23 January 2015 – Expansión
The real estate company Renta Corporación has begun 2015 with its eye once again on acquisitions. With a healthy balance sheet and the threat of bankruptcy behind it, the company has agreed an alliance with two overseas funds to buy buildings amounting to €500 million in Madrid and Barcelona this year.
Under the plans, Renta Corporación will contribute 10% of the capital and will act as the manager of the transactions, whilst the funds will provide the remaining 90%. Together, they will spend €250 million and the other half, up to €500 million, is expected to be financed by banks.
One of the funds is Kennedy Wilson Europe Real Estate, with whom the real estate company signed a partnership agreement last December. And its alliance with the second investment fund is in the “advanced” stage, explains the Chairman of Renta Corporación, Luis Hernández de Cabanyes.
The €500 million will be used to acquire a range of buildings including offices, residential properties, hotels, shopping centres and land. Renta, which has historically focused on the purchase, renovation and sale of residential buildings, will hereby enter other segments of the real estate market.
At the end of December, Kennedy Wilson Europe Real Estate and Renta Corporación closed their first purchase under the new alliance, in Madrid. The target, an office building in Calle Santísima Trinidad, will be converted into luxury homes, with a planned investment of more than €5 million.
The Chairman of Renta Corporación considers that “financing will experience an upturn over the next twelve months”. The banks “are in much better shape, from a solvency perspective, than in 2008”, he said.
Hernández de Cabanyes points out that Renta Corporación’s vocation has always been the purchase of “buildings with potential for value generation”. Now, with the help of these funds, “we have the peace of mind that comes from having more financial muscle”. It may take anything from six months to four years for the alliance between Renta and these funds to make purchases, create value and realise sales.
According to Hernández de Cabanyes, the prices of buildings in Madrid and Barcelona are currently 55% of the peak values they reached in 2007. In the case of land, its current value amounts to just 25% of the prices seen before the burst of the housing bubble.
In November, Sareb, Popular, ING and Banco Caixa Geral all invested in the share capital of Renta Corporación, in exchange for the cancelation of their debt in the company.
Original story: Expansión (by Marisa Anglés)
Translation: Carmel Drake