3 April 2018 – Expansión
The American investment fund Oak Hill Advisors has arrived in the Spanish residential market hand in hand with the recently created management firm Íbero Capital Management. The fund is planning to allocate at least €400 million to finance the construction of homes in the country.
Walter de Luna, former CEO of Acciona Inmobiliaria and Executive Chairman of Íbero Capital Management, explains that, given the lack of modern, structured capital for the construction of residential developments and the high-level of unmet demand for new homes, the objective of the platform is to channel financing from Oak Hill Advisors and to offer customised solutions for the real estate project.
Oak Hill Advisors, with more than USD 30 billion under management, has invested more than €1 billion in Spain through corporate loans and investments in assets and companies. The alliance between Íbero Capital Management represents its debut in this segment.
The fund is currently negotiating to offer €50 million in financing for the development of around 500 homes in several developments in the Costa del Sol and Madrid. The heads of the platform explain that they will select new projects in other regions and open the door to extending their coverage to Portugal.
Sources at Íbero Capital Management explain that the requirement to access financing is that the property developers’ plans are “commercially viable” with a minimum of €5 million. Moreover, unlike what happens currently with bank financing, they will offer funding for the purchase of developable land or plots where little (urban planning) management required.
Another difference with respect to current bank financing lies in the fact that property developers do not need to have a certain volume of pre-sales to access the funds; moreover, payment of interest and commission will not be triggered until the homes are handed over.
The investment and divestment horizon for the €400 million financing initially planned has been established at six years. “The fund has the capacity and appetite for more”, adds Luis Moreno, Director General of Íbero Capital Management.
The financing solutions proposed by Íbero Capital Management are mainly aimed at small- and medium-sized property developers, although the firm is also open to reaching agreements with large listed companies for land co-investment agreements or specific projects.
Original story: Expansión (by Rebeca Arroyo)
Translation: Carmel Drake