In which real estate investing now?
After the debut of Neinor in Stock Exchange arises the uncertainty of if at this moment they are more appropriate the patrimonialists or the promoters
Real estate indicators point to a market recovery. In addition, as described by Nuria Álvarez, Renta 4, this is gradual, healthy, which makes you think that is not going to end soon. That is why, in her opinion, in a portfolio, some real estate action must be taken. The unknown, especially after the landing of the developer Neinor, is whether it is more interesting to invest in companies that buy land, build homes and sell them, or in patrimonialists, which exploit via rental their properties.
Alvarez comments that, in a context of recovery, the patrimonialists, who in Spain are mainly socimis, exempt from Corporate Tax and obliged to have their property in rent and to distribute the bulk of their profits in the form of dividends, are the first Are recovering because they are benefited by an increase in the demand for space by companies whose activity is growing. Next, they join the housing developers, who resume developments to meet the demand of those who have regained their jobs. If so, the Spanish market would have followed a logical evolution: the socimis were the first to come out to quote the start of the recovery and it has not been so far that a promoter, Neinor, has debuted on the stock market, although others from the previous cycle .
According to Jesús de Blas, of Bankoa-Crédit Agricole, the socimis have disappointed in the first phase described by Alvarez. De Blas believes that this real estate sub-sector is lacking, that it stops growing and that it can count on a more consistent perimeter to know what flow of dividends can be expected. As for the recently launched promoter, he believes that although he is a more procyclical company and, therefore, he can expect more increases, he says that his plan is very ambitious considering its current dimension.
A matter of cycle
For Carlos Val-Carreres, manager of Lierde, there is a cyclical question to consider: On the increase in the value of assets, the returns obtained by the patrimonialists have already been reduced and perhaps a better time for the promoters. In this sense, explain what your favorite companies are. Firstly, Realia, because it is a company that has a very large floor bag in Madrid, Barcelona and Baleares. “He has always had patrimonial activity and promotion. This last one has been a bit of a stop, but now it is in a fabulous situation because it has soil and money to build, “explains Val-Carreres.
Among the companies, it is inclined to Lar, because it is developing shopping centers in Sevilla and Sagunto, which are already pre-rent and also sells flats in Juan Bravo, Madrid, at the highest prices in the capital. Finally, it is committed to Renta Corporación, because it believes that it can also be favored by this moment of the cycle more positive for the creation of value with the promotion that for the generation of income, since it reform and transforms the use of buildings. He also sees potential Merlin for its size and pending integration of its latest acquisitions.
Josep Monsó of GVC Gaesco Beka points out that we must pay attention if we want to invest in a “dead” industry that can be traveled if it improves as it is doing according to which areas, or if it is done in buildings already made and already rented , Through the sociologies in which, in turn, attention must be paid to the profitability they provide, as well as the aggressiveness of their investments.
Mixed portfolios
In the end, Monsó’s bets are mixed. On the one hand, he likes construction with Quabit, because he has floor in many places with potential and, above all, because he has done a spectacular cleaning of the debt and has obtained financing to build. He prefers Neinor because it is cheaper and because Neinor sees a more financial profile in search of an opportunity that can come out, or not. As for the socimis, he explains that he did not enter Hispania and now he will not, since the instrument is closed and waiting for its sale in a few years. He has just divested in Axiare, because at these prices he is already quoted that he is going to rent his assets at a good pace, when these are not ‘prime’, and also the possibility that Colonial will end up buying it. Merlin is reducing, due to the aggressiveness of its purchases and because the last package that has acquired, the one of Metrovacesa, includes too much risk, although recognizes that it is the company that seems to have chosen the foreign investors to take advantage of the Spanish recovery. In return, it bets on Colonial, because it has the best ‘portfolio’ of all, with high quality real estate.
Gonzalo Sánchez, of Gesconsult, adds that both types of companies, patrimonialistas and promotoras are different, but more than by the cycle, by the investors for which they are suitable one and others. Thus, companies, in general, due to their high and predictable cash flows, respond to a conservative investor profile, while the promising companies present a higher risk. But their bets are mixed. On the one hand, he likes Colonial, because the quality of its assets is unrepeatable, implying that they will increase both in valuations and in income. And also, believes that Merlin has interest, company that sees potential. Finally, his firm went to the stock market of the promoter Neinor, because it is a small company with a strategic plan that has room in the current market environment.
