KKR Defies Sovereign Fears & Teams Up With Catalan Property Developer Corp

24 June 2016 – El Confidencial

One of the largest private equity funds in the world has arrived with a bang in the Catalan real estate market. KKR is finalising an agreement with the property developer Corp to invest together in new developments, according to three sources familiar with the talks. The agreement is pending the final signature only.

The operation represents a breath of fresh air for the Catalan real estate market, which in recent times, due to the sovereign crisis and the triumph of Ada Colau in Barcelona, has seen several international funds start to regard the region with distrust and give orders to concentrate their investments in Madrid. However, that tension seems to have now diminished.

The importance of these types of funds for domestic property developers is crucial, given that in the face of the shortage of bank financing and the gradual recovery in demand, they are teaming up on a large scale with these types of vehicles, which inject the money they need to build homes.

Although both Corp and KKR declined to comment, the sources consulted confirmed that the US fund is handling this operation through its recently created Real Estate fund for Europe, which has raised $739 million (around €655 million).

As a result of this operation, the firm led in Spain by Jesús Olmos, is redoubling its commitment to the real estate business, where its largest operation to date had been the purchase of a 5.4% stake in another high-profile property developer, Quabit, one of the great survivors of the crisis, which has started to set up its cranes again to build 476 homes.

Moreover, KKR held negotiations with Acciona to strengthen the ties that already bind them in the energy business, by also acquiring a stake in its real estate division, but it seems that that operation has been ruled out in the end. Moreover, two years ago, the firm hired Alejo Vidal-Quadras de Caralt to lead its office in Madrid and join the wave of funds investing in the domestic real estate business.

Property developer of the moment in Cataluña

Grupo Corp is one of the property developers of the moment in the Catalan market. Created in 2008 by Pedro Molina and Pau Castro, the two businessmen knew how to detect business opportunities at the height of real estate crisis that decimated the sector.

Bearing in mind the maxim that from great crises arise great opportunities, Molina and Castro took the wise decision to target the middle-class public, with modern designs and sustainable, high-quality homes, at affordable prices.

In fact, a snapshot of their properties could be summarised as homes measuring around 100 m2, with between two and four bedrooms, located in middle-class neighbourhoods and marketed at prices that range between €170,000 and €370,000.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake