Except for a last-minute surprise this Thursday, Spanish SOCIMIs will continue to enjoy their special tax regime that allows them to pay corporate tax at 1%. And this is palpable on the parquet. The socimis within the Ibex 35, Inmobiliaria Colonial and Merlin Properties, rebound on the stock market and now trading above previous level to make it known that the Government and its partners were preparing a tax reform that directly affected these real estate companies and compromised their future dividends.
But, finally, the proposal remained a proposal after the Finance Commission this week. Although the Government is still in the negotiation phase with the rest of the political parties, it seems unlikely that a tax reform for investment groups in real estate assets that allocate, at least, , 80% of its profits to the distribution of dividends. From the bottom seen last week, Merlin rebounds 8.9% while Colonial advances 6.6% to 5.54 euros per share. That is to say, they erase the last collapse and Merlin returns its annual accounts to positive, with a rise of 4.2%, while Colonial reduces its fall in the year to 15.3%, compared to the almost 21% that it lost after knowing the tax.
Several analysis firms left their valuations under review due to the expectation that these companies would find it necessary to allocate a lower amount to shareholder remuneration or that their ability to generate cash would be diminished. Colonial estimated that its profit per share could fall between 1% and 2% if it had to pay a tax under the same conditions as the majority of companies in this country. In the case of Merlin, its cash flow (FFO, fund generated by operations in a real estate company) would be cut by 8.5%, as recalled from Renta 4. However, the reality is that, today, The valuations of the Ibex 35 SOCIMIs are higher than they were two weeks ago.
The market consensus collected by FactSet estimates that the target price for Merlin Properties is 12.97 euros, which implies a potential of almost 26%. With this assessment, the company It would be listed again, more than four years later, above pre-pandemic levels. And, the truth is that up to a dozen experts see Merlin setting new historical highs on the stock market in the coming years, surpassing the current ones established at 13.41 euros.
On the part of Inmobiliaria Colonial, the consensus target price rises to 6.97 euros, which would imply a journey ahead also of 26%. Trading at this level would mean seeing Colonial again at June 2022 levels. This same Wednesday, JB Capital showed new optimism with the SOCIMI and raised its recommendation from hold to buy.
In the midst of this entire process, both companies presented their results for the third quarter of the year that exceeded market expectations, according to Bankinter.
Even with these latest increases, both companies continue to offer attractive discounts on the stock market with respect to the value of their assets (NAV). Specifically, Colonial is acquired at a 43% discount to its NAV. The real estate company established in its semi-annual results (the data is reviewed every six months) the value of its assets at 9.66 euros per share. This figure meant seeing a new reduction compared to the 10 euros set at the end of 2023. The cut is even greater year-on-year, when in the first half of the previous year the NAV was 10.88 euros.
For its part, Merlin’s discount drops to 32%. In its case, however, the company modified the value of its assets upwards in the last review, to 15.11 euros, compared to 15.08 euros per share at the end of 2023. However, as As with Colonial, the figure is lower than the same period of the previous year, 15.36 euros.
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