Merlin Properties, a newly created REIT managed by Magic Real Estate, the asset management firm headed by former RREEF executive Ismael Clemente, has announced plans to raise up to €1.5 bn in an Initial Public Offering on the Spanish stock exchanges.
Merlin Properties, a newly created REIT managed by Magic Real Estate, the asset management firm headed by former RREEF executive Ismael Clemente, has announced plans to raise up to €1.5 bn in an Initial Public Offering on the Spanish stock exchanges.
In a statement on Friday, Merlin said it plans to issue 150 million shares at a price of €10 a share in what is expected to be the largest flotation in the Spanish market since July 2011, and the third largest in Europe in the past 12 months. The flotation is also understood to be the largest IPO of a REIT ever registered in the EMEA region.
Merlin has received binding investment commitments for a total amount of more than €600 mln, roughly equivalent to 40% of the newly-issued share capital. According to market rumours, investors may include Pimco’s Bill Gross, Quantum’s George Soros and billionaire John Paulson, who already invested in Hispania Activos Inmobiliarios.
The company expects to start trading on June 30.
Following the IPO and conditional upon its success, the company has committed to acquire full control of Tree Inversiones Inmobiliarias, the owner of a portfolio of BBVA bank branches leased to the Spanish bank through long-term contracts. The deal price amounts to €740 mln.
Tree Inversiones Inmobiliarias currently holds a portfolio of 880 branches and five office buildings located throughout Spain.
‘This is one of the first Spanish Socimis (Spanish REITs) principally focused on core and core plus
investments and comes at an excellent time for these segments in the markets,’ commented Ismael Clemente, Executive Chairman and CEO of Merlin Properties. ‘This IPO is a milestone for the Socimi market in Spain since, in view of the agreement to acquire the shares of Tree Inversiones, Merlin Properties will immediately be able to benefit from the recurring income earned from a portfolio that is fully-leased to a blue-chip tenant like BBVA.’
Clemente is already familiar with the BBVA assets, having led the acquisition of these assets back in 2009 and in 2010 on behalf of RREEF where he previously held the post of head of Spain.
In 2009, a consortium led by Deutsche Bank's property fund RREEF completed the sale-and-leaseback of the majority of the Spanish assets of BBVA bank for €1.15 bn. The sale covered three office buildings and 944 bank branches located throughout Spain.
The buying consortium called Tree Inversiones Inmobiliarias comprised RREEF, Area Property Partners and Europa Capital.
In 2010 the partners bought a second portfolio for €364 mln.
In general, Merlin will focus on offices, shopping centres, industrial and logistics facilities as well as urban hotels in Spain and, to a less extent, Portugal. The firm will be led by Clemente and Miguel Ollero, CFO and COO, both of whom are founding partners of Magic Real Estate. The team will also include David Brush as CIO, who previously was European head of real estate for Brookfield Asset Management and RREEF.
Credit Suisse Securities will be acting as sole global coordinator and joint bookrunner along with Deutsche Bank, London Branch and UBS. Merlin Properties has appointed Freshfields Bruckhaus Deringer as legal advisor as to Spanish, UK and US law.