Spain's Colonial turns to profit, cautious on European real estate (updated)

MERLIN Properties SOCIMI

30/07/2024 17:26

(Adds quote from CEO, guidance, shares year-to-date and
context)
    By Matteo Allievi and Javi West Larrañaga
       July 30 (Reuters) - Spanish real estate group
Inmobiliaria Colonial  COL.MC  turned to profit in the first
half of 2024 as the value of its assets started rising again,
but it remains cautious on the short-term outlook while interest
rates remain high, it said on Tuesday.
    Over the period, the Barcelona-based firm reported an
attributable net profit of 86 million euros ($92.92 million)
from a loss of 347 million euros one year ago.
    Colonial said the value of its assets increased 1%
like-for-like to 11.27 billion euros, reversing the downward
trend which has weighed on the company's profit for more than
one year.
    Real estate companies such as Colonial and rival Merlin
Properties  MRL.MC  make profit on the rental of their property
assets and they have to include in their results the impact of
an updated valuation of their properties every six months.
    Central banks' tightening monetary policy took a toll on the
real estate sector, but investment in properties are expected to
pick up as interest rates decrease.
    "There are not yet many people willing to sell, or willing
to buy, therefore I believe that we will have to remain cautious
for the rest of the year," CEO Pere Vinolas told reporters. 
    Colonial's portfolio, including buildings located in Spain
and France, achieved a 6% increase year on year in like-for-like
rental income to 192 million euros as lease contracts were
adjusted upwards due to high inflation and occupancy levels
stayed at 97%.
    Colonial reiterated its 2024 earnings per share guidance
between 0.30 and 0.32 euros this year, mostly in line with 0.32
euros posted in 2023.
    Shares were down almost 20% year-to-date after Tuesday's
market close. 
        
  
($1 = 0.9255 euros)

 (Reporting by Matteo Allievi and Javi West Larrañaga; Editing
by Susan Fenton and David Evans)
 ((matteo.allievi@thomsonreuters.com;))