Sabadell Seeks Investors to Develop More Than 2 million m2 of Land

28 December 2017 – Expansión

The bank, through Solvia, has spun off the management of assets worth €600 million into a new company, which will be headquartered in Madrid.

Solvia, the real estate management company of Sabadell, wants to replicate the operation that it carried out in the hotel sector earlier this year, when it sold its hotel business to Blackstone for €630 million, generating profits of €55 million.

As such, the entity has decided to carve out its activity relating to the development of land into a new company called Solvia Desarrollos Inmobiliarios. That company will manage 2.22 million m2 of land in total, equivalent to almost 300 football pitches. The construction of 4,000 homes, across more than 84 developments, is already underway.

The portfolio of assets under management amounts to €600 million, equivalent to approximately 15% of Solvia’s total income. That size places it in the second division in the sector, just behind the listed real estate companies, led by Metrovacesa, Neinor, Aedas and Vía Célere. The largest owner of land in Spain is Sareb.

This new company will be headquartered in Madrid and will be led by Francisco Pérez, former CEO of the Catalan property developer Vertix. “The idea is to grow hand in hand with the large overseas investors that are looking for high returns in Span, but which do not have any structure here. Most of the funding will come from outside of the country”, explains Javier García del Río, CEO of Solvia (pictured above).

The plans

Solvia Desarrollos will develop not only Sabadell’s land – the bank owns 83% of the portfolio – but also plots owned by family offices that the bank manages and the developments that Sareb is granting it. Solvia was one of the four entities chosen by the bad bank in 2014 to help it sell its homes to the general public. Specifically, it took over the problem loans proceeding from Bankia, Ceiss and Banco Gallego.

Sabadell has been developing land since 2013 and has grown a considerable business in that time. It was the first bank to get back on the horse after the real estate bubble burst. “Land is behaving magnificently, although we do not expect to see any abrupt growth. Areas that were very risky in 2013, such as Huelva, are no longer”, said García del Río.

The experts in the sector endorse his opinion. “The turning point in this market came in 2015 and 2016. This year has been exceptional, with more than 20,000 transactions involving land”, explains Samuel Población, National Director of Residential and Land at the consultancy firm CBRE. He calculates that property developers are capable of generating margins of between 18% and 22% from the construction of private housing blocks in Spain.

“The funds that left Spain have returned and investors are interested in buying land”, says José García Montalvo, Professor of Economics at the Universidad Pompeu Fabra and an expert in the real estate sector.

Solvia manages a portfolio of 148,000 real estate assets, whose value exceeds €31 billion. Last year, it generated a gross profit of €57.8 million and brokered the sale of 20,321 properties. Between 2011 and 2016, it sold more than 91,000 assets.

Sabadell granted new financing of €1.35 billion to property developers in 2016, up by 56%. Last year, it started granting property developer loans again in CAM’s area of influence after four years of restrictions imposed by Brussels.

Original story: Expansión (by R. Lander)

Translation: Carmel Drake

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