Excem to make its début on the MAB with a valuation of €16.8 million

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Published in Expansión on July 2018

The REIT devoted to renting rooms to millennials is set to list its shares at €1.40 apiece.

The REIT will make its début with a portfolio of 28 apartment buildings encompassing 181 rooms for rent, all of which located in central Madrid.

The property manager, set up in 2015, has set its sights on investing in urban properties located in the city centres of Madrid, Barcelona and other major Spanish cities whose rooms are suitable, following refurbishment and decoration, for rental to students and young professionals.

At present the REIT is looking to expand its business model from the capital to cities presenting “strong demand for and scant supply of this type of rental assets”, including Barcelona, Seville, Valencia, Malaga, Bilbao and Santiago de Compostela, according to its IPO prospectus.

The company is 40%-owned by Excem, a group owned by the Hatchwell family. Indeed, the REIT is presided by David Hatchwell, who before joining the family group worked at Goldman Sachs and HSBC.

In order to fund the execution of its investment and growth strategy, Excem’s REIT has completed several rounds of equity raises since 2016 and has mortgaged the 28 properties in its portfolio.

At present the company’s leverage stands at 38.5% of the value of its assets, which is well below its self-imposed limit of 70%. “HOMIII.COM”.

The REIT markets the rooms it rents on a proprietary online platform (www.homiii.com) and through specialist firms. Since September of last year it has had an agreement with Uniplaces, a UK firm specialised in booking accommodation for students in several European cities.

According to the company’s prospectus, at the end of last March, the firm had 175 room lease agreements (96.7% of its portfolio) with multiple tenants.

Under these agreements, the tenants pay monthly rent and make a contribution to the shared utilities (water, electricity, gas, internet and heating); they must also make a deposit of one months’ rent and utilities.

Excem aims to generate a pre-tax yield on each asset of between 4% and 6% (calculated as pre-tax income per rental over the investment made in the property).

The REIT does not rule out the possibility of putting an expiry date on its existence, i.e., the possibility of selling the properties once the minimum three-year holding period stipulated for REITs has elapsed or of unwinding the company after year seven “depending on what the shareholders agree as a function of the company’s and portfolio’s performance and outlook”.