Shares in Spanish housing firm Metrovacesa slip below last week's IPO price


Shares in Madrid-based residential developer Metrovacesa, one of the biggest casualties of Spain's recent recession, fell in trading Monday to €15.27, below its IPO price last week of €16.50. Its bank shareholders had brought the firm back to the stock market at a company value of €2.5bn.

The stock was down 2.70% on Monday even though the issue price itself was set lower than Metrovacesa’s net asset value of €2.69bn. But the pricing indicated the determination of Metrovacesa's shareholder banks - SantanderBBVA and Banco Popular - to start to liquidate their exposure after they were obliged to step in to support the company at the end of last decade. With around one-fifth of its assets in politically troubled Catalonia, lead managers cut the expected range of its flotation price. In the IPO, Santander and BBVA sold just over 39m of their stock – 25.8% of total issued - to raise €646m.

At IPO, CEO Jorge Perez de Leza said the new management team was excited to bring the IPO of Metrovacesa, "a company with 100 years of history that, with a unique and high quality portfolio of €2.6bn of gross asset value and a potential to deliver more than 37,500 homes, is the largest homebuilder in Spain." He added: "We believe that it is the right time in the cycle to be long in land as it provides unique visibility of future profitability and the ability to generate a significant amount of cash flow that can be returned to shareholders in the coming years."

The three banks controlling Metrovacesa are Santander, with the main stake of some 70% of equity, BBVA with 20.5% for BBVA and Banco Popular with 9%. The banks bailed out the firm in 2012 at the depth of Spain's housing crisis and after 50 years of trading on the stock exchange. Four years later its commercial real estate was bought by Spanish REIT/SOCIMI Merlin Properties, trimming Metrovacesa down to a tight focus on housing development.

At IPO last week – which marked the fourth in its history - Metrovacesa had around 2,300 homes under construction, targeted for handover to owners through 2020, and for which sales commitments amounted to almost €75m. It intends to divest some €500m of its land this year and next, assuming demand holds stable. Unlike Neinor and Aedas, two residential developers that beat Metrovacesa to market, and which hold plots zoned for immediate development, some 26% of Metrovacesa’s land still needs to be classified.

Metrovacesa traces its origins back to 1918 and the foundation of the construction firm Urbanizadora Metropolitana, one of three groups that in 1989 merged to form Metropolitana Vasco Central (Metrovacesa). The interests of the three were largely confined to housing and office property but the newly-merged entity expanded across Spain and moved into other assets such as shopping centres and car parks. The firm merged with housing development firm BAMI in 2000, and in 2005 acquired a majority stake in French REIT/SIIC Gecina, subsequently sold.

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