18 June 2015 – Expansión
International investors are forming partnerships with local real estate developers to manage and develop new properties in Spain, whereby leveraging their market knowledge.
Spanish property developers are finding it difficult to access credit and foreign funds are looking for opportunities in the real estate sector, and so, alliances between the two are proliferating. International investors are interested in the high yield on certain Spanish assets and are reactivating the sector together with local companies, by making significant purchases.
There is a clear upwards trend and “it is going to strengthen”, since “it is becoming an alternative to bank financing”, says Jorge Almagro, Commercial Director of Residential, Urban and Land Development at the consultancy firm JLL. “Funds are looking for the expertise of local developers, who know the market well and who provide guarantees and even participate in transactions, by taking a percentage stake. In this way, the risk is minimised”, he adds.
One example is the agreement that was signed between the Socimi Lar España and Pimco. It is a framework agreement for a joint venture whereby the fund holds a 12.5% stake in Lar España, which has increased with the purchase of the plot of land located at Juan Bravo, 3 (Madrid). “Funds are looking for stable companies and the existence of strong, reasonable business projects”, says Miguel Pereda, CEO at Lar España.
Another example is the alliance between the real estate company Renta Corporación and the fund Kennedy Wilson, which began with the purchase and refurbishment of an office building into luxury homes in the neighbourhood of Chamberí in Madrid in December. Their second joint operation was closed in May, after Commercial Court number 3 in Barcelona awarded Kennedy Wilson and Renta Corporación ownership of the building at Puerta del Sol, 9 in Madrid.
Original story: Expansión
Translation: Carmel Drake