Merlin targets €1.5bn Spain IPO

A new property company could become Spain's biggest flotation since 2011 if it achieves its target.

Merlin Properties, the Spanish SOCIMI, is attempting to raise up to €1.5 billion via an initial public offering (IPO).

The 'cash box' SOCIMI, which is Spain's version of a REIT, is being orchestrated by MAGIC Real Estate, which has almost €5 billion of assets under management in Spain, Portugal and Morocco, and whose founding partners are Ismael Clemente, Miguel Ollero and ex-RREEF and Brookfield Asset Management executive David Brush. Clemente is to be chairman and chief executive officer of Merlin, while Ollero becomes chief financial officer and COO. Brush is the company's new chief investment officer.

Details of the company's deal pipeline accompanied a statement about its intention to float on 30 June in what could become the largest flotation in the Spanish market since July 2011 and the third largest in Europe in the past 12 months.

Merlin has entered into an irrevocable undertaking, though dependent upon the success of the IPO, to acquire for €739.5 million a company called Tree Inversiones Inmobiliarias, which owns a portfolio of commercial properties leased to Spanish bank, BBVA, through long-term lease contracts.

But the company's mandate is broad in that Merlin will scout out commercial property in the Iberian region with a focus on Spain’s main cities and, to a lesser extent, on Portugal. It will mainly invest in offices, shopping centres, industrial and logistics facilities and urban hotels, all of which will be in the core and core plus segments.

The company added that today the CNMV (Comisión Nacional del Mercado de Valores) which is the Spanish Financial Securities Markets Regulator, has approved and registered the company’s IPO prospectus. The roadshow and the bookbuilding period commenced today, therefore. It also reported that executive management team would make an investment in the company of €7.5 million, which represents 0.5 percent of the company's share capital.