Category: Residential

GSA With ‘High Honours’ in Spain: Investments of €300 million for New Acquisitions

2 November 2017

GSA’s overall objective is to have 250,000 beds under management by 2025. Barrelling into the Spanish market, it plans to manage 10,000 beds within the next five years.

GSA, a British group specializing in student residences business, has a strong presence in the Spanish market and intends to keep it that way. The company is planning its route in Spain, in which it plans to invest around 300 million euros over the next five years in adding 10,000 beds to its portfolio, as Christopher Holloway, CEO of GSA in Spain, and Miguel Muñoz, GSA’s director of real estate acquisitions, explained to EjePrime.

GSA’s initial foray into Spain was through Nexo, a company that it acquired mid-year from Threesixty Developments, a firm owned by funds managed by Oaktree Capital Management. Nexo took its first steps in the hands of Holloway and Muñoz with the purchase of the Residencia Galdós in Madrid.

In the following years, Nexo acquired more assets in Madrid, Alcalá de Henares and Barcelona. “GreenOak wanted to leave the shareholding since its horizon in the company was five to seven years, and GSA wanted to start operating in Spain,” the executive added. GSA, which sees its investment in Nexo as “something long-term”, is now ready to grow in Spain through the acquisition of new real estate assets where they can develop their business.

While GSA’s overall goal is to have 250,000 beds under management by 2025, barrelling into the Spanish market, the plan is to manage 10,000 beds within next five years. For this, the group foresees an investment of between 300 million euros and 350 million euros, although “it could grow,” meaning that it is an “approximate, not closed” investment figure.

GSA currently manages two projects in Barcelona that will involve an investment of almost 60 million euros

“To carry out our plan for the coming months, we focused our objective on three main tracks: one part would be the purchase of land for the development of new student residences; another the acquisition of assets, with its subsequent rehabilitation and management, and a third possibility, which is the management of third-party assets, through management contract agreements.

GSA, which has a presence in Germany, China, Japan, Australia, the United Kingdom, Ireland and Dubai, has already set to work on the first two projects to be carried out in Spain under its management. They are two residences located in Barcelona. The first, in the South Campus of the University of Barcelona, will involve an investment of 30 million euros. “For now, we have all the licenses to start building, although construction will not start until February,” GSA stated.

The second project in the Catalan capital will be in the Sants Station and will be carried out in collaboration with the Barcelona City Council. This residence, which is already being built, signified an investment by the group of more than 27 million euros.

“We are now looking for new assets in our primary markets, which are Madrid and Barcelona, and then we will expand our focus to other cities, such as Salamanca, as well as cities in the south and north of Spain,” both executives added.

Regarding the purchase of new companies, at the moment, the CEO of GSA in Spain dismisses the possibility: “the only company that could interest a group like ours is Resa, and its sale was carried out recently.” “For now, we do not know of any other company that interests us,” he says.

The business in Spain

As a Spanish-speaking country, Spain receives a large number of Latin American students every year. Of the more than 100,000 international students that arrived in the last year, 10% were Colombians and Peruvians. They are, together with Italians, the foreign nationalities which most contribute students to the Spanish universities.

The Swiss fund Corestate paid 13.5 million euros for a college in Madrid

This international influx, which represents 7% of the total number of students in state universities, has led different funds to become interested in the construction and purchase of residences in the country. The Swiss fund Corestate entered the market last year, through the acquisition of a college in Madrid, for which it paid 13.5 million euros, while Early Capital will build a residence of 10,000 square meters in Esplugues de Llobregat (Barcelona). Also, the multinational The Student Hotel is already active in Barcelona.

In total, the market for student residences in Spain is expected to receive investments of €600 million in 2017, with a return on prime residences of 5.75%, above countries such as the United Kingdom or Germany (5% in both). Just with the sale of Resa, that quota has already been fulfilled.

Original Story: EjePrime – C. Pareja

Translation: Richard Turner

Neinor Homes Loses €6.1m up to September and Recomposes its Board with Talent from BDO

31 October 2017

The group also announced the departure of Dominique Cressot, proprietary director for Lone Star, from the board, and the appointment of Alberto Prieto, general director of BDO Real Estate, as the new independent director.

The real estate developer Neinor Homes ended the first nine months of the year with losses and a change in its board. The company reported losses of €6.1 million to the National Securities Market Commission (CNMV). In addition, the group has also announced the departure of Dominique Cressot, proprietary director for Lone Star, from the board, and the appointment of Alberto Prieto, general director of BDO Real Estate, as the new independent director.

However, although the group has not yet turned a profit, it achieved a positive gross operating result (EBITDA) of €0.5 million. The real estate investment company’s income stood at €169.4 million for the first nine months of the year. Neinor does not compare the results of this year with those of the same period of 2016 because it was first listed in March. The company highlighted that “the accounts of the first nine months are in line with the business plan presented on the occasion of its listing.”

The company currently has 71 planned developments, totalling about 5,500 homes, of which more than 2,000 are already under construction, according to Neinor, which also has pre-sales amounting to almost 700 million euros from last year (2,100 homes).

So far this year, the firm has purchased land valued at €275 million, which would have already covered 100% of the 2017 goals and 42% of those set for 2018, Velayos explained, who stressed that now that they have no “corporate distractions” and are entirely focused on their business. Neinor has accumulated enough land to build 12,000 homes, which is nearly the largest land bank in Spain, second only to Metrovacesa.

Of those 12,000 homes, 16% (1,900) are in Catalonia, which in value concentrates 22% of Neinor’s portfolio, whose strategy established that Madrid and Catalonia should contribute 50% of business with the remaining 50% spread over the rest of Spain.

Regarding the situation of the company in Catalonia, Velayos has ensured that they are on the lookout in case there are good opportunities to purchase land in the area, where some operators may want to reduce their exposure, and advised that the company could close an operation before the end of the year. Of the 1,900 homes to be built in Catalonia, Neinor already has 1,500 in production and, of these, 1,200 are pre-sold.

However, given the possibility that the political instability in Catalonia may continue, Neinor is considering entering new markets, among which Velayos has highlighted Lisbon (Portugal), where they are analysing whether there is available land with attractive margins.

Original Story: EjePrime

Translation: Richard Turner

The Owners of La Zagaleta Will Create a Luxury Development for Millennials

28 April 2017

The British firm, which owns the most luxurious resort in Europe, is working on a development in Cádiz, with homes which will cost between three and five million euros, aimed at the younger generations of extremely wealthy families.

Located in the municipality of Castellar in Cádiz, next to the exclusive developments of Sotogrande and Valderrama, the last available estate in the area is awaiting the approval of the local town council to become the site of a modern and luxurious residential resort, which will include a top-level golf course and a five-star hotel. The estate is called Valderrama II, a 220-hectare farm that was acquired last year by the company La Zagaleta Limited.

The firm, based in London and owner of another luxurious residential development called La Zagaleta, bought the Valderrama group, the company that owns the land, as well as the golf course of the same name, considered the best in Spain and one of the best in the world, in a deal valued at 40 million. “The agreement was closed in December 2015. There are a number of possibilities but we intend to convert Zagaleta Limited into a holding that integrates several luxury brands, and that is why we choose only projects that have established brands that are well-known in the real estate market. Here we have a unique opportunity to develop the land from scratch. The land has a total of 220 hectares, where we can build 200 homes, a golf course and a hotel,” Ignacio Pérez, Business Development Director of La Zagaleta, explained.

The owners of La Zagaleta’s new project, considered the most luxurious development in Europe, and located in the Malaga municipality of Benahavís, will also be for millionaires, but with some differences. “In La Zagaleta there are two lines: one with houses of between five and eight million euros and another one starting with eleven, which is the one we are promoting.” Valderrama 2 is another concept, with houses of between three and five million euros, that the buyer can easily finance,” Ignacio Pérez stated.

Also, the new venture will have a maximum of 200 homes, each with between 2,000 and 3,000 square meters of land, which will be aimed at a different public than the norm in La Zagaleta. “In this area, we could build townhouses, but that is not our thing. We will make an integrated resort, with private streets, similar to the luxury developments that exist in the United States, and where the nature of the surroundings mitigates prevailing winds found in the area,” the Director of Business Development pointed out. “The idea is to make homes without fences, like in Los Angeles or Florida, where you can see without being seen, and that incorporate the current demands of millennials,” he adds.

The objective of La Zagaleta is to pre-sell the homes so that each client can customise it during its construction. “We believe that buyers of these homes will be an international mix: people who like to play golf but we will also go after clients in Tarifa, which is very close to Valderrama 2. And don’t forget that we are 20 minutes from Gibraltar airport,” Ignacio Pérez stressed.

La Zagaleta has given itself three years to begin construction.” We will spend 2017 solving some critical steps and setting a timetable, but we want to have the development under construction by 2020 and then complete it rapidly.”

In total, the group plans to invest 200 million of its funds in developing the development over ten years. The total investment could reach over €400 million. “We will be building the homes, for example, at a rate of about 20 a year. The logical thing would be to finance them in the long term so that the buyer can easily take on the outstanding loan and buy the property with a smaller downpayment.”

Original Story: Expansión – Rocío Ruiz

Translation: Richard Turner

Neinor Invests €275 Million Up to September and Accelerates the Pace of Development

31 October 2017

The company has available land valued at 1.4 billion euros, enough to build 12,000 homes.

Neinor Homes accelerated the pace of its investments and pre-sales in the third quarter of 2017. In the first nine months of the year, the developer acquired 24 plots of land to develop more than 3,000 homes for 275 million euros, of which 103 million euros were invested just in the third quarter.

The company, which went public on March 29, finalised sales worth 169.4 million euros, in line with forecasts, and closed September with a net loss  of 6.1 million euros and a positive gross operating profit of five hundred thousand euros.

So far this year, Neinor has delivered five developments with a total of 185 homes, which has allowed it to generate revenues of 39 million euros. The rest of the proceeds came from its servicing business (21 million euros), through a contract that it has with Kutxabank for the management of the bank’s real estate assets, and especially the legacy assets, for 109 million, through the divestment of assets acquired as part of the agreement reached in 2014 with the financial entity.

The developer, led by Juan Velayos, has 71 developments in production, including some 5,500 homes, of which 2,000 units are in the construction phase, and will not reach cruising speed before 2020 when it expects to deliver between 3,500 and 4,000 homes annually.

Neinor executed pre-sales for 370 homes in the third quarter, totalling 1,080 pre-sold homes for the year, worth 368 million euros. The company’s total accumulated pre-sales reached €697 million with 2,101 homes.

Arrival in Portugal

The CEO of Neinor, Juan Velayos, explained that with the last quarter’s investments, the company had completed 100% of the purchases projected in its strategic plan for the whole of this year and 42% of its objectives for 2018. The company continues to analyse opportunities and has a pipeline worth 300 million euros.

Velayos announced that the company is studying investments in new markets such as, among others, Portugal. “The Portuguese market fits in with our strategy, the macroeconomic environment is propitious, there is limited supply and real demand, and the next step is to identify if land is available that can be bought at the prices we want, without forgetting the time factor. Licensing takes more time in Portugal than it does in Spain. ”

Taking advantage of opportunities in Catalonia

As for Catalonia, Velayos has indicated that Neinor’s exposure in the region is limited. Thus, although 16% of its total number of homes – some 30 developments and 1,900 homes – are in this area, of which, 1,500 homes are already in production, and more than 900 have been pre-sold.

In this way, only 4% of the value of its assets in Catalonia have not been taken up. “Catalonia has been a good play during these last two years even though there was already some political uncertainty; I am much more optimistic than just a few weeks ago. I think that common sense in Catalonia is going to recover,” he added.

Regarding the purchase of land in Catalonia to launch new developments, the CEO of Neinor explained that the firm is studying some operations in the region and that if they fit with their strategy, they will take advantage of them. “If windows of opportunity are opened, we are going to take advantage of them, Catalonia is an engine of the Spanish economy, and it continues to be so despite the circumstances,” he assured.

New board member

The company has altered the composition of its board of directors after the reduction in Lone Star’s participation, which sold 27% of the developer promoter in an accelerated operation, last September.

Thus, Neinor has announced the departure of proprietary director Dominique Cressot, Lone Star’s representative, and the appointment of Alberto Prieto as independent director. Thus, the number of independent directors now amounts to four out of a total of seven.

Prieto is currently Managing Director for Real Estate at BDO Spain and has extensive experience in the residential land market developed over more than 20 years at Knight Frank, of which he was CEO, and at BDO.

Original Story: Expansión – Rebeca Arroyo

Translation: Richard Turner

Aedas, Testa and Vía Célere, After the ‘Neinor Effect’: The Stock Market Opens its Arms to Real Estate in 2018

27 October 2017

U.S. funds are seeing gold in Spain’s residential real estate market and are planning on taking their presence in the country to the next level. Castlelake, Värde and Lone Star are the leading this new moment in Spanish real estate.

What will the new real estate cycle bring that that everyone is looking to invest in it? Not only is Spain a target market for large international funds, but it is also a playground for these groups to grow their businesses and create a new corporate reality within the sector. Castlelake’s Aedas, Värde’s Vía Célere and Aelca and even Spain’s own Testa and Sareb are seeking to take advantage of the Neinor effect by preparing their IPOs for the coming months. If 2017 was the year in which the residential real estate market in Spain quickly recovered, 2018 is expected to be the year when developers give an emphatic ‘yes’ to the market.

The Värde fund has had the clearest intentions regarding the future of its business in Spain. The company will list two of the developers that it controls in the country: Vía Célere and Aelca. The U.S. fund plans to list 60% of the first company on the stock market.

Värde hired Credit Suisse and Jefferies-Arcano to manage contacts with investors for the Vía Célere IPO, while CaixaBank will act as the placement bank. Last February, Värde paid ninety million euros for control of the Madrid-based developer Vía Célere, with the aim of merging it with its real estate company DosPuntos.

Värde had initially planned for Vía Célere’s IPO to take place at the beginning of 2018, but the move could take place before the end of 2017, after considering the excellent performance the real estate sector is experiencing on the stock exchange.

The stock exchange is one of funds’ alternatives to finance their growth plans in Spain

The U.S. fund has similar plans for Aelca, which has a portfolio of assets valued at 650 million euros and which could also start trading in the coming months. The fund has invited the main investment banks and advisory firms to present their proposals to list the developer on the stock market. Aelca was founded in 2012 by Javier Gómez and José Juan Martín and Värde acquired 75% of the company’s capital in 2016. The remaining 25% is in the hands of the two founding partners, who lead the developer’s management.

Castlelake and Aedas

Another principal actor in Spain’s new real estate cycle is the developer Aedas Homes, owned by the U.S. fund Castlelake, which is also considering a jump to the stock market soon. The firm has already publicly declared its plans to list its shares on the Madrid, Barcelona, Bilbao and Valencia stock exchanges and its inclusion into the Stock Exchange Interconnection System (Continuous Market).

Its objective is the same as that of Värde’s Vía Célere: placing up to 60% of the company’s capital through an initial offer that expects to raise funds amounting to 100 million euros. Aedas Homes will invest these funds in future growth opportunities and to partially finance the planned expansion of the group and, principally, to pay for buildable land under the housing development plan, up to 2023. The share offer will be composed of the issuance of new shares and an offer of existing shares by the sole shareholder, Hipoteca 43 Lux.

Developers and socimis take their business in the country to the next level, moving to the continuous market

Neinor Homes paved the way for the new wave of developers that are betting on stock market listings, hoping to gain the financial strength to ensure their growth plans for their businesses in Spain. Lone Star’s company was the star of the most significant IPO of a real estate developer in the country. The company made its leap to the market last March with an initial capitalisation of around 1.3 billion euros.

The value of the group’s shares has been increasing in the stock market in recent months. At the close of yesterday’s session, the company’s shares were valued at 17.97 euros each, with a total market capitalisation of 1.419 billion euros, an increase of 9.15% since its debut in the continuous market in the first quarter of this year.

Testa to Sareb: also heading to the stock market

Thus, the Basque company has facilitated the path for other real estate developers who are looking to make the leap to the stock market. An example is Testa Residencial, which is also preparing for a listing next year.

The apartment rental socimi, owned by Santander, BBVA and Acciona, is expected to debut on the stock market sometime between April and May of next year. The company will be listed on the stock exchange after becoming the first company focused on rentals in the country after its merger with Acciona’s home rental business.

Through this operation, the group presided by José Manuel Entrecanales will take a 21% stake in Testa’s capital, which makes it the second largest shareholder of the socimi, behind Santander (38.8%), in exchange for supplying the combined company with one thousand additional properties, according to Europa Press.

The transaction is part of the growth strategy that Testa delineated after its incorporation in October 2016, a result of a merger between Merlin and Metrovacesa. This approach has as its ultimate goal the firm’s IPO, as established by its status as a socimi. Under the socimi’s legal structure, the firm has September 30, 2018, as a deadline for a stock market listing.

Sareb prepares to launch its socimi Témpore Properties and its immediate jump to the stock market

Sareb has also been caught up in the rush to a listing, this time with its socimi Témpore Properties. While it is still in the process of incorporation, the bad bank says it will take the company public before the end of this year. To this end, it has chosen Azora, which was behind the creation of Hispania, one of the largest socimis in Spain, to manage the firm.

Témpore Properties will have its pick of more than 1,500 of Sareb’s best rental properties, with a volume of assets valued at over 200 million euros, with the aim of attracting the highest number of investors.

Sareb continues to plan to list Témpore Properties on the stock exchange through the Alternative Stock Market (MAB), which saw the debut of a large number of socimis last year. But it intends to make the leap to the continuous market, where companies with higher visibility are listed, in the future.

Original Story: Eje Prime – C. Pareja

Translation: Richard Turner

Solvia: House Sales Will Reach 564,000 by 2020

31 October 2017 – Solvia

According to data from the latest trend report issued by Solvia about the real estate market, we can expect to see a moderate increase in the volume of house sales in Spain over the next few years. The increase will also be accompanied by a moderate increase in prices. These forecasts establish a context of real estate recovery in the country.

Towards 560,000 transactions by 2020

Since the number of houses sold in Spain hit rock bottom back in 2013 – when around 300,000 transactions were recorded – the figures have risen by 50%, in just three years. In this way, around 450,000 house sales were recorded in 2016 and Solvia forecasts that this figure will increase by between 7% and 8% per annum over the next three years, to reach 564,000 house sales by 2020.

A key factor in this new real estate cycle is the significant weight of buyers looking to reposition themselves on the housing ladder – whose purchase decisions had been postponed during the years of economic recession – and also small-time investors, who are buying homes to rent them out, given the higher returns offered by the real estate sector compared to other investments. Demand from non-resident foreigners is also expected to continue to grow, driven by the record visitor figures that are being recorded in the tourist sector.

From 2020 onwards, Solvia forecasts that the volume of house sales will start to decrease, for three reasons: the natural demand from the population aged between 25 and 44 years will decline, as will the pent-up demand to buy a home; moreover, the rental culture will continue to grow in popularity amongst the new generations.

Regional focus

By autonomous region, in terms of the volume of transactions for every 1,000 inhabitants, the most dynamic regions will be the Balearic Islands and the Community of Valencia, primarily due to the foreign buyer effect. By contrast, if we look at absolute sales volumes, the most operations will be undertaken in Andalucía, Cataluña, the Community of Madrid and the Community of Valencia.

Original story: Solvia

Translation: Carmel Drake

Andalucía Auctions 16,000 m2 Of Land For Residential & Industrial Use

31 October 2017 – Inmodiario

The Junta de Andalucía’s Ministry of Development and Housing has awarded almost 16,000 m2 of regional land to residential and industrial development in the provinces of Jaén, Córdoba and Málaga, for a sales price of €2.2 million. This operation forms part of the third offer made in 2017, for the sale of land and other assets, by the Agency for Housing and Rehabilitation (AVRA).

In the tender for the sale of land allocated for social housing use, two plots have been awarded. One of them is located in the O3 sector of Córdoba, known as Huerta Santa Isabel, with a surface area of 2,197 m2 and space for 39 homes. The award price of that land amounted to €698,175. The other plot is located in the Malagan town of Algarrobo with a surface area of 4,092 m2 and space for 48 homes. The award price, in that case, amounted to €563,960.

All of the industrial land is located in the province of Jaén, with a total combined surface area of 9,428 m2 and a sales price of €615,723. The plots sold are located in the municipalities of Alcalá la Real, Martos and Linares.

With this initiative, the Ministry of Development and Housing is seeking to place its public land assets at the disposal of the production fabric of the region with the aim of boosting economic activity and generating employment, allowing for residential and industrial development (…).

Through this operation, the autonomous Administration will also take advantage of the revenues generated from the sales to continue allocating resources to its housing policy, in particular, to help the most vulnerable families and those less able of accessing a home (…).

Original story: Inmodiario

Translation: Carmel Drake

Notaries: House Sales & Prices Rose In Q2 By 14.2% & 5%, Respectively

31 October 2017 – El Mundo

House sales rose by 14.2% on average during the second quarter of 2017 with respect to the same period in 2016, to exceed 142,000 transactions, whereby moderating the YoY increase experienced in the previous quarter (20.3%) by six points, according to data from the General Council of Notaries.

By type of dwelling, flat sales recorded a YoY increase of 15.3% during the second quarter of 2017, and whereby accumulating 14 consecutive quarters on the rise. In terms of prices, the average cost of homes purchased during the second quarter was €1,387/m2, up by 5% YoY. Meanwhile, the price of flats (in general) rose by 5.6% YoY to €1,529/m2.

According to the Notaries, the sale and purchase of homes rose in every autonomous region during the second quarter of 2017, with the exception of the País Vasco, where sales fell by 0.4% YoY. The highest increases were recorded in the autonomous regions of La Rioja (25.9%), Asturias (21.6%) and Castilla-La Mancha (19.6%).

In terms of house prices, they decreased in Murcia (4.3%), Cantabria (3.7%), Aragón(0.5%) and Castilla y León (0.3%) but rose in the remaining 13 regions, in particular in Navarra (17.7%), Castilla-La Mancha (11.1%), Cataluña (9%) and the Canary Islands (8.9%).

On the other hand, the number of new mortgages granted in the second quarter of 2017 fell by 2.4% with respect to the same period in 2016, after having increased by 7.8% YoY during the first quarter.

Original story: El Mundo 

Translation: Carmel Drake

Blackstone & Santander Will Transfer 21,000 Of Popular’s Homes To Various Socimis

30 October 2017 – Cinco Días

The sale of the real estate assets proceeding from Popular to Blackstone is not over yet, but the strategy behind the operation is already very clear and will reinforce the US fund’s position as the largest homeowner in Spain. The American firm’s plan involves replicating its previous purchase of banking portfolios linked to real estate on a grand scale. Specifically, the fund will transfer a large part of these homes to several Socimis with the aim of renting them out. A small proportion, the lowest quality properties, will be put up for sale.

In August, Santander sold 51% of Popular’s real estate to Blackstone, together with the real estate management platform Aliseda, which it had previously repurchased from Värde and Kennedy Wilson. These assets (comprising homes, land, office and doubtful debt) were worth around €10,000 million, and so Blackstone will pay almost €5,100 million when the operation is finally closed at the beginning of 2018.

Of that transaction, Blackstone and Santander will manage around 80,000 assets through Aliseda. Of those, 30,000 correspond to homes from property developer loans, according to market sources. Now, it has been revealed that the strategy of the two partners involves transferring approximately 70%, in other words, almost 21,000 homes, to several of the US fund’s Socimis with the aim of putting them up for rent, explain sources in the sector (…).

Blackstone has already followed this strategy in the past. Its first major operation in Spain was the purchase of 40,000 mortgages from the now extinct Catalunya Caixa for €4,123 million in 2015. Next, it created the platform Anticipa Real Estate to manage those assets. Prior to the purchase of Popular’s real estate, it had already acquired around €7,000 million in these types of assets, of which 12,000 were homes.

To create the residential giant, the US firm began to create Socimis to which to transfer its properties for rent. The first of these companies was Albirana Properties, which made its debut on the Alternative Investment Market in March, with a market capitalisation of €170 million and 5,000 rental homes under management.

But that was just the beginning. Since then, Blackstone has created several more Socimis, such as Tourmalet, Torbel, Albirana II and Pegarena, according to the tool Insight View from Iberinform. Now, Blackstone will identify the best homes, put them up for rent and package them into several different Socimis.

Currently, Blackstone is involved in a detailed assessment process of the properties in order to proceed with their appraisal, according to sources in the sector, which will conclude with the completion of the operation during the first quarter next year. The other homes, those that will not be transferred to the Socimis, comprise around 9,000 units. They are the worst quality properties and will likely be put up for sale on the retail market.

Blackstone first entered the rental market with the purchase of homes from Madrid’s Municipal Housing Company in 2013, which it subsequently grouped into the Socimi Fidere, whose shares are also traded on the MAB and which has a market capitalisation of €268 million.

Blackstone, which is led by Claudio Boada as the CEO in Spain, is particularly active in the real estate sector in the country. Last week, it purchased the company HI Partners, the owner of 14 holiday hotels, from Sabadell for €630 million.

Original story: Cinco Días (by Alfonso Simón Ruiz)

Translation: Carmel Drake

Morgan Stanley & Gestilar To Build 1,050 New Homes

27 October 2017 – Eje Prime

Gestilar and Morgan Stanley are taking their first steps together in the sector. The property developer and the international fund have invested €120 million in the acquisition of land in Spain, where they plan to construct more than 1,050 homes, according to Javier García-Valcárcel, founder and President of Gestilar, speaking to Eje Prime. The company is currently marketing a portfolio of 1,000 homes, which it expects to complete and deliver in 2018.

For the most part, the land purchases have taken place following the signing of a joint venture with Morgan Stanley. “90% of these new acquisitions form part of the agreement”, says García-Valcárcel. Most of the land recently acquired by the group is located in Madrid, Cataluña, Galicia and the Balearic Islands, according to the director.

This land, which has a combined surface area of 150,000 m2, will be added to the portfolio that the company is already working on. It is constructing around 1,000 homes, which it will deliver during the course of next year and of which almost 80% have already been sold. “Gestilar has completed 600 homes in the last three years”, says the executive.

The roadmap for Gestilar and Morgan Stanley has already been defined, at least the next stage. “We have a pipeline for investing capital for the acquisition of land to build more than 2,000 homes”, explains García-Valcárcel. “That means investing around €250 million more”.

With García-Varcárcel as the sole shareholder, the company launched so-called Project Orizone, with the aim of searching for a strategic partner. Through a process led by A&G, it invited more than a dozen international funds, who had expressed interest in the project, to participate and in the end, the winner was Morgan Stanley’s fund.

“This investor was looking for a partner in Spain and after a year of negotiations, we closed an agreement”, says the executive. “We were never looking for a corporate operation but rather a single strategic partner to work with over the next four or five years”. The long-term objective is to launch 14 or 15 new projects.

Gestilar plans to build 2,500 new homes between 2018 and 2020, with an investment of around €500 million during that period. That will allow the company to place itself amongst the largest real estate businesses in the country in terms of construction volumes.

Morgan Stanley’s return to Spanish real estate  

With this alliance, Morgan Stanley’s fund is backing the Spanish real estate sector once again. In 2006, before the international economic crisis hit, the fund announced that it had €1,000 million proceeding from various funds to invest in real estate assets in Spain.

In line with its plans, Morgan Stanley launched a company together with the real estate group Lar. Moreover, during its time in the Spanish market, the fund joined forced with the real estate firm owned by the Pereda family to build shopping centres and holiday homes on the coast. Nevertheless, it never prospered and ended up shutting down the company after investing in five holiday home projects (with more than 1,500 units) and ten shopping centres.

Original story: Eje Prime (by C. Pareja)

Translation: Carmel Drake