GreenOak Prepares New €900M Spanish Residential Fund

16 February 2017 – Cinco Días

The firm GreenOak Real Estate is preparing its second dedicated real estate fund in Spain, which is expected to have an investment capacity of around €900 million. On this occasion, the new vehicle will place a greater focus on the residential construction segment in Madrid and Barcelona above all.

Housing is attracting international funds. The enormous commitments pledged by Värde Partners, Lone Star and Castlelake have been known for several months and now, the US fund GreenOak is joining the party. (…). The recovery in the residential sector is attracting lots of overseas investors given that it offers higher returns than other real estate segments such as retail, offices and industrial warehouses.

And so GreenOak has now opened its second fund in Spain, from its British office, which is led by John Carrafiel. Its investment capacity is expected to amount to almost €900 million, both in terms of capital secured as well as additional bank financing, according to market sources. Some of those resources will be allocated to housing, both the renovation of existing stock and new builds. The fund will also develop buildable land in established residential areas, where active demand exists due to the lack of development during the years of the crisis.

The search for opportunities will focus on Madrid and Barcelona, markets where almost all new builds are being sold, according to sources in the sector, due to the demand that has built up in recent years. In order to construct its projects, rather than creating its own real estate company like other funds have done, GreenOak will establish partnerships with local developers that specialise in different markets.

GreenOak was created in 2010 by three partners from Morgan Stanley’s real estate business. Its main headquarters are located in New York, London and Tokyo; and Spain has been a strategic investment location since the beginning.

In 2015, the firm announced that it had raised its first fund amounting to €700 million, with a view to investing in property in our country. That vehicle has now completed around 15 operations in Spain, primarily in the logistics sector.

The first fund entered the housing sector for the first time with the renovation of a building on c/Fuencarral 77 in Madrid, close to the Tribunal metro stop. (…). The firm also has experience in residential construction in other countries, such as in the USA.

Last year, GreenOak also acquired four office buildings from Santander in the Avalon business park, on the Julián Camarillo industrial estate in Madrid.

It completed its major purchase in a single operation last year when it acquired the Las Mercedes business megacomplex, at kilometre 11 on the A-2, next to Barajas airport. That park contains nine office buildings with a surface area of 78,000 m2. According to sources in the sector, it acquired it for around €140 million from Standard Life.

Moreover, the first fund has been particularly active in the logistics segment, closing more than a dozen operations. In fact, the firm has considered putting up a portfolio of some of its industrial assets up for sale, just a year after acquiring them.

In addition, the firm debuted its own Socimi, called Gore Spain Holdings, on the Alternative Investment Market, on 19 January 2017, with an initial value of €144 million. That company owns 20 assets in Madrid, Barcelona, Zaragoza, Valencia, Bilbao, Murcia and Sevilla, including logistics warehouses and the Avalon business park in Madrid.

Original story: Cinco Días (by Alfonso Simón Ruiz)

Translation: Carmel Drake

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