15 November 2016 – Expansión
Merlin is going all out following its merger with Metrovacesa and is now busy exploring new market niches. The new real estate giant is analysing alternative options for the sale of its non-strategic assets, and now that it has set the future of its residential business on course, it is searching for a solution for its hotel portfolio – one option includes creating a new specialist Socimi to compete in the market.
“We will analyse the book value of our assets and we will determine whether a block sale from the portfolio is possible. If not, because the cost of capital of the potential buyers is very high, then we will probably opt for a solution that is similar to the one we have applied to the residential business. We will create a subsidiary, we will look for partners and we will constitute a company, in which we hold a majority, minority or equal stake, to serve as an owner of urban hotels”, explains Ismael Clemente, CEO of Merlin.
Following the integration with Metrovecesa, Merlin has gone from having 12 hotels worth €398 million, to owning 24 hotels with a gross value of €654 million. In this way, the new Merlin has multiplied the value of its hotel assets by 1.6x following the integration. By number of rooms, the union between Merlin and Metrovacesa has given rise to a giant hotel company with almost 4,500 rooms and a gross yield of 5.8%, according to the most recent data available.
In terms of its main rival in the sector, Hispania, Clemente says that “if there are any solutions that we can find together, we would be delighted to explore them”.
Merlin is now beginning a new phase in its journey, having created a business with assets worth €9,500 million in just two years. (…).
The listed real estate company, the only one to feature in the Ibex 35 following Colonial’s departure in 2008, faces a difficult year ahead with the major task of integrating Merlin and Metrovacesa’s teams. “By the end of the first quarter, the integrated team will work together in one location, which will not be where either of them are currently based”.
In addition, one of Merlin’s other challenges for 2017 is to dramatically improve the occupancy rate of the offices that it has inherited from Metrovacesa, as well as to perform a “significant” intervention in the shopping centres of both companies. (…).
Growth in housing
In terms of its plans for Testa – the subsidiary that owns the Socimi’s rental homes – Clemente says that, at the moment, the firm is holding conversations with other companies, as well as with its shareholder banks, with the aim of increasing its portfolio by incorporating new assets.
“We think that this vehicle has the potential to become a major player in the professional market for residential rental properties in Spain. The vehicle could own between 9,000 and 10,000 homes by the end of 2017”. (…).
Original story: Expansión (by R.Arroyo and R.Ruiz)
Translation: Carmel Drake
Source:: AURA Real Estate Experts