Société Générale punishes the Socimis: sell Colonial and keep Merlin

In the case of Inmobiliaria Colonial, Société Générale analysts place the target price of the Catalan Socimi at 6.6 euros per share, which implies a decline of 17% from its current prices on the stock market at 7.96 euros per share.

From the French entity they wonder why Colonial has not taken the opportunity to increase its diversification and scale as a true pan-European office consolidator. “Your chosen branch office focus is sensitive to the economic cycle and has been disrupted by the Covid-19 pandemic. We are concerned that the sharp drop in office rentals in 2020 will persist “, they emphasize.

Société Générale punishes the Socimis: advises to sell Colonial and keep Merlin

For their part, they recommend keeping Merlin Properties’ securities with a target price of 8.3 euros per share, which gives it a potential upside of 7% at this time. Société Générale comments that Merlin Properties is well positioned to face Spain’s country risk, which has been particularly affected by the pandemic.

In addition to the recommendations on Merlin Properties and Colonial from the French investment bank, they have analyzed other European Socimis, advising the sale of the German Alstria and the French Gecina.

In the opinion of Société Générale experts, the real estate market has advanced too much due to the expansionary monetary policies carried out by central banks, while Covid-19 increases risks.

The truth is that the two Spanish Socimis listed on the Ibex 35 are not going through their best moment due to the effect of Covid-19, which implies a lower demand for offices and in the short term the closure of companies, which invites investors to take precautions with this sector.

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If the fall of both companies this 2020 is added, they represent a loss of joint market capitalization of 4,000 million euros, 2,300 million was left by Merlin Properties and 1,700 million Colonial lost last year.

The consensus of the analysts . advises to keep Colonial shares with an average target price of 8.49 euros per share, which gives it a potential of 6.8%. Seven firms recommend buying their shares, six advise holding and five selling.

In the case of Merlin Properties, it continues to have the support of analysts, since it has a general purchase council with a potential of 16.7% to 9.05 euros per share. It has 12 buy recommendations, four to keep and only three to sell.

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