Estate, Merlin Properties, and Lar España purchased logistics properties worth more than €200 million.

Another example of the boom in the sector is that the asset purchases have not been restricted to the major markets, says the consultancy in its report. “Madrid, Guadalajara and Barcelona continue to be the preferred locations for investors, but cities such as Sevilla, Valencia, Zaragoza and others are also in the mix”. The experts at JLL believe that, over the next few years, the funds with a more opportunistic nature will make way for those that have a more conservative profile.

In the case of recruitment, the numbers did increase with respect to the previous year, but not as significantly as the investment data. Nevertheless, demand for large warehouses, especially those that occupy more than 25,000 square metres, has skyrocketed, as companies such as Amazon and the textile groups realise their need to increase their storage capability in the face of increases in online sales.

Original story: Expansión (by R. Ruiz)

Translation: Carmel Drake