Colonial will convert an office building in Barcelona into a hospital – Idealista/news

The largest listed company in Spain, SOCIMI, has new plans to build an office building in Barcelona. In particular, the company intends to turn the office building into a hospital, Idealista/news reports. These intentions can be confirmed in February next year by the company’s president, Juan José Bruguera. In fact it was his own Bruguera is the one who set this operation in motion. during the tenth property sector meeting organized by IESE in collaboration with Tinsa and Savills.

“Our assets located in Spain are almost completely occupied, with the exception of the 22@ area in Barcelona, ​​where there is an oversupply in the office market. We are considering changing the use of one of our buildings,” he said during the meeting. “It will be a hospital,” sector sources said.

Bruguera also outlined his position on asset price adjustments during an event organized by IESE and announced his company’s next plans in this section. “Analysts are very influenced by how things are going in the US offices. The investor lost guidance on value due to the rate storm. The real estate sector will make a pretty significant adjustment to their portfolios and that’s where our focus will be on where the value is. . We will definitely announce this in February and perhaps return to the values ​​of 2018,” he said.

Bankinter supports Colonial on the stock market

A few weeks ago, Banker gave Colonial some oxygen after failures at Jefferies and Morgan Stanley. The financial institution’s research team raised its share price target for property giant Ibex 35, improved its earnings forecasts for this year and gave it a stock market upside of nearly 20%. A breath of fresh air after the reports of two international investment banks.

Before Bankinter’s recommendations, Morgan Stanley decided to downgrade Merlin Properties and Colonial, given that both companies had risen too much in the stock market in the midst of lower interest rate expectations, and that their current prices do not reflect the companies’ fundamental values. According to the company, its current prices underestimate the risk of a possible new correction in the stock market.

In its turn, Jeffries published a report in which he pointed out the need for a Colonial keep selling assets to reduce your leverage and that its debt will limit future earnings growth, according to the investment bank.

He also believes that Market consensus earnings for REITs for 2024 are very high, although they are considering a fall. For now, The stock market forecasts a 17% fallAs a result, the company’s share price will be approximately 5 euros per share.

However, Bankinter is more optimistic and sees improvement in the company led by Pere Viñolas. According to its analysts, which suggest that the value of Colonial’s assets will continue to decline, “the market assumes an overly conservative scenario is trading at a 45% discount to its net share price.”

Analysts say that “while the outlook for office assets is weak due to weaker demand and less room for rent increases, Colonial has a portfolio of the highest quality offices in Europe. The vast majority of its assets are located in locations ‘Premier” in Paris, Madrid and Barcelonawhere we expect occupancy levels to remain high given that companies will concentrate their activities in these locations due to brand image and proximity to the customer.”

Bankinter also highlights that 2024 will be a “favorable” year for the real estate sector due to factors such asexpected reduction in interest rates in the eurozone, “which will lead to less pressure on the cost of financing and greater investment attractiveness compared to risk-free assets”; A moderate economic growth and strong labor marketthat “should help support demand for office assets”; and one inflation is still high (more than 2%), which “will increase income.”