15 September 2017 – Expansión
A new alliance between international funds and Spanish real estate companies has been forged in the market. This time, the stars are the fund Morgan Stanley Real Estate Investing and the Madrilenian property developer Gestilar.
Created in 2009 by Javier García-Valcárcel (pictured above), the real estate company specialising in residential property development has become a leading player in the north of Madrid, following the construction and completion of more than 800 homes in just four years. With García-Varcárcel as the sole shareholder, the company launched the so-called Project Orizone, with the aim of finding a strategic partner. Through a process led by A&G, more than a dozen international funds interested in the project were invited to participate, and in the end, the winner was the fund owned by Morgan Stanley.
“The investor was looking for a partner in Spain and after a year of negotiations, we have reached an agreement. We were never looking for a corporate operation but rather a strategic partner to work with over the next four or five years”, explains Javier García-Valcárcel, President of Gestilar.
The agreement between the fund and the real estate company has materialised in the creation of a joint venture, in which the former will hold a majority stake of the share capital, whilst Gestilar will take care of searching for the land and of the construction and sale of the homes. “The objective is to launch 14 or 15 new projects, with around 1,000 homes”, said the executive.
Currently, Gestilar has a portfolio of 1,000 homes under development, which will generate revenues of €500 million for the company. Its land portfolio has involved investment of more than €350 million.
After closing the agreement with Morgan Stanley, Gestilar has already selected three plots of land to contribute to the joint company, to which it will also incorporate new assets soon, says its President.
“Although our current developments are located in Madrid and Cataluña, following the agreement with Morgan Stanley, we could increase our activity right across Spain”, explain sources at the company.
This is not the first time that the real estate company has reached an agreement with a fund to invest jointly in housing. Nevertheless, on this occasion, it is a long-term alliance for more than one development.
Return to Spain
The agreement between Gestilar and Morgan Stanley represents the return of one of the investors that backed the Spanish real estate market most heavily before the burst of the bubble.
In this way, in 2006, the American fund announced that it had €1,000 million proceeding from various funds to invest in real estate assets in Spain.
As part of its commitment to this market, Morgan Stanley launched a joint venture with another real estate group Lar (managers of the Socimi Lar España). In February 2005, the fund joined forces with the real estate company owned by the Pereda family to construct shopping centres and holiday homes on the coast. In 2009, they closed that company after investing in 5 holiday home projects (comprising more than 1,500 units) and ten shopping centres.
Original story: Expansión (by Rocío Ruiz)
Translation: Carmel Drake