Colonial’s Board Approves Conversion Of Company Into A Socimi

25 May 2017 – Expansión

Colonial is going to propose to its shareholders that the firm turn itself into a listed real estate investment company (Socimi), according to a statement issued on Tuesday by the group to Spain’s National Securities and Exchange Commission (CNMV).

The company has explained that the measure, which has already been adopted by the Board of Directors, will be subjected to a vote at the next General Shareholders’ Meeting, scheduled to be held on 29 June.

The real estate company explained that becoming a Socimi “would not involve any change in the group’s corporate strategy or in its business plan” and that, by contrast, it would mean that the profits and cash flow would increase “significantly”.

Specifically, Colonial wants to adopt this structure retrospectively, with effect from 1 January 2017.

In addition, the company states that becoming a Socimi would have a positive impact of €72 million on its own funds, as it would allow it to pull back some of the provisions accounted for in 2016.

Colonial also highlights that with this step, the effective tax rate would be reduced to 0% and also, that the group would be able to continue using a “tax shield”, amounting to more than €1,300 million to structure investment or divestment operations.

Moody’s assigns a Baa2 rating to Colonial

On the other hand, on Tuesday, the agency Moody’s assigned a credit rating of Baa2 (investment grade) to Colonial, with a stable outlook.

In this sense, it is worth noting that the company already saw its rating improve on 19 April this year, when S&P increased its debt rating to BBB (investment grade) from BBB- (low investment grade), also with a stable outlook, to become the Spanish real estate company with the highest credit rating in the sector.

Original story: Expansión

Translation: Carmel Drake

S&P Confirms Merlin’s Investment Grade Rating

21 April 2016 – El Mundo

Standard & Poor’s (S&P) has ratified the BBB rating that it assigned to Merlin Properties back in February, after the Socimi successfully closed its recent €850 million bond issue, according to reports from the company.

The ratings agency considers that Merlin’s investment grade reflects the “optimal risk profile” of the Socimi, which is further supported by a portfolio of property assets worth around €6,100 million.

The firm also assigns a stable outlook to the rating for the company led by Ismael Clemente, because it considers that its “large and diversified” property portfolio constitutes a “source of recurring revenue generation”.

“The assets are also well located, which allows the company to benefit from the recovery in the real estate sector that Spain is currently enjoying”, added the ratings agency.

The ratings firm has also assigned the same BBB rating to the €850 million bond issue that the Socimi recently placed. Through this operation, the company will restructure one tranche of the debt that it inherited from Testa when it acquired the company from Sacyr.

Moreover, S&P leaves the door open to a possible increase in Merlin’s rating, in the event that the Socimi adopts a “more conservative” financing policy, however it also warns of a downgrade in the event that its debt exceeds the threshold of 50% of the value of its assets.

Original story: El Mundo

Translation: Carmel Drake