10 March 2017 – Expansión
The recovery in the market is fuelling investors’ interest in housing. International funds such as Lone Star, Värde and Castlelack are the new stars.
The recovery of the residential market is starting to take shape in certain autonomous regions and international investment funds are positioning themselves to benefit as the boom takes hold. According to data published on Wednesday by INE, the price of private (unsubsidised) housing rose by 4.7% on average in 2016, which represents the third consecutive annual increase following six years of decreases and the highest rise since 2007.
And as they await the reactivation of the sector, several of the funds have made in-roads. Värde, Lone Star, Castlelake, Texas Pacific Group, Apollo, Cerberus and Kennedy Wilson are just some of the stars of the new residential market.
These funds maintain their presence in the residential market in several ways: as holders of debt, as servicers and as owners of the new generation of property developers, which are much more professional than their predecessors.
Specifically, Värde has been one of the firms that has staked the most on the real estate sector in Spain in recent years. The fund recently announced the purchase of the property developer owned by Juan Antonio Gómez-Pintado. That followed its purchase two years earlier of the real estate subsidiary of Grupo SanJosé (formerly Parquesol), which it subsequently renamed Dospuntos. The fund’s plans now involve integrating those two companies into a single firm, which will have more than 1 million m2 of land and more than 10,000 homes in progress or in its portfolio. In addition, Värde plans to list this firm on the stock market in the medium term.
Moreover, in 2014, the US fund purchased 51% of Banco Popular-e’s credit card business, for which the entity generated gains of more than €400 million. And as Expanión revealed, in December 2016, the fund acquired 40% of La Finca Global Assets, a division of the group owned by the Cereceda family, which specialises in the management of premium offices in Madrid.
Another fund that has been seduced by the residential market is Lone Star, which controls the property developer Neinor. The former real estate subsidiary of Kutxabank will be the largest exclusive property developer to debut on the stock market since Realia in 2007 (the large Socimis that have also debuted since then invest in tertiary assets). The fund is looking to place up to 60% of the company’s shares on the stock market, through the issue of new shares and the placement of existing shares. Lone Star, which will see its stake diluted as a result of the operation, will use the funds raised to reduce debt and continue with its plans to reach cruising speed by 2020 with the completion of between 3,500 and 4,000 homes per year.
Another fund that has positioned itself well in this market is Castlelake with Aedas. The group specialising in the residential segment, controlled by the US fund, has a portfolio of developable land worth €1,000 million, which will allow for the construction of more than 12,000 homes. The fund decided to back the house building segment and, on the advice of Merlin Properties, has launched fourteen developments in Alicante, Barcelona, Madrid, Málaga, Sevilla and Valencia.
Similarly, the funds have known how to gain a foothold in the market through the servicers. Servihabitat, Altamira, Haya and Aliseda are all controlled, in whole or in part, by international investors. These companies, created by the banks during the crisis to accelerate the divestment of assets from their balance sheets, have evolved into multi-service platforms, with financial and real estate assets.
Original story: Expansión (by Rebeca Arroyo)
Translation: Carmel Drake