The Norwegian sovereign wealth fund, the largest in Europe, has applied a great snip to its portfolio of shares in Socimis and Spanish developers. By the end of 2022, the giant of the north had liquidated its positions in Metrovacesa and in Inmobiliaria del Sur (Insur), two of its great national bets in the sector. According to what is recorded on his website, when the year ended he had only raised his shares in Colonial and Neinor, two values severely punished last year.
Spain’s weight loss is of great proportions. When the 2020 financial year ended, the fund managed by Norges Bank had shareholding packages in up to eight national real estate companies, a figure that in 2021 was reduced to seven due to the departure of Quabit, which ceased trading after the purchase by Neinor. At that time, real estate holdings accounted for 10% of the portfolio of 74 Spanish companies owned by the Norwegian fund.
But in 2022, the number of participations has been reduced to five, barely 5% of the total of 72 Spanish bets from Norges Bank. It is the lowest level in recent years. The most notable movement is the departure of the capital from Metrovacesa, where at the end of 2022 the firm had a 1.27% stake. It had already reduced its presence in the promoter controlled by Banco Santander and BBVA in 2021.
But the firm has decided to clean the slate after a year in which Metrovacesa went from less to more. In March it hit the lowest for the year at 5.85 euros, but thanks to the takeover bid (OPA) launched by the Mexican tycoon Carlos Slim, it managed to close the year at 6.37 and avoid the harsh general correction in the sector. With these cards on the table, Norges Bank has decided to fold the candles in the value, which has started 2023 with increases of more than 5%, below in any case the average advance of the general Madrid index of which it is a part.
The departure of the capital from Insur is also surprising, which has historically been one of the great bets of the Norwegian fund among small Spanish real estate companies. In fact, when 2021 ended, it had 2.34% of the Sevillian company, which was the highest percentage participation of Norges Bank in the Spanish real estate sector. This package was already less than 2.60% in 2020, but the liquidation of the participation of a company that exceeds 10% revaluation in 2023 is especially striking.
By percentage and also by market value, Norges Bank’s largest position in Spanish real estate is the 1.82% it owns in Merlin Properties. A package that remains practically intact compared to 1.81% in 2021. Therefore, the firm maintains its commitment to a value that last year distributed an extraordinary dividend of 1.15 euros per share, with a return of 11%. . Norges also keeps intact its 1.65% stake in shopping center specialist Lar España.
Faced with the consolidation of these two holdings, the reduction in Aedas stands out from 1.58% in 2021 to 1.24% in 2022. It must be taken into account that the promoter controlled by Castlelake was Norges’ big bet in 2021 , when it more than doubled its share from 0.73% to 1.58%. But after a bad year on the parquet in which the Aedas price suffered a large drop of more than 40%, the sovereign wealth fund has decided to reduce risks in the value.
Norges Bank bets
The good news is borne by Colonial and Neinor Real Estate. Neinor’s stake in the socimi rises from 1.45% to 1.62%. Although he is still very far from the package of just over 3% that he reached in 2020, Norges ends the process of lightening his commitment to the company. After a large stock market decline of 27% last year, the fund believes it has upside potential. At the moment, it is already up 15% so far this year.
In the case of Neinor, the rise in participation is from 0.72% to 1.02%. However, Norges is still very far from the 2.44% that it reached at the end of the last decade. A reading of all the holdings shows that the fund is taking a further step in its risk reduction strategy in the Spanish real estate portfolio, which already began in 2021. Amid strong inflationary pressures and interest rate rises in Europe, the Norwegian bottom is put in a more defensive position than ever.