Gestilar Launches Plan to Address Mallorca’s Scarce Housing Supply

6 July 2018 – Eje Prime

Gestilar is thinking about the Mediterranean. The property developer has started the summer by marketing the first 89 homes that it is building in Mallorca. As part of its €123 million investment plan, the real estate company is going to build 400 homes over the next few years in Palma across three developments in the Nou Llevant area, to the south-east of the city.

Mediterrània 1, the residential development through which the real estate firm has arrived in the Balearic Islands, is going to comprise homes with two, three and four bedrooms. It is designed for locals, both first-time buyers as well as those looking to reposition”, explain sources at Gestilar speaking to Eje Prime.

On an island with a “shortage of structural supply and economic stability”, Mallorca has become “one of the most desirable markets in Europe for investing in the real estate sector”, according to Raúl Guerrero, Director of Developments at Gestilar.

At the end of 2017, the property developer led by Javier García-Valcárcel purchased three plots in the Balearic capital with a total surface area of 55,300 m2. “We set our sights on Palma due to the shortage of new housing projects that have been built there in recent years”, explains Guerrero, who highlights the “the pent-up and unfulfilled demand” that exists in the city.

The first of the developments comprises several four- and seven-story blocks with their ground floors allocated to commercial premises. The design of the project has been entrusted to the Spanish architecture studio L35, which has created an urbanisation with substantial common areas.

Located 500 metres from the beach and the port of Portixol, Mediterrània 1 will have communal spaces with a swimming pool, a gym and a games area for children. The construction of the first phase is due to start between the last quarter of this year and the first quarter of 2019, with the aim of handing over the first keys before the end of 2020.

“There is space for new projects in Palma” 

Gestilar’s interest Palma is not the first from a Spanish residential property developer in recent months. A few days ago, the listed company Aedas Homes put on the market its fourth project in the Balearic capital and several other companies are working to begin projects this year.

This growing interest in Mallorca comes in response to the sales rates on the island that place it at the top of the ranking in the residential sector, behind Madrid and Barcelona. “It is still too early to assess the rates of our own developments, but for the last few months, we have been monitoring and updating our market research, and the results of this analysis reveal a high rate of marketing in the area”, explains Guerrero (…). According to the director of Gestilar, “there is space for new projects in Palma”, where the property developer has already opened an office.

In this regard, the property developer believes that Palma is going to be one of the cities, like Madrid, Barcelona and Bilbao, that will look to improve its positioning abroad. In the Balearic capital, we are seeing a recovery in terms of property development activity, where a significant number of developments have started to be marketed between December 2015 and October 2017, which means that home completions are now growing, according to Gestilar (…).

Original story: Eje Prime (by J. Izquierdo)

Translation: Carmel Drake

Ibero CM Grants First Alternative Loan (€35M) To Local Property Developer

6 July 2018 – El Confidencial

Ibero Capital Management, the management firm launched by Walter de Luna and Luis Moreno, both former directors of Sareb and Acciona Inmobiliaria, has just closed the first major alternative financing operation in Spain, for an amount exceeding €35 million, which involves funding to purchase land, repay bank debt and build the project.

Of those €35 million, two thirds will be allocated to the land purchase and to repaying debt, whilst one third – approximately €10 million – will be used for the construction of the project.

The beneficiary is a local property developer in Málaga, which, thanks to this liquidity has been able to acquire three plots located in the Málagan town of Mijas, together with a golf course. It plans to build 145 homes on the land. The plots are not only finalist, the urban planning permissions to be able to start the building work are also very advanced, given that the marketing of the homes will begin immediately, according to explanations provided by Walter de Luna and Luis Moreno, speaking to El Confidencial.

The Ibero CM platform was created by the two directors to facilitate access to alternative financing for property developers and cooperative managers who want to buy land and are unable to obtain bank financing. They have €400 million available to finance developments all over Spain. The money comes from Oak Hill Advisors, one of the largest investment funds in the world, with more than USD 30 billion under management, which has invested more than €1 billion in Spain since 2005, primarily in real estate projects.

Ibero CM has closed this operation in record time, almost two months after announcing its own launch. It currently has several other projects in the pipeline amounting to approximately €100 million, which it hopes to close over the coming weeks and months.

This is the first firm of its kind to be launched in Spain, financing both the capital and debt of property development companies in every phase of the development of their products, including land purchases.

“The financing structure is very flexible since it includes several tranches that finance the acquisition of land, the repayment of bank debt, the payment of taxes and other expenses associated with the transaction and construction of projects (…)”, explain Walter de Luna and Luis Moreno.

“By staying (involved in projects) to the end and sharing in the profits, the financing costs decrease significantly”. And they add that “by sharing in the final profits of the project, the interest rates are not as high as if they were only financing land purchases. And there is not a fixed percentage, given that it depends on the total cost of the constructions that we finance. The greater the cost, the higher the percentage”, say the directors.

For now, Ibero Capital is focusing on finalist land and plots in a very advanced phase of urban planning, and they are centring on the major markets in Levante, Andalucía and Madrid, although they acknowledge that the Madrilenian market “is very expensive and, although we are only looking at the moment, obviously, if we decide to enter, the property developer margin would narrow”. Specifically, the manager is holding conversations with a cooperative manager to finance a project in Madrid. Similarly, they are open to both first and second home projects, whenever the projects are viable.

Unlike the investment funds that have acquired stakes in property developers in recent years, they do not get involved in the management of the companies that they finance. “We are not shareholders in the companies’ share capital, therefore we do not interfere in their decision-making or in their management. We carry out the same controls that any bank would when granting a property developer loan”, they conclude.

Original story: El Confidencial (by E. Sanz)

Translation: Carmel Drake