March Family Expands Stake in Inmobiliaria Colonial Amid European Real Estate Turmoil

The March family decided last Friday to expand its stake in Inmobiliaria Colonial given the demolition prices at which the Catalan socimi is trading. It did so through its investment arm, Corporación Financiera Alba, until it exceeded a 3% stake, a percentage from which it is mandatory to declare it before the National Securities Market Commission (CNMV).

But it was not a novel position, but to take advantage of the discount that investors are applying without exception to the entire European real estate sector. “It is a financial participation that already existed and that was slightly below 3% of the capital,” financial sources indicate to the newspaper EL MUNDO.

In any case, the March family has been seeing value in Colonial for years, since the real estate company was already among its investees, these same sources point out.

Corporación Financiera Alba reported over the weekend how last Friday the holding company already had 16.3 million shares of the Catalan socimi in its hands, in what was the first official communication to the regulator about its position within Colonial.

At the close of the session, this participation reached a market value of 85.9 million euros.. The Marches took advantage of the last day of a week that was dyed black for the real estate company to buy more shares of Colonial, with its share at its lowest since November 2022.

Only in the last seven sessions its titles have lost just over 7% of their value, close to 200 million euros when it capitalizes 2,800 million. With that of this Monday, the company accumulates seven consecutive sessions of falling stock. Its national comparable, Merlin Properties, has behaved along the same lines, accumulating losses in the market that exceed 7.3%.

What is happening? The Socimi led by Pere Viñolas is the best example that in times of massive sales the market does not discriminate because its business has nothing to do with what is currently happening with Chinese brick.

Owner of prime offices in the financial districts of Paris, Madrid and Barcelona, the sales are devastating the price of European real estate due to doubts about the liquidity of the sector in China and after the US subsidiary of Evergrande invoked US laws to file for bankruptcy (although now back off and say it’s not bankruptcy). But it’s not the only motive.

In Europe, the sector that brings together the largest real estate companies on the continent has accumulated losses of 12% since January and has completely distanced itself from a year that points to profits.

The Stoxx 600, which is the reference index that averages all the sectors, rises 5% in this 2023, so the distance between the two already exceeds 17 points. Historically, the brick is directly related to the progress of the economy, so if it grows more houses are built and the opposite happens in times of recession, which seems to be the case.

This makes investors prefer to take their money and return to the market, compared to real estate investment, which is undoubtedly less liquid and is going through delicate moments.. The industry itself knows.

Its top managers have been recognizing for a year and a half that, as a result of the economic slowdown, the valuation of their properties was going to fall. and so it has been.

Both Colonial, dedicated exclusively to office rentals, have adjusted the value that their buildings would have today on the market; as Merlin has done, which also includes shopping and logistics centers in this mix.

Be that as it may, the accounts still do not come out. If the valuations of the valuers in June are taken as a reference, Colonial should be trading (if it adjusts to it) at a price of 11.5 euros per share.

It is more than double where it is trading now after the falls. Merlin Properties should have a price of 15.4 euros when trading below 8 euros. And this, if the potential of the two socimis is trusted, means buying at very attractive prices, which is the financial strategy that Corporación Financiera Alba would be following.

In any case, the March family is an expert in real estate investment. At the end of December, it declared that it had 2,885 million invested in the stock market through eight listed firms, all in Spain except the Italian Technoprobe.

This market value has increased by 6%, to over 3,060 million euros, to which must be added the now known stake in Inmobiliaria Colonial, over 85 million. Its most important company continues to be Naturgy, where they hold 5.44% of the capital that today is valued at 1,350 million euros, some 460 million more at the end of 2022.

In fact, thanks to its investment in the gas company chaired by Francisco Reynés, the holding manages to keep its numbers in the green, since most of its investees, companies such as Acerinox (where they hold 18.96%), Viscofan (with 11 % of capital) and CIE Automotive (with 10%) suffered losses on the stock market in the year.

They also have 5% of Global Dominion and 14% of Ebro Foods, world leader in the marketing of pasta and rice.