14 November 2016 – El Mundo
The rise of the residential rental business in this new real estate cycle seems to be undeniable. And this is evidenced by the fact that increasingly more companies are committing themselves to the professionalization of the market, which has, in Spain at least, traditionally been handled by individuals and small and medium-sized investors. The emergence of the Socimi structure has played a key role in enabling large investors to place their focus on the segment.
First came the shopping centres, then the offices and then the industrial and logistical warehouses. Over the last few years, the Socimis have placed their focus on all of these assets. But now, it seems that homes are attracting the most attention. And, following in the footsteps of the large Socimis, such as Merlin, Hispania, Lar and Axiare, we are now seeing smaller entities, focusing on the management and operation of residential rental businesses, and many are about to debut on the Alternative Investment Market (MAB).
This group of new players includes VBare, a company constituted in March 2015, from an initiative created by Aura Real Estate, a company that specialises in the valuation of large real estate portfolios and which has vast knowledge of the market, and the Israeli investment bank, Value Base.
In addition to the real estate knowledge and financial muscle of its founding companies, the Socimi’s offering is enhanced even further by the extensive experience of David Calzada (pictured above). Calzada is the CEO of Vbare, having previously worked as a Partner at the international consultancy firm PwC for four years, where he led the team responsible for Socimi research.
Since its constitution as a Socimi, VBare has raised €16.2 million in financing. Those funds have been contributed by 35 qualifying investors, of which only the Israeli bank can be considered as an institutional investor (the bank holds a 15% stake). Of that volume, €14.5 million has already been spent on the acquisition of 166 homes, 61 storerooms, 28 parking spaces and three retail premises.
Real estate portfolio
According to Calzada, the company’s strategy is to buy residential assets in the metropolitan areas of major cities with an average discount of 10% compared to market price. The firm then undertakes capex investment of around €2,700 per flat to ensure that each one fulfils certain aesthetic and quality criteria, with a view to obtaining initial net returns of 4%. According to the company’s CEO, the portfolio is currently generating a yield of 6.1% and its asset value has already increased to €20.8 million.
In terms of its core product, the Socimi mainly focuses on properties with “affordable, middle-class” rents of between €550 and €600 per month. Its portfolio is characterised by one-bedroom homes, measuring around 40 m2.
Calzada interprets the current period in the housing market as “the end of the decrease in prices”, which means that from now on he expects prices to rise and for there to be “more competition in the residential market”. In terms of rental prices, Calzada estimates that they may rise by 6% between 2017 and 2018 and by 5% in 2019.
VBare’s plans to debut on the MAB in the middle of December, and it hopes to raise between €5 million and €10 million. Ultimately, according to Calzada, our objective “is to move onto the main stock market, as soon as we are the right size”.
Original story: El Mundo (by Luis M. De Ciria)
Translation: Carmel Drake