Quabit Joins Forces With US Fund Avenue Capital
15 December 2016 – Valencia Plaza
Quabit Inmobiliaria and the US investment firm Avenue Capital have signed a binding framework agreement for a financing line amounting to €60 million from funds advised by Avenue Europe International Management, L.P.
The available funds under this credit line will be used to acquire buildable urban plots of land in the Community of Madrid and the surrounding area, as well as in other regions with high potential for demand.
After successfully completing a capital increase last year, the company chaired by Félix Abánades, has been holding intensive negotiations with different investment funds for the last few months. It has now closed this agreement with Avenue Capital, given the professionalism of the investment firm and its certainty for the great potential for growth and profitability in the Spanish real estate sector.
With the signing of this agreement, Quabit Inmobiliaria is continuing to fulfil the objectives set out in its strategic plan to 2020. Specifically, it means that it is fulfilling another one of the most significant milestones in its business plan regarding the raising of financing to undertake new investments and develop new residential projects.
“The strategic agreement with Avenue is a perfect symbiosis for generating value. On the one hand, Quabit has more than 20 years of experience, an expert team in the management of land and real estate developments, sensitivity and market knowledge, an established financial structure and a healthy equity position. All of this, combined with Avenue’s investment capacity, gives us the capability to start growing again and to become one of the key players in the consolidation of the real estate business in Spain once more”.
The most important terms of the agreement are:
– The funds from this credit line will be used to finance 70% of all land acquisitions. The remaining 30% will be financed by Quabit.
– The funds must be drawn down during the first year of the contract, and repaid when the credit line matures (after 4 years).
– Quabit may make early repayments from month 18 onwards and it may reuse the funds to make new investments in land.
– A new company will be constituted for each one of the plots of land that are financed. Each company will be owned 100% indirectly by Quabit.
– Moreover, Quabit will provide Avenue with warrants over its shares, which will allow the investment firm to own up to 6% of the real estate company’s share capital if it subscribes to new share issues in several tranches. During the first two years of the agreement, the average subscription price will be €3.25/share; and during the last two years, it will be €3.75/share. The use of the different warrant tranches will depend on how much of the credit line is drawn down.
Quabit and Avenue have set a deadline of 28 December for signing all of the documents that form part of this agreement, which will also be the start date for the line of credit’s term.
Original story: Valencia Plaza
Translation: Carmel Drake