September 30, 2023

Valores Simesa Trims Net Loss in Full-Year 2021 Versus 2020

Medellin-based real-estate developer Valores Simesa – 66% of which is owned by Bancolombia’s investment-banking division — announced March 16 that its full-year 2021 net loss came-in at COP$4.56 billion (US$1.2 million), an improvement over the COP$12.47 billion (US$3.26 million) net loss in 2020.

Valores Simesa –created via a spin-off from the long-defunct “Siderúrgica de Medellín” steel mill here nearly 22 years ago – mainly invests in real estate, subdivisions and commercial/industrial projects, including the “Ciudad del Rio” residential/commercial development in Medellin, the same site of the former steel mill.

“After a difficult year 2020 for both Valores Simesa and the economy in general, 2021 brought us a more favorable outlook, a good performance of the real estate sector and a slightly more optimistic environment, with the hope that the economic and social crisis unleashed by Covid-19 has begun to come to an end,” according to the company’s announcement.

“After several months of negotiations and after defining by the shareholders’ meeting how to resolve conflicts of interest, in January 2021 we were able to sign the new agreement for the sale of lots ‘B2’ and ‘B4’ in Ciudad Del Río, allowing to guarantee the continuity of the project.

“Similarly, talks were resumed for the sale of lots ‘B5’ and ‘B6,’ with the corresponding signing of contracts in October, and progress was made with interested parties in lot ‘A16,’ for the development of what could be the first rental housing project in the city.

“At the end of 2021, the company had a loss of COP$4.56 billion [US$1.2 million] explained by a lower commercial appraisal of lots B1, B3 and B5 in Ciudad Del Río, due to the fact that the demand for real estate projects for commerce and services had not yet picked up.

“Negotiations are currently being carried out with the municipality of Medellín, seeking to enable, in the short term, the possibility of building housing on the lots located on the edge of the ‘partial plan,’ based on the transformation that the sector has undergone since the issuance of the decree,” the company added.

Net assets at year-end 2021 dipped by COP$13 billion (US$3.4 million), to COP$253 billion (US$66 million), “mainly explained by the lower value of the appraisals of the aforementioned lots and the payment of the repurchase of shares,” according to the company.

Liabilities totaled COP$15.9 billion (US$4.15 million), “where the most significant items continue to be the deferred tax liability at COP$9.8 billion [US$2.56 million] and dividends payable, at COP$2.5 billion [US$653,000],” according to the company.

With the Covid-19 crisis seemingly moving into recovery, “this trend is expected to continue throughout 2022,” helping to boost demand for residential and commercial real estate, according to the company.

“As for construction, a sector that directly impacts Valores Simesa, this sector presented a historical recovery that was leveraged by the 200,000 subsidies from the national government” during 2021, according to the company.

“As of December 2021, the unemployment rate in Colombia was 13.7%, showing a reduction of 2.2 percentage points in relation to the same month in 2020, with just over 1.2 million jobs missing to reach employment levels of 2019.

“In 2022, the economy is expected to continue its path towards recovery, framed by the political uncertainty brought about by the legislative and presidential elections, as well as the eventual emergence of new variants of Covid-19 that may impact different economic sectors.

“A good year is also expected for the sale of new homes and the resurgence of demand for offices to the extent that the health crisis caused by the pandemic is left behind,” the company added.

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