Sareb Emulates The Funds By Teaming Up With Local Developers

23 November 2015 – El Confidencial

Two years after its creation, Sareb has decided to change its strategy and instead of selling large portfolios of land to opportunistic funds, it will now develop these plots of land itself and whereby benefit from the resulting margins.

Aware that the bulk of the large operations have now been completed, the President of the entity, Jaime Echegoyen, has decided to adopt a retail sale strategy, in which one of the main growth drivers will be the formation of partnerships with local developers, to jointly develop the greatest possible volume of land.

For these co-investment agreements, Sareb will provide the land, whilst the local partners, which specialise in the business, will take care of the construction and development of the homes, in projects that would be very difficult for them to aspire to if they had to purchase the land, since many domestic companies are still unable to make that kind of financial commitment.

Sareb hopes to lay the first stone in this new initiative in Andalucía, where it is currently finalising an agreement with a local property developer. And it will soon add other projects in Madrid, where the entity owns various plots on which it is looking to develop several promotions through this kind of co-investment formula.

On the trail of the large funds

These types of agreements between Spanish property developers, who know the business, and financial institutions, have been one of the main drivers behind the emerging recovery seen over the course of the last year, above all in Madrid and Barcelona, which have enabled international funds to now be financing the development of 10,000 homes.

For example, Castlelake, which acquired around twenty plots of land from Sareb in two different operations – the Crossover portfolio and 76,100 m2 of land in Boadilla del Monte – have a total surface area large enough for the development of 1,200 homes. It is working together with its local partner, Aelca, on this project.

Other examples of partnerships between international funds and local property developers include: Renta Corporación and Kennedy Wilson, Momentum Real Estate and Harbert Management, Uniq and Bream Real Estate, and InmoGlaciar and the German fund Aquila.

To become a partner of reference for domestic companies, Sareb has the experience and position of having more than 17,000 debtor companies, with which it is trying to negotiate solutions, such as “daciones en pago” and other conversion formulae. In fact, between January and June this year, it managed 5,413 proposals from property developers, around 30 proposals per day, according to its half yearly report.

During this period, the entity led by Jaime Echegoyen also completed six real estate developments, resumed another 11 and approved the development of 13 plots of land, where it plans to build another 780 homes.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

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