BBVA completes the purchase of 662 branches from Merlin for 1,987 million | Economy

BBVA and Merlin Properties have completed the operation by which the bank has repurchased 662 bank offices that were owned by the socimi (listed real estate investment company) in exchange for 1,987 million euros. As announced by the entity in a note sent to the National Securities Market Commission (CNMV), this Wednesday “the sale and purchase contract of Tree Inversiones Inmobiliarias has been made public.” This was the subsidiary with which Merlin controlled the offices and of which, from now on, BBVA has 100% of the shares. The bank calculates that the operation will have a negative impact of 200 million in its next quarterly accounts.

In a statement published on its website, BBVA specifies that the 662 transferred assets are 659 branches and “three unique buildings”. All of them were part of a larger package of real estate that the bank sold in 2009. In that year Tree, a company then controlled by the real estate fund of Deutsche Bank, acquired 950 branches in exchange for 1,200 million, as published citing market sources. The agreement included, in exchange, that BBVA stayed in the offices as a tenant. In 2014 the portfolio would pass into the hands of Merlin, which paid some 740 million for 880 branches, since some had previously been resold to the bank. Sales would follow later, up to the 662 assets remaining in Tree.

The operation was announced on April 1 and has taken a month and a half to complete, half the maximum time (a quarter) contemplated by the parties involved. BBVA, which had a commitment to remain in the properties until 2040, claimed at the time that the move would allow “significant economic savings”, as well as “greater flexibility in the management of its branch network”. As specified by the bank, the lease contracts included an annual rent update of 1.5 times inflation, which in the current context meant raising the price of those rents a lot.

Already then, the entity estimated that the impact on its results would be around 200 million, but assured that it would be “compensated by the expected accumulated savings.” Some of the spaces, sources of the operation also pointed out, were not even occupied, since the bank had stopped using them within the process of reducing offices that entities have undertaken in recent years.

Merlin Properties is the largest Socimi in terms of capitalization on the Spanish Stock Exchange, although with the sale of these properties it occupies second place in asset volume behind Colonial. In February, it announced the process of selling the BBVA branches, to which it attributed an appraised value of 1,750 million. The agreed price has finally meant a premium of 13%, although the effective income for the company is estimated at around 1,250 million, once 740 million of debt and derivative products that the real estate company had linked to Tree are discounted.