Neinor ends plan to create its SOCIMI after rejection from shareholders

This article was written and published in Spanish and has been translated into English via Google Translate. Click here to read the original article.

The board of directors of Neinor Homes approved a plan by which would have the real estate company enter the house renting business. But according to sources close to the company, at the very last moment, it was nixed, after the CEO of the promoter, Juan Velayos, presented the project to the large shareholder funds, which were mostly opposed to creating a SOCIMI dedicated to the lease of houses.

Velayos made a round of contacts with around a dozen of the largest shareholders of the real estate. The CEO had the previous support of Adar, represented by two members on the board of directors, and which has 28.6% of the company's capital. The executive was explaining to these international funds his project, advanced last week by Cinco Días, with its advantages and disadvantages. But mostly they answered that they preferred the current business model, that of a pure housing developer, without entering into the patrimonialist business. "They answered that if the business went well, why would it change," said the sources. And is that the project should receive the approval of the majority in the shareholders' meeting.

The idea concocted by ​​Velayos and the Adar fund was to enter into this new activity of building houses and keeping them in property to be rented, instead of selling them to individuals. For this, a subsidiary of Neinor would be created, with the fiscal figure of SOCIMI or another lesser-known one called EDAV (entity dedicated to housing leasing). In this project now parked have worked, along with Velayos, Goldman Sachs and JP Morgan.

This change would have meant a need for more investment, a change in the longer-term financial structure and lower margins. As advantages, Neinor was considering entering a business with high demand, diversifying activity and benefiting from rents for long-term rentals.

The CEO transferred the plan with just a few hours in advance to the investors, to avoid the use of privileged information while the decision was made public. Upon receiving a majority rejection, it was paralyzed and communicated it to the company's management. Neinor's main shareholders include BMO Financial Corp, Invesco, Julius Baer, ​​King Street, Alken, Norges Bank, Vanguard Group, Franklin Resources and Santander, according to Bloomberg.

In a recent meeting with the press, Velayos explained that although it has been thoroughly studied to enter the rental business, the conclusion is that it is best to continue with the business model that has worked so far. He did not rule out, however, building turnkey projects for other investors dedicated to leased housing, but today he sees it as complicated without affecting the margin of the business.

THE KEYS OF 2018

Benefit. "It has been a spectacular year. We have fulfilled the objectives that we had set, "he remarked on the results presented yesterday to the CNMV. The promoter obtained last year a net profit of 50 million euros, compared to 25.9 million losses in 2017.

Sales Regarding the income, it reached 382 million, 70% more, of which 313 million come from the promoter business and the rest of the activity inherited from Kutxabank.

Ground: Last year he invested 56 million in land, which gives him a capacity for 13,000 homes.

Deliveries: "The fourth quarter was overwhelmingly good," according to Velayos, with 580 of the 1,000 homes delivered.

This article was written and published in Spanish and has been translated into English via Google Translate. Click here to read the original article.

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