Residential Assets Displace Offices as the Leading Investment Choice for New Socimis

23 August 2018 – El Confidencial

The configuration of the investment map of the Socimis on the Alternative Investment Market (MAB) has changed drastically following the recent incorporation of the company owned by Santander, BBVA, Acciona and Merlin Properties. With a portfolio comprising 10,700 homes, Testa has placed the residential segment in first position on the investment ranking of new listed companies, relegating the office sector to third place.

In this way, of the 14 new joiners to the MAB so far this year, 30.8% have housing as the main or significant target of their investments, compared with 12.8% of the 20 new companies that made their MAB debuts in 2017. With this boost, offices, which had led the ranking until now, have been relegated to third place with 15%.

The weight of retail premises is also striking since they have increased from 6% to 23%, according to data from Armabex. Beyond specialisation, registered advisors also highlight the leading role of international investors, which account for 43% of the new listed companies.

“The rate of new joiners is expected to continue and this year, we are going to comfortably exceed the total figures recorded last year (44 companies), to more than 70”, said the President of Armabex, Antonio Fernández. Currently, there are 59 Socimis trading on the MAB, which account for 60% of the one hundred or so companies that participate in the Alternative Investment Market.

In terms of the upcoming debuts, the Socimi from Bankinter specialising in the hotel sector, Atom Hoteles, is planning its launch. Other examples include Haya Real Estate, Vía Célere and Azora, whose plans to debut on the stock market have been delayed due to the instability in the international financial markets, the political uncertainty in Spain and the evolution of the businesses themselves. The most recent to debut, at the beginning of August, was Mistral Patrimonio, whose activity focuses on rental homes.

“These companies have evolved towards greater specialisation. They started leading tertiary assets to move towards housing and, now, they are opening up to other segments such as hotels, residences, healthcare complexes, gas stations, etc.”, says Fernando Vives, Technical Director at Alia Tasaciones.

An annual valuation

To ensure transparency, the regulations require that these investment vehicles are listed on a regulated European market, be it the main stock market, the Euronext or the Alternative Investment Market, in a maximum period of two years following their constitution.

Nevertheless, the stock market listing is not the only method of transparency. The MAB has just introduced a new requirement that obliges companies to issue more reports. They will be obliged to undertake an annual valuation of their assets, beyond the initial assessment. (…). “The measure obliges Socimis to provide more information and to incur expenses, but it is very positive at the macroeconomic level and for investors”, says Antonio Fernández (…).

“The Socimis have brought confidence back to the real estate sector after the real estate bubble burst. They are here to stay, taking advantage of the upwards cycle and they will continue to activate the real estate market, above all for tertiary use until at least the end of the cycle (…)”, says Vives.

Original story: El Confidencial (by E. H.)

Translation: Carmel Drake

Conren Tramway to Invest €150M in 3 Buildings in Barcelona

22 May 2018 – Eje Prime

Conren Tramway is on a spending spree in Barcelona. The real estate company has invested €150 million in the purchase of three office buildings in the Catalan capital, two of which are located in the sought-after 22@ district and the third is in the Paral·lel area. The three properties have a combined surface area of around 60,000 m2, according to a statement from the company.

The asset manager, which is headquartered in Barcelona, is controlled (50%) by the brothers Jaime Enrique and Paco Hugas, through Tramway, and by the German company Conren Land, formed by large business families from the Bavarian country.

The company is creating a different vehicle for each project, although it explained that investors tend to be recurrent. In the latest operation, the assets acquired are located in two sought-after enclaves for offices. Two of the properties are located in the 22@ district, the technological hub of Barcelona, and an area where the neighbours of Conren Land’s future tenants will include Amazon, WeWork and King, amongst others, all of which have recently moved into the district.

At number 97 Calle Badajoz, the company has acquired an asset with a surface area of 14,000 m2. Meanwhile, the second property to enter Conren Tramway’s portfolio in the 22@ district measures 8,300 m2 and is located at number 65 Calle Sancho de Ávila, which was previously a plot owned by Sareb.

The third asset is the former headquarters of Endesa in Paral·lel. The company paid €20 million last year for that property, which has a surface area of 33,800 m2 and has already started renovating it to turn it into a corporate office building.

Created in 2014, Tramway Capital joined forces with Conren Land two years ago to specialise in the office market, primarily in Madrid and Barcelona. “Between 2013 and 2016, the market offered lots of opportunities and we had to take advantage of them, but now, in a much more mature phase of the cycle, the capital requires a greater degree of specialisation because more added value needs to be contributed to the operations”, according to Jaime Enrique Hugas.

Original story: Eje Prime

Translation: Carmel Drake

The MAB Gets Ready To Receive A New Wave Of Socimis

5 October 2017 – Expansión

Socimis have become the shining stars of the stock market and the undisputed protagonists of the real estate sector. Over the last four years, in addition to the large five listed Socimis – Merlin, Colonial, Hispania, Axiare and Lar España – , 40 vehicles of this kind have been incorporated into the Alternative Investment Market (MAB) and experts predict that, far from slowing down, the flood of stock market debuts is going to continue for the next few months at least.

Specifically, they estimate that around a dozen new vehicles are set to debut on the Madrilenian stock market. “We calculate that the total number of Socimis listed on the market could reach 50 by the end of 2017. At Armabex, we have 14 processes open for new Socimis, which will be making their debuts between 2017 and the first quarter of 2018”, explains Antonio Fernández, President of Armabex.

“You could say that we are facing the second wave of Socimis, but their growth prospects, until they reach the €40 million or €50 million mark, are still very broad”, explains Sandra Daza, Director General of Gesvalt. For Daza, the tightening of the access requirements to the MAB for Socimis, especially in terms of the diffusion of shareholders, will avoid the appearance of a distinguished group of small Socimis, focused solely on the fiscal benefits and not oriented towards the professionalism of their asset management.

Moreover, analysts expect to see greater specialisation in the field of the Socimis and consolidation of the sector over the medium term. “Gradually, over a period of three to five years, we will see the start of a new model of Socimi: those that arise as a result of mergers and acquisitions. This movement will result in the consolidation of the structure and the creation of some more heavyweight Socimis”, explains Fernández.

For Daza, the specialisation of Socimis in alternative assets within the real estate sector will be a process that will push ahead gradually: “For a Socimi to be a good investment vehicle, it requires a minimum size and a development plan that alternative assets do not always allow due to the small size of the market”.

Experts rule out that a bubble is being generated. “If we analyse in detail the history of the various Socimis listed on the MAB, the majority are the result of the restructuring of pre-existing real estate companies. In other words, there were not any previous transactions, they merely represented the adaptation of existing property portfolios to a new financial-fiscal environment, the Socimis, in which their respective real estate strategies fit better”, says Fernández. For Daza, in comparison with other countries, the size of the Spanish market and our GDP indicate that we are in for “a bright future in terms of the growth in the volume of Socimis over the next three to five years”.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

The 4 Largest Socimis Will Specialise By Asset Type

31 January 2017 – Cinco Días

Hotels, logistics assets, offices, shopping centres. The four largest Socimis – Merlin, Hispania, Lar España and Axiare – are entering their third year of life, and as they do so, they are embarking upon a new phase of specialisation by type of asset – the aim is to make their management more effective and ensure that they remain attractive to large international funds. (…). 

Between them, Merlin, Hispania, Axiare and Lar España now own assets worth almost €14,000 million – they have created small empires out of nothing.

Hispania looks set to become one of the major stars of 2017 with a series of operations planned to strengthen its already high degree of specialisation in hotels. The Socimi, in which the magnate George Soros owns a 16% stake, has a portfolio worth €1,793 million (including its most recent purchases at their acquisition prices). 61% of the portfolio value relates to hotels and most are located in the Canary Islands (70%) and the Balearic Islands (16%).

The experts forecast that this company, managed by Azora and led by Concha Osácar, will put the majority of its offices and residential assets on the market, and at the same time, will continue to buy up hotels. (…). 

Meanwhile, Merlin has taken steps to divest its residential and hotel assets, transferring them to Testa and Foncière des Murs, respectively, and is continuing to expand its core portfolio with its recent purchase of the Torre Agbar office block in Barcelona for €142 million. The Socimi’s portfolio currently comprises offices (48%), shopping centres (18%) – Merlin is now one of the major players in this segment – retail premises (22%) and logistics assets (5%). Experts consider that the latter have enormous potential to generate higher returns for this Socimi.

Axiare, led by Luis López Herrera-Oria, has already focused heavily on offices, which account for 73% of its €1,300 million portfolio. It has enhanced its presence significantly in recent weeks through its acquisitions of the headquarters of PSA, Cuatrecasas, McKinsey and Vocento for €242 million in total.

The Socimi’s high decree of specialisation in offices has led Colonial to take advantage of the fund Perry Capital’s departure from its share capital to acquire 15% of the Socimi. Some in the sector view this move as a precursor to a possible takeover bid, but the Catalan real estate company has denied the claim repeatedly. (…). 

Finally, Lar, led by José Luis del Valle and Miguel Pereda, has managed to specialise mainly in shopping centres, which now account for 75% of its €1,201 million portfolio. With shareholders that include Pimco and Franklin Templeton, the company owns 17 assets including shopping centres, retail parks and hypermarkets.

In just three years, Lar España has risen up the ranks to become the third largest owner of shopping centres in Spain, behind Unibail and Merlin. (…).

Original story: Cinco Días (by Alfonso Simón Ruiz)

Translation: Carmel Drake

BDO Hires Former CEO Of Knight Frank To Grow Its RE Business

21 October 2016 – Expansión

The professional services firm BDO has taken another step forward in its multidisciplinary and sectorial-specialisation expansion strategy by launching a new real estate advisory business line, with the goal of benefiting from the boom in the sector.

BDO has hired the former CEO of Knight Frank in Spain, Alberto Prieto (pictured above) to lead this area, along with José Manuel Sánchez, from the same consultancy firm, who will be responsible for developing the real estate analysis and valuations department.

BDO Real Estate’s team in Spain will comprise between five and ten professionals, who will benefit from synergies with other divisions. At the international level, BDO has a team that specialises in real estate and construction comprising more than 500 professionals across more than 1,500 offices.

“The Spanish real estate market offers great opportunities. I don’t think there has ever been such a significant inflow of international capital like the one we have seen over the last four years”, explained Prieto.

For Prieto, real estate consultants operate more like “agents”, whereas BDO wants to attack another business niche. “At BDO, we want to go a step further, focusing above all on buyers, to offer them greater added value in the analysis of operations with technical, legal and financial advise”, said the Director, who has served as the CEO of Knight Frank in Spain for the last five years and who also sat on the company’s European executive board.

Meanwhile, Sánchez highlighted that players dedicated to real estate management and other investors from outside of the sector are participating in the real estate market and they will need to receive differential advise in terms of strategy and opportunities.

The Directors have identified opportunities and potential for transversal growth, taking advantage of the knowledge inside the firm, in line with the strategies adopted by the Big Four. BDO already has specialists in this sector in its legal team. In this vein, BDO recruited Juan Gómez-Acebo two years ago to lead the real estate practice in this division.

At the global level in the Real Estate space, BDO renders the following services: investment analysis, asset verification, comprehensive transaction management advise, liquidity analysis and planning, refinancing support and tax and legal advice.

Interest from overseas investors

Regarding the current status of the real estate market, the directors consider that there is “clear” interest from international investors to enter Spain. For Prieto, the Spanish market has changed a lot over the last few years. “Before, the attitude was anything goes, but now there is a lot more specialisation in the sector”.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Alquiler Seguro Prepares Its Socimi’s Debut On The MAB

10 June 2016 – Expansión

The first Socimi specialising in the residential rental market in Spain is finalising its debut on the stock market and hopes to be ready to list on the Alternative Investment Market (MAB) before the end of the year. Quid Pro Quo – the name of Alquiler Seguro’s real estate investment company – wants to raise €50 million initially, which it will use to purchase properties for their subsequent rental.

The CEO of Alquiler Seguro, Antonio Carroza (pictured above), explained that the company wants to begin by incorporating 500 homes into its portfolio during the first phase. To that end, it has identified around 6,000 homes, from the total pool of homes that it manages, which fulfil the requirements set in terms of rotation, tenant retention and which are also likely to be acquired from their owners at market prices. The company has already signed purchase options with owners worth €12 million in total.

“Within 5 years, the aim is that the Socimi will own around 6,000 homes and achieve an investment volume of €500 million, through several capital increases”, explained the CEO.

Carroza said that, with that volume of assets, the group would then be able to consider moving onto the main stock exchange. Quid Pro Quo’s assets will be mainly located in Madrid, although it will also have a portfolio of homes in Barcelona, Valencia and Sevilla and, to a lesser extent, in Alicante, Vitoria and Bilbao. “We have worked hard to make the intermediation business profitable and to encourage both supply and demand; now, we want to close the circle by professionalising the supply”, said Carroza.

For the CEO, the future of the Socimis will involve specialisation. “The few (Socimis) that have been working in the residential sector until now are getting rid of that part of their businesses”, he said.

In terms of Quid Pro Quo’s shareholders, Alquiler Seguro will acquire up to 5% of the Socimi’s share capital, whilst the remainder will be offered up to domestic and international investors.

In terms of the Board of Directors, the Socimi’s highest executive body will comprise five members: the President of Alquier Seguro, Gustavo Rossi; the CEO, Antonio Carroza; and three independent directors, one of whom will come from a multinational entity and will have a financial background, to lead the Audit and Internal Control Committee. The other two independent directors will be Salvador Garriga – who has served as an MEP for the PP for twenty years – and José Luis Bartolomé, a real estate consultant and advisor.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake