Grupo Pinar & Baupost Agree Purchase of Levitt & Create New Property Developer Giant

19 February 2018 – El Confidencial

The most coveted property developer of recent times may change hands within the next few days. Levitt is holding advanced talks with Q21 Real Estate, a company created by the joining of forces between the former Grupo Pinar and the US fund Baupost, to close its sale this week and, in any case, before the end of February, according to several sources familiar with the operation.

The agreement will put an end to almost two years of to-ing and fro-ing with different interested parties in acquiring the property developer, a reference player in the market for premium homes, and will also create a new giant in the sector within the convulsive Spanish residential market.

As El Confidencial revealed, it was in 2016 when Levitt first started to listen to offers as a formula for dealing with its problem of generational succession, following the death of the group’s founder and alma mater, José María Bosch Aymerich, without any direct descendants.

Owner of one of the best land portfolios in Madrid, with land in locations such as Alcobendas, Las Rozas, Pozuelo and Boadilla del Monte, Levitt has proved tempting over the past two years for giants such as Goldman Sachs, Apollo, Värde and even the fund Baupost itself, which was on the verge of acquiring the property developer last year.

But on the home straight, those negotiations were called off due to differences over price, as well as over the continuity of the project and Levitt’s team. After closing that door, the fund found another window open through Q21, the property developer that has placed a better offer on the table than the one put forward by the US fund, and one that ensures the survival of Levitt.

Who is Q21?

Constituted in July 2014, Q21 Real Estate has a brand that is still new and a workforce of just 17 employees – both features have facilitated its agreement with Levitt, with which it shares its vision of high-quality developments.

Currently, Q21 has nine developments underway, mostly in the Community of Madrid (Boadilla del Monte, Valdebebas, Getafe and Mostoles), but also in Málaga and Valencia. Altogether, the firm is working on 1,500 homes.

With assets worth €6.3 million and net equity of €3.58 million in 2016 (the last year for which audited figures are available), Q21 generated revenues of €5.27 million, an operating profit of €3.5 million and a profit of €2.76 million.

Its numbers are well below those recorded by Levitt, whose turnover amounted to €62 million and net profit €6.3 million. Moreover, Levitt owns a portfolio worth €200 million, its brand is recognised in the market and its history spans almost fifty years in Spain after it arrived in 1971 to introduce the US residential urbanisation model.

Original story: El Confidencial (by R. Ugalde)

Translation: Carmel Drake

No Buildable Land Left in ‘Sevilla Este’ After Fund Shopping Spree

16 January 2018 – Sevilla ABC

The supply of land in Sevilla Este has almost run out. And that milestone represents more than just a symbolic fact. It is a clear sign that a new cycle of real estate expansion is underway, characterised by significant interest from property developers in neighbourhoods and towns on the outskirts of Sevilla. It also provides evidence of the shortage of buildable land that exists in the municipality of the provincial capital, which has caused the few plots of buildable land that have come onto the market to spark a great deal of interest amongst investors.

Whilst the property sector started its rebirth in certain parts of the city centre in 2015, interest in other areas of the city has been increasing significantly over the last two years to meet the new demand that is being generated by the growth of the economy. The result of this trend is that in just three months, almost all of the residential plots in the Sevilla Este area have been sold.

“With just a few exceptions, everything that was on the market has now been purchased”, along with plots that still need to be developed for public and social services, explains Juan Aguilera, Manager at Gaesco, speaking to ABC.

And this investor boom in that area of the city is due to the fact that “Sevilla is running out of buildable land for new developments, since vital infrastructures such as the SE-35 ring-road have not been built, which is the main artery that ought to be boosting all of the new areas of metropolitan expansion”, says Aguilera (…).

Q21’s investment

The most recent large land operation in Sevilla Este was carried out by Q21 Real Estate, the property developer that emerged from the merger between the US investment fund Baupost and the Spanish company Grupo Pinar (one of the most recognised firms in the former property sector). That company has acquired a plot measuring 5,400 m2 at the end of Avenida Emilio Lemos, opposite the Aleste Plaza shopping centre, where it will build around 164 homes. The company is currently processing the permits it requires to start the building work and, once it has received the green light, will complete the construction of the properties within a period of 26 months. The plot that Q21 has acquired belonged to another company in the sector that filed for bankruptcy.

That purchase operation took place at the same time as two other large investments in Sevilla Este, also made by companies that are partly owned by large investment funds. One of them was led by Vía Célere, in which Värde Partners owns a majority stake; it acquired a plot for the construction of 1,700 homes that had belonged to BBVA. And in parallel, the fund Activum purchased plots for the construction of more than 1,000 homes (…).

In Aguilera’s opinion, the interest from these investment funds in Sevilla Este has arisen because several factors have converged. “There is significant built-up demand in Sevilla from families who chose to rent during the crisis and who are now interested in buying a home, plus the years of recovery are now creating new families who can also afford to buy one of these new homes”. This demand, combined with the shortage of buildable land in Sevilla, is what has caused the interest in Sevilla Este to soar, which is exactly what already happened with Hacienda Rosario (which used to belong to Gabriel Rojas and which was acquired by Aedas Homes).

Interest in Entrenúcleos

In these circumstances, Aguilera considers that future real estate investments will not be made directly in Sevilla, but rather in the some of the population nuclei of the metropolitan area, especially in Dos Hermanos (which has made the effort to develop an area like Entrenúcleos).

Aguilera thinks that, unfortunately, time has proved him right. “If we had done our homework, we would now be enjoying a great period for the reactivation of large residential projects: demand and the economy are growing, financing is available at very reasonable prices…but none of the areas that require the SE-35, like Higuerón Norte, Buen Aire, San Nicolás Oeste and Villanueva del Pìtamo, have the infrastructure they need to capitalise on this new construction boom” (…).

Original story: Sevilla ABC (by Luis Montoto)

Translation: Carmel Drake