12 March 2015 – Expansión
The Socimi and the North American management company are investing €120 million to rescue the most exclusive residential project in the city. Designed by Rafael de La-Hoz, its 50 apartments will cost around €4 million (each).
Three months ago, the Socimi Lar España and the North American management company Pimco agreed to purchase the company Juan Bravo, 3. The agreement will result in the revival of one of the most exclusive residential projects in Madrid, which has suffered from the full force of the real estate crisis.
“It was a transaction that was in the market and we were not the only interested party. Nevertheless, many funds dropped out when they saw the complexity of the project. There were lots of stakeholders: from the judge overseeing the bankruptcy process to the former owners of the company and its creditors”, explains Jorge Pérez de Leza, who heads up Lar España.
The Socimi proposed that the company be brought out of bankruptcy, rather than be liquidated, through the purchase of the remaining loans from its main creditor (Santander). In total, both partners invested €120 million in the land and (associated) loans, as well as in a residential building adjacent to the plot, which used to belong to the former owners of Juan Bravo 3. “The existing creditors are going to be paid, which is the innovative part (of the transaction), and we hope that the bankruptcy proceedings will be lifted within the next few days”, said Pérez de Leza.
The investment has been made through a company whose share capital is owned split 50:50 between Lar and Pimco, one of the largest fund managers in the world. “When Pimco joined the Socimi as an ‘anchor investor’, it suggested that we make a number of joint ventures in the Spanish market. Pimco wants to continue investing in Spain and we think that the next wave of investment will be in the residential market”, predicts the director. With this project, Lar does not exceed the threshold set for Socimis (that no more than 20% of the assets in their portfolio may not generate returns) and therefore it does not rule out continued investment in the premium residential sector.
After closing the acquisition of this land, Lar España hired the architectural firm Rafael de La-Hoz, which had also been appointed by the former managers to design the project. “Juan Bravo 3 offers the opportunity to construct a new building concept with four façades. The homes, from the garages to the bedrooms, will be completely new. As such, we will have almost total freedom in terms of the form (it takes) and we will be able to do without elements such as common areas and patios”, says Rafael de La-Hoz.
This architect will be responsible for designing the block of homes, which will contain between 50 and 55 units, on a plot of land measuring 26,203 square metres. “Last summer, we conducted a study in the market to see what type of project would fit best and we identified that there is room for luxury (properties) in this area. Therefore, each home will measure at least 250 square metres and on average, will measure between 400 and 450 square metres, as well as having three parking spaces”, says Jorge Pérez de Leza.
The homes will have an average price of €10,000/m2 (prices will range from €8,000/m2 to €12,000/m2 depending on the floor). “It will be different to anything else that exists in the area. There will be common areas with a gym, spa and a space for events. We are going to customise the product and for that reason, we have created a specific team of technical architects to advise clients in their choice of materials and the distribution of their homes, as well as on implementation costs and timings”.
The sale of these homes will begin this summer, although the developers have already received a number of requests. “We expect 60% of the homes to be sold to foreigners; and the remainder to be sold to people who live in the area and want a new home, or who have a home in La Moreleja or Somosaguas and now want to move to the centre”. The construction work will begin at the start of 2016 and will be completed in mid-2018. “Some of the below-ground work has already been completed, but we will have to improve it because it is somewhat dilapidated”.
In addition to fifty homes, the property will also have a shop space measuring around 1,000 square metres, which will be rented out.
Original story: Expansión (by Rocío Ruiz)
Translation: Carmel Drake