Sareb Finalises Creation of a New Company with Aelca to Manage Property Worth €800M

20 July 2018 – El Confidencial 

The Company for the Management of Assets proceeding from the Restructuring of the Banking System (Sareb) has made a change to its property development plan. The so-called bad bank has decided to create a joint venture with a first-rate property developer to manage €800 million in finalist land and developments in progress in several main cities across Spain.

This decision represents a change to Sareb’s initial formula for its property development business, which was going to involve a strategic alliance that would allow the integration of its residential construction and land development businesses into one of the large Spanish property developers. Initially, the chosen entity to form part of this company, according to assurances provided by sources close to the negotiations speaking to El Confidencial, is Aelca.

Sources at Sareb, meanwhile, speaking to this newspaper assure that “at the Board meeting on Thursday, a decision was taken to approve the creation of a vehicle, but the choice of travelling companion and the percentage stakes to be owned by each party in the JV have not been decided yet”.

If the conversations with the property developer founded by Javier Gómez and José Juan Martín prove fruitful, it will end up being responsible for managing so-called Portfolio Casiopea, given that it is the last man standing in the negotiations in which the listed company Aedas Homes has been involved until recently. The future company – likely a banking asset fund – will be owned by Sareb (90%) and Aelca (10%). According to the same sources, the process is in its final phase and the details are being finalised for the signing of the corresponding agreements.

At the beginning of the year, Jaime Echegoyen (pictured above) decided to work on a strategic alliance with a large property developer that would allow Sareb to sell a significant batch of land and compete in the first division of property development in Spain, head to head with the largest players in the sector, such as Aedas, Neinor, Vía Célere and Metrovacesa.

Nevertheless, in recent weeks and after the offers presented by Aelca and Aedas failed to meet Sareb’s price expectations for its land, the bad bank has rethought the whole process, opting for the creation of a joint venture vehicle, in the end, in which it will control the majority. It is in this process in which Aelca has been left alone in the negotiations.

Building 1,500 homes per year

Sareb currently has around 4,300 homes in different stages of development, located in different towns across Spain, which involve a combined investment of around €60 million. Moreover, it is finishing the construction of 2,340 homes that it received unfinished and it is building 2,153 other homes from scratch.

Just over a year ago, Sareb expressed its commitment to become one of the country’s largest property developers by announcing its intention to promote an average of 1,500 homes per year until its liquidation. The company plans to finish building 4,000 new homes, between now and 2020, a clear display of its commitment to residential development (…).

The sources consulted by this newspaper explain that Sareb’s objective is to maximise the value of the assets that it has in its portfolio and, even, in the future, debut the company on the stock market as a way of divesting easily, obtaining liquidity and collecting gains. It is worth remembering that Sareb is already trading on the stock market through its Socimi Témpore Properties, with 1,300 rental homes.

Until now, the formula has been to delegate construction work to different property developers on a project by project basis, however, the strategy to be adopted from now on will generate value from the land to be developed and promotions underway in conjunction with a single partner.

Original story: El Confidencial (by E. Sanz)

Translation: Carmel Drake

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