Domo Activos Embarks On New Growth Phase

3 November 2017 – Eje Prime

Domo Activos is embarking on a new phase of growth. The largest property developer Socimi, aimed at medium-sized investors, is going to launch a €15 million capital increase over the next few weeks. It plans to use the funds raised to buy new land in Spain, with the purpose of building new homes, according to José Luís Alba, Director of Domo Gestora’s Socimi.

According to the director, the company has already identified opportunities in Spain and is now waiting to beef up its financial strength so as to be able to actually purchase the new plots. “We will focus these acquisitions in Madrid, Málaga and Valencia in the first instance, but we are also looking for plots in Sevilla, Córdoba, Granada and Zaragoza”, said the executive.

Domo Activos Socimi will increase its share capital through an issue and placement into circulation of up to a maximum of 7.5 million shares, with a nominal value of €2 each “with an incomplete subscription forecast”. To approve this increase, Domo Activos has convened an Extraordinary General Shareholders’ Meeting, which will be held in Madrid on 30 November.

The business model of Domo Activos involves the acquisition of land for the construction of buildings, which are let out for the first three years and then sold “whereby benefitting from the tax benefits afforded to these types of companies”. “In this way, all of the capital gains generated, from the date the land is acquired to the date the properties are sold, are not taxable for corporation tax purposes”, explain sources at the group.

According to the company’s own estimates, the return on this project, once the divestments have been made, could reach 10% per annum. Investors receive the profits resulting from rental income in the form of dividends throughout the period that the buildings are leased and until they are sold.

Currently, the first project being promoted by Domo Activos is the development that it is constructing in Madrid, in El Ensanche de Vallecas. This building will contain eighty homes for rent, according to sources at the group.

New leadership team

Moreover, the company has also been reshaping its management team in recent months. To carry out this new phase of growth, Domo Gestora has appointed José Luís Alba as Director of the Socimi, a role carried out until now by Roberto Boluda, who moved to Prygesa in July as the Managing Director of the property developer owned by the Pryconsa group.

Domo Gestora’s Socimi was created by a team that is closely related to the real estate business. When it was launched, the company appointed Enrique Guerra as its CEO. Guerra is an expert in real estate management and has specialised in housing cooperatives since 2002 (…).

Domo’s management team is completed by executives such as Juan Pedro Plaza, the Socimi’s Director of Investments (…); Feliciano Conde, who took over the presidency of Domo Activos in January 2016 (…); and Alberto Freire, Director of Developments at Domo, amongst others.

Original story: Eje Prime (by C. Pareja)

Translation: Carmel Drake

Domo Submits Bid To Wanda For Edificio España

31 May 2016 – Cinco Días

Domo Gestora has submitted an offer to acquire the historical Edificio España as part of the sale process that the Chinese group Dalian Wanda currently has underway. Three sources close to the operation have confirmed the bid, but it is expected that the company will have to compete with other interested parties.

The sale of Edificio España is being managed by the consultancy firm JLL, which declined to comment on the process. The intermediary closed the first deadline for the presentation of non-binding offers last Friday, 27 May 2016. Over the next few weeks, the Chinese group will analyse the offers it has received for the building, in which Wanda had planned to open a hotel and luxury homes, as well as a shopping arcade. The plan is to finalise the sale before August. Domo is one of the possible candidates to take over the property and is expected to form an alliance with a hotel partner or other investor, whose identity has not been revealed.

Domo is a medium-sized company that specialises in the management of housing cooperatives. According to the sources familiar with the transaction, it could become the perfect local partner to take over the renovation and marketing of the apartments. The management firm has been in the news recently for its involvement in Residencial Maravillas, a luxury housing development on Calle Raimundo Fernández Villaverde (in Madrid), where work has not started yet and whose approval divided the municipal Ahora Madrid government.

The sources consulted understand that Wanda lost interest in this Madrilenian project after it was unable to carry out its renovation plans, which involved demolishing the property to rebuild it from scratch in keeping with the original style. After the plans were rejected by the Administration, the company decided to withdraw its complex renovation plans. The group purchased the 1950s building from Santander for €265 million in 2014. Domo is thought to have been inspired by a proposal put forward by the architect Carlos Rubio Carvajal, who submitted a more respectful design to the financial institution.

In addition to Domo’s offer, sources in the sector indicate that other investors, who were potentially interested in the building initially, have also analysed this operation, however, it is not known whether they have submitted bids in the end or not. The other parties include the Chinese fund Fosum, the Hong Kong-based firm Platinum Estates, the Philippine group Emperador – which recently acquired Torre Espacio from the Villar Mir Group -, the US fund Hines and the insurance company Axa, which declined to comment on its involvement in the sale. Both Wanda and JLL are maintaining the utmost confidentiality surrounding this transaction.

Experts in the sector indicate that Wanda will only be interested in selling the property if the consideration offered exceeds the €265 million it paid in 2014. Meanwhile, the Asian group is continuing its negotiations with the Town Hall regarding the handling of the renovation work, given that the property would be worth more if the group manages to obtain the necessary building permits.

Original story: Cinco Días (by Alfonso Simón)

Translation: Carmel Drake

Demand For Off-Plan Homes Rises From The Ashes

8 May 2015 – El Confidencial

We can see cranes and bulldozers on the horizon in Spain once more. And although players in the real estate sector would rather talk about prudence than euphoria, stabilisation than recovery, the outlook is very encouraging.

Mortgage lending is increasing, more new homes are being built and more homes (in general) are also being sold. And, although the second-hand market is still winning hands down – even though the statistics are distorted by the foreclosures of homes by banks – demand for new builds is returning once more. Thus, purchasing a home off-plan, a practice that became almost anecdotal during the crisis, is returning to the fore once again, seven years after the real estate bubble burst.

There are several advantages to purchasing off-plan. You buy a new home that, for the most part, does not need any work doing to it. Some developers even allow future owners to adapt homes to their needs and likes – to convert a 4-bedroom home into a 3-bedroom property with a larger living room, for example – but, undoubtedly, the main advantage is that purchasers are not obliged to make a major outlay (of cash) in one go, but rather, they make small contributions until the keys are handed over, and those amounts are then deducted from the final price of the home. The main drawback is that new builds are not yet finished, which means they are not available immediately. And construction work can last for between 18 and 24 months.

Recently, several dozen people queued up overnight to reserve one of 62 homes that Solvia will soon build in Barcelona. It will be the real estate platform’s first development in the regional capital. (….) “There was a great deal of interest because it was a well-located product, with great features and reasonable, attractive prices”, said Augusto Monte, Director of Sales and Transactions at Solvia. “Clearly, it was an exceptional case and you cannot make wider generalisations about what happened with this development”. Nevertheless, Monte acknowledges that the fear of buying off-plan has declined in recent months.

(…) Other recent examples include the actions of housing cooperatives – for example, the plot of land in Raimundo Fernández-Villaverde or the old engine sheds at Cuatro Caminos – which obtained 100% of the partners in record time to sign up to purchase homes that will not be built for another two years.

Property developers, banks and servicers are conscious of this change and have come to the largest real estate fair in Spain (SIMA) with this type of product. Thus, for example, Solvia has a 75-home development of Alcalá de Henares. Between July and September last year, 64% of the development had already been purchased. And it is not the only one.

“We still notice considerable uncertainty amongst prospective buyers. Many of them come to the stand to ask us when the construction work will to begin. They are quite afraid that the building work will get delayed or that it will not happen at all”, says Inmaculada López-Gasco, sales manager at Magnum & Partners, which started to sell 63 homes in San Sebastián de los Reyes in April. “We have already sold 16 – i.e. 25% – and we will have the licence to start the construction work in June. We hope that sales will accelerate once the bulldozers start work.

(…)

Original story: El Confidencial (by Elena Sanz)

Translation: Carmel Drake

Cooperatives Queue Up To Buy A Plot That The Treasury Purchased 30 Years Ago

16 February 2015 – El Confidencial

All eyes are focused on one plot of land in Madrid. A plot of land, which the Treasury purchased from a group of nuns for 800 million pesetas in 1985, could now, three decades later, be sold for several million euros. It is one of the largest and rarest gems left in Madrid and many of the large housing cooperatives have already expressed interest. These same cooperatives were responsible for some of the most talked about transactions in the country last year; and this deal would allow them to offer hundreds of low cost homes in the centre of Madrid, just a few metres from the Paseo de la Castellana, something that was unthinkable a few years ago.

The plot measures just over 15,000 square metres and is located at the intersection of Calles Padre Damián and Fray Bernardino Sahagún, very close to the Castellana and ten minutes away from the Santiago Bernabeu stadium and the Torres KIO. It is owned by State Heritage (Patrimonio del Estado), which in turn reports to the Treasury (Ministerio de Hacienda). The land has its own history…it used to house a convent, which was demolished shortly after the plot was acquired by the Government. Three decades later…., the plot may come back onto the market in a perfect transaction for the public coffers, thanks to the increase in land values during the intervening period.

Nevertheless, before the plot is auctioned, some administrative hurdles will need to be overcome to change its intended use. The State Heritage department has proposed a one-off amendment to the General Urban Plan for Madrid because, for this land to be attractive in the market, and for the Treasury to obtain the maximum price for its sale, its use must be residential; currently it may only be used for the collective services of the Public Administration. (…)

This one-off amendment is awaiting provisional approval by the Town Hall of Madrid and definitive approval by the Community of Madrid, according to sources from the Treasury who say that until this happens, the plot will not be put up for sale. (…)

(…)

Under the spotlight of the management cooperatives

“The size of the plot, its location, its environment, its intended suitability for construction, its scope, the potential appeal of the project that could be developed makes this plot of land a clear target that is going to generate a lot of interest”, said Leopoldo Morena, the CEO of the Ibosa Group, the cooperative manager that was responsible for one of the most important land transactions in the capital last year, when it was awarded ownership of Metro de Madrid’s depots in Cuatro Caminos for €88 million. That project, Residencial Metropolitan, which will bring more than 400 homes onto the market, with prices upwards of €2,600 per square metre, has almost all been sold (95%).

Nevertheless, the operation of the year was, without a doubt, the sale of a plot of land on Calle Raimundo Fernández Villaverde by the Ministry of Defence in a bid that was won by the cooperative manager Domo. Its offer for €111 million exceeded those made by Ferrovial, Pryconsa and Construcciones Amenabar; all of the homes in the development have already been sold. The sales price of the 355 homes was expected to start at €3,300 per square mete.

These two transactions boosted the market in 2014. According to data from the real estate consultant Irea, transactions involving land in Spain amounted to €346 million last year, which represented just 4% of the total investment in the market. A low percentage, however, in 2013, there weren’t any transactions involving land above five million euro, the threshold that Irea uses to prepare its analysis of investment in Spain (and so the deals closed in 2014 did represent a move in the right direction).

“Transactions such as the one in Calle Raimundo Fernández Villaverde, the Metro de Madrid and more recently, Amenabar’s purchase of various plots of land from Sareb, without financing, were unthinkable a few years ago”, explains Mikel Echavarren, the CEO at Irea.

In his opinion, the main players that may sign land-related transactions in Spain this year will continue to be domestic companies, developers and cooperatives, which are capable of financing their land purchases with their own funds: “There are scarcely six companies in Spain at the moment with sufficient financial capacity to finance land purchases”….

The role of international investment funds in the direct purchase of land will be practically zero, but they will be involved in the acquisition of portfolios of debt that contain land or residential developments as underlying collateral.

The plot of land in Madrid has also attracted interest from prospective house buyers, as evidenced by the fact that some managers have received requests from more than 2,000 interested parties. And it is no wonder: if the land falls back into the hands of cooperatives, they may build homes right in the centre of Madrid at very competitive prices, especially compared with those in private developments, such as the one that will start soon in Calle Juan Bravo, 3, where the prices of the luxury homes that are going to be built on the site may reach €9,000 per square metre, significantly higher than the less than €4,000 per sqm being charged by both the Ibosa Group and Domo Gestora for their recent acquisitions in Madrid.

Original story: El Confidencial (by Elena Sanz)

Translation: Carmel Drake