Velayos: Neinor Plans to Deliver 15,000 Homes by 2022

23 February 2018 – Eje Prime

Despite ending last year with a loss, Neinor Homes seems to have everything under control. The property developer is now heading into a new  five-year phase during which time it expects to leave behind those losses and invest almost €1.5 billion in the purchase of new land and to deliver up to 15,000 homes, according to explanations provided by Juan Velayos (pictured above), CEO of Neinor Homes, speaking to Eje Prime in an interview.

“You always have to read the cycle and, now, is a good time for the real estate business”, explains Velayos. “We complain that there is not as much land as we would like in the market, but the reality is there is, just not in the hands of property developers”.  Over the next few years, new land will start to be released, which will satisfy the desire of companies such as Neinor Homes, and other players that operate in this sector, including Aedas Homes, Vía Célere and Metrovacesa, to continue growing.

In 2018, Neinor Homes plans to invest around €250 million in land. “At the moment, we are studying land on our radar worth around €500 million, of which €151 million is already in the negotiation phase, another €145 million is under analysis and the remaining €217 million is strategic land for Neinor Homes”, says the director.

Over the next few years, Neinor Homes has set itself the challenge of investing between €300 million and €350 million in the purchase of new land until, at least, 2022. “Nevertheless, we are negotiating several purchase operations for non-buildable plots, minimising the use of own funds, whereby following the Anglo-Saxon model,” said Velayos, as one of the alternatives that he has found to continue gaining ground in the development of its business plan.

In terms of the delivery of homes, since its creation until 2017, Neinor Homes has delivered 432 homes, with a gross margin of approximately 28%. Now, the company has set itself the objective of handing over 1,000 homes in 2018, in order to reach its cruising speed over the following years and double the delivery of finished homes year after year. In this way, Neinor Homes expects to hand over 2,000 homes in 2019, 4,000 homes in 2020 and 8,000 homes between 2021 and 2022.

Currently, Neinor Homes has a portfolio of 12,472 homes in stock, including finished homes, homes under construction and homes under design, compared to 9,025 a year ago, which represents an increase of 28%. The property developer owns a portfolio of buildable land spanning 1.47 million m2, which has also grown since last year, by 29%.

In terms of Neinor Homes’ debt, according to Velayos, it is “more than under control”. The company has net debt amounting to €382 million, up by 31% compared to last year, when its credit obligations stood at €291.6 million. “It is healthy and an indicator that the business is performing well: we finance the construction phases using bank debt and the purchase of land using own funds”, says the executive. The group’s loan-to-value is 22%.

2018 – the turning point

The property developer lost €25 million in 2017, weighed down by the costs of its stock market debut, as the group reported yesterday to the National Securities and Exchange Commission (CNMV). Nevertheless, Neinor Homes still has the objective of becoming profitable in 2018. If Neinor Homes fulfils all of its objectives for the coming year, the company will sell and deliver (and receive the proceeds for) 1,000 homes, at an average price of €300,000. As such, with a return of 20%, the property developer could generate profits of €60 million.

The revenues of the company, which has been listed since March 2017 and for that reason does not compare its accounts with those of 2016, amounted to €225 million, of which €77 million proceeded from the new build property developer business and more than €114 million from the sale of “legacy“, assets proceeding from the real estate subsidiary of Kutxabank, which its former shareholder Lone Star purchased in 2015 to create it.

Following the same calculations, the turnover of the company from the handover of homes in 2018 would thus amount to €300 million, excluding any pre-sales that may be closed during the course of the year, which Neinor calculates will amount to €750 million.

Original story: Eje Prime (by Custodio Pareja)

Translation: Carmel Drake

Neinor Expands Overseas & Finalises Purchase of 3 Plots in Lisbon

26 December 2017 – El Confidencial

The dream of making the leap overseas is increasingly closer to becoming a reality for Neinor. The property developer led by Juan Velayos is holding advanced talks to acquire three plots of land in Lisbon, according to sources familiar with the deal. Provided nothing goes awry, the deal is expected to close between the end of January and the beginning of February.

With this move, the company will fulfil its objective of entering the Portuguese market, where it first placed its focus several months ago in order to take advantage of the recovery happening in the country. The evolution there is expected to be similar to the recovery that Spain has been enjoying in recent times.

Neinor’s objective is to acquire sufficient plots of land to enable it to build 300 homes per year, a volume that would justify the opening of a dedicated office in Lisbon.

The acquisitions that the property developer currently has on the table would justify its debut in the neighbouring country, although the same sources also indicate that, currently, Neinor is in the “due diligence” phase and that all three plots must pass the test for it to go ahead with the agreement.

Although the entry into the Portuguese capital would represent Neinor’s international debut, the property developer regards the move in the context of the entire Iberian Peninsula representing a single market, albeit taking account of the Portuguese cultural, legal and regulatory rules.

In light of this commitment to urban housing, Neinor and its main shareholder, Lone Star, have taken the decision to not transfer to the property developer the plots of land that the fund acquired two years ago in the Algarve from Catalunya Banc.

The plots in question house the Vilamoura tourist complex, which spans a surface area of almost 2,000 hectares and a buildable area of 700,000 m2. More than 5,000 apartments and homes are going to be constructed there and the US fund engaged CBRE last autumn to start selling them.

During the first nine months of 2017, Neinor invested €275 million in buildable land, which means that it now has land for the immediate development of around 12,000 homes. It also generated revenues of €169.4 million, with a gross margin of €40.7 million.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

Neinor Recorded Losses of €8.2M In Q1

28 April 2017 – Fianzas

The real estate company Neinor Homes recorded losses of €8.2 million during the first quarter of the year, according to a statement filed with Spain’s National Securities and Exchange Commission (CNMV).

Neinor, which debuted on the stock market on 29 March 2017, is the former real estate arm of the Basque bank Kutxabank, which was acquired by Lone Star; that fund that is still the entity’s main shareholders with 39.5% of its share capital.

The real estate company recorded revenues of €72 million during the first quarter and a gross margin of €10.8 million.

The firm’s debt amounted to €314 million, the same as last year, although the company highlighted the strong generation of cash flow – €106 million – which reduced its net debt balance to €208 million, i.e. 28% lower than the figure last year (€291 million).

That left the ratio between net debt and net equity at 29%, compared with 46% last year. (…).

Original story: Fianzas

Translation: Carmel Drake