|Shares Out. (in M):||645||P/E||0||0|
|Market Cap (in $M):||692||P/FCF||0||0|
|Net Debt (in $M):||711||EBIT||0||0|
1. Greater liquidity and expanded shareholder base: Shares in Spain include rights to limit the dilution of existing shareholders. Slim was hoping that existing shareholders wouldn’t participate in the rights offering, allowing him to win even more of the company. However, we have been encouraged by the stock’s recovery, indicating that new investors are buying stock to participate in the offering.
2. Announcement of housing projects: The only way to know that Realia has started two housing projects is by going to their website or talking to management. They didn’t disclose it in their financial report – technically two small housing projects don’t impact financials, but it’s a huge shift in the company’s strategy. They are starting a third housing project. Eventually, shareholders will reprice the company to values closer to Neinor, Aedas and Metrovacesa, three publicly-traded Spanish housing firms.
3. Change in accounting method would raise the value of the land bank: Polygon Capital is moving assertively against Realia’s improper accounting method of the land bank. If Realia doesn’t change it voluntarily, there is an avenue to report the company to the ICAC (Instituto de Contabilidad y Auditoria de Cuentas), the government’s organization to supervise that publicly-traded companies in Spain have financial that converge with financial information adopted by the European Union.