Tag: Anglo-Saxon model

Corestate Teams up with Medici Living to Invest €200M in Co-Living Homes

17 December 2018 – Eje Prime

Corestate Capital is launching itself in the residential co-living market in conjunction with Medici Living. The Luxembourg-based fund manager has joined forces with the German provider of spaces to invest €200 million in the development of shared residences across Spain, according to explanations provided by sources close to the operation speaking to Eje Prime.

The plans of the two groups in Spain form part of an expansion target at the European level. In fact, over the next three to five years, Corestate and Medici Living are planning to invest €1 billion in the development and purchase of around thirty co-living properties, containing 6,000 rooms in total, located in Austria, Poland, Switzerland and Spain.

Barcelona, Madrid and Sevilla are the cities that the joint venture has chosen for its debut in the Spanish market. In those regions, they forecast investment of between €20 million and €60 million. For the time being, the intention of the companies involves acquiring seven buildings in Spain, with 1,190 rooms in total.

Corestate is responsible for the investment, project development, financing and management of its assets. Meanwhile, Medici Living takes care of the design and operation of the properties, according to reports by the company, which already has a portfolio of 1,800 rooms and a presence in Germany, the United Kingdom and the Netherlands.

It is the largest operation undertaken to date in the European co-living market. In fact, it is a sector with a great deal of potential on the Old Continent, aimed at people looking for professional environments and collaborative lives, where they can share ideas and experiences. Currently, most of these assets are located in Anglo-Saxon countries and they are expected to become one of the alternatives for affordable living in large cities.

“The arrival of investment to the shared accommodation sector represents a great step forward for the European residential market”, said Gunther Schmidt, CEO at Medici Living, who stresses in a statement that, as a company, they have set themselves the objective of becoming the WeWork of co-living.

Meanwhile, the CEO of Corestate Capital, Michael Bütter, confirmed that “demand for shared residential spaces is increasingly motivated by the desire of young people to work and live in different cities and to do so in a community”. Moreover, according to the executive, “they are low-risk operations that generate great returns”.

In addition, with this agreement, the Luxembourg fund manager is diversifying its commitment in Spain after announcing its investment plan for student halls of residence next year. Corestate is planning to allocate €100 million to the construction of those types of assets and is currently searching for land in Valencia, Sevilla and Bilbao, as revealed by Christopher Hütwohl, the head of the company in the country, speaking to Eje Prime.

Original story: Eje Prime (by Berta Seijo)

Translation: Carmel Drake

Overseas Funds On The Hunt For Holiday Hotels

26 March 2015 – Expansión

Socimis (‘socidedades cotizadas de inversión inmobiliaria’ or listed real estate investment trusts) and the appetite of overseas investment funds are driving the professionalization of the hotel sector in Spain, to separate the ownership of properties from the management of establishments, in line with the Anglo-Saxon model.

That is one of the conclusions to come out of a conference held in Madrid yesterday about the evolution of the hotel sector over the last decade. The conference was organised by Magma Hospitality Consulting and the Intercontinental Hotels Group (IHG), the largest hotel group in the world by size.

Liquidity

“Socimis are an essential tool that Spain has needed for a long time, to provide liquidity to a portfolio of assets, respond to generational renewal and professionalize management”, said Luis Migual Martín, Investment Director at Azora.

This company launched a Socimi (Hispania), which formed an alliance with Barceló at the start of the year to create the first listed investment vehicle specialising in the hotel sector (Bay Hotels), which has assets of more than €420 million.

For his part, Alejandro Hernández Puértolas, CEO at HI Partners, the hotel fund driven by Solvia – Banco Sabadell’s real estate arm – added that “the Socimis could bring together assets in Spain amounting to €8,000 million”. In the USA, the REITS – equivalent to Socimis – that specialise in the hotel sector have (assets under management amounting) to more than €70,000 million.

Nevertheless, there is still room for improvement. For Martín “there needs to be a change to the current legislation to reflect the management model, which now falls outside of (the scope of) the Socimis”. Arturo Díaz, CEO of Business Development at Renta Corporación, added that “other instruments will be created besides the Socimis”.

In the case of international funds, the focus has shifted from the city to the beach. “Institutional investors are starting to get involved into the vacation segment. The main difficulty is obtaining a portfolio of assets, but the appetite is there”, said Díaz, who called for restraint when it comes to changing the use of office buildings and homes into hotels.

Original story: Expansión (by Y. Blanco)

Translation: Carmel Drake

Socimis Come To The Hotel Sector’s Rescue

17 March 2015 – Expansión

Trend / Listed real estate investment companies (REITs or Socimis) are paving the way for (hotel) groups to separate the management and ownership of properties – the vehicles provide significant tax advantages and boost the professionalism of the industry.

Socimis – ‘socidedades cotizadas de inversion inmobiliaria’ or listed real estate investment companies – are playing an increasingly important role in the hotel sector due to the tax benefits they offer and also because they allow (hotel) chains to separate the ownership of their properties from the management of the facilities, in line with the Anglo-Saxon model.

These types of vehicle, which are used to purchase and refurbish assets for rental, must invest at least 80% of their funds in property and pay out at least 90% of their rental income (from said properties) in the form of dividends. They also have a special tax regime.

To publicise this alternative funding formula, the Mallorcan Hotel Business Federation (‘Federación Empresarial Hotelera de Mallorca’ or FEHM), Armabex Asesores Registrados and Garrigues have organised a seminar entitled “Socimis as an instrument for restructuring the real estate property of hotel groups”, which will be held today in Mallorca. At the event, the tax advantages of this investment vehicle will be analysed, together with their legal status and the process for incorporating Socimis into the Alternative Investment Market (Mercado Alternativo Bursátil or MAB), amongst other considerations.

The purpose is to raise awareness amongst (hotel) chains and professionals in the real estate sector of the importance of ensuring that the management of hotels and the ownership of the property are in different hands; this is the biggest challenge facing the industry. We will also analyse in more detail the value that Socimis have as a tool for reducing risk, being more competitive and efficient and also their tax advantages”, says Inmaculada Benito, Executive Vice-President of the FEHM.

Antonio Fernández, Chairman of Armabex Asesores Registrados, stresses that “the restructuring of real estate capital in the sector has been triggered by the lack of financing, the decrease in prices and the existence of an appropriate legal and fiscal framework”. On that last point, Fernández highlights that “investors may now own properties without having to manage them and hotel groups can continue with their management without having to be owners”.

José Manuel Cardona, partner at Garrigues, says that “Socimis are a tool that help to address many of the challenges facing the hotel sector in a single solution”. In his opinion, “they not only represent a funding formula; they also facilitate expansion and internationalisation, provide a solution to the problem of succession in family businesses and pave the way for integration between larger groups and small chains”. Furthermore, “they encourage greater transparency and control, the professionalization of management teams and carry the requirement to distribute minimum dividends, which results in more objective valuations of the assets and rents”.

First case

Barceló was the first company to adopt this formula, through its alliance with Hispania. Bay, the first hotel-sector Socimi, was created with 16 hotels and two shopping centres, worth €421 million. Experts believe that it will not be the only one and that there will soon be more hotel Socimis, that will own both holiday and urban hotel properties. “2014 was the year for shopping centres (in the real estate sector) and this year, hotels will be the leading players”, predicts Fernández.

Original story: Expansión (by Yvonna Blanco)

Translation: Carmel Drake