Tag: Kronos

Kronos to Invest Another €500M by 2021 to Become the New Real Estate King

16 May 2018 – Press Release

The real estate developer created by a former director of Fortress now owns a  land portfolio spanning more than 1 million m2 for the construction of 8,000 homes.

Led by the investment manager Kronos, the real estate company Kronos Homes has become one of the largest property developers in the country, in just four years, with a land portfolio that exceeds 1 million m2.

Saïd Hejal leads the company. The Parisian founded Kronos in 2014, after several years studying the Spanish market from London as the head of one of Fortress’s investment funds. “I was in charge of investments in Southern Europe (Portugal, Spain, Greece and France) for Fortress, with a particular focus on Spain from 2012 onwards. We chose Spain because we believed that it was the market with the greatest future growth potential with respect to the other European countries”, explains Hejal, Managing Partner of Kronos.

Unlike other investors, the former executive of Fortress opted to create his own property developer and grow it to become one of the largest landowners in the country. “I have worked for years in the US, and there, the property developers were focused on design; in Spain, we saw the opportunity to create a company based on design, that’s why we chose to create a company, with a new image, rather than acquiring an existing one”.

To carry out this project, Hejal went to a group of investors who, through Kronos Asset Management, put together the funds to create the Spanish developer. “Kronos is the owner of Kronos Homes, the brand of the residential developer. We have an office in London since most of our investors are based all over Europe; they are family offices and global investors. In total, we have around 15 investors, who arrived after the company was created, although the family that founded Kronos is also still with us”, explains.

Since its creation, Kronos Homes has invested €500 million in the purchase of land. “We have a portfolio spanning 1 million m2, which will allow us to develop 8,000 homes. The plots are located in Madrid, Cataluña, Costa del Sol and Alicante. Now we are entering some of Spain’s large capitals such as Córdoba, Sevilla, Tarragona and Cadiz”, says Hejal who predicts more new acquisitions. “We plan to invest another €500 million over the next 24 to 36 months”.

To this end, Kronos is backing the selective purchase of land. “We have acquired two thirds of our current portfolio from banks and the other third from developers; we have also completed several operations with Sareb and we will continue to work in this way”.

Thus, he rules out the possibility of corporate operations, giving priority to organic growth. “We are not interested in buying other companies. Such deals typically involve very difficult processes, combining corporate cultures and requiring a lot of time for integration.”

Kronos closed 2017 with 500 homes sold, among their developments in Madrid, Barcelona, Costa del Sol and Alicante. “2017 was quite a good year, better than expected, and 2018 is going very well, too. We have some very expensive projects and others that are more affordable. Our cheapest house costs around €145,000 and the most expensive, €2 million. The latter is a spectacular project in Estepona (Málaga), designed by Rafael de La-Hoz”.

“Our typical customers are first-time buyers, who have budgets of between €300,000 and €400,000.”

Stock market

Unlike other investors, the head of Kronos Homes is not planning to debut his firm on the Stock Exchange – “we are not interested, there are too many distractions”, he says – but he does plan stay with the company for many years. “Our plans in Spain are long term, we have already developed ten projects, this year we will deliver more than a hundred homes (133) and launch six new promotions. In 2019, we will launch another 20, including a project in Valencia that will be the tallest residential building in the city, with 34 floors”.

The plans of Kronos coincide with other ambitious bets from property developers such as Aedas, Vía Célere and Metrovacesa. “I think it is good that there is competition, it is healthy and positive for the consumer. We have positioned ourselves in a certain niche, with a focus on design and architecture, and that is what makes us different.”

Original story: Press Release

Edited by: Carmel Drake

CBRE: Investment in Residential set to Overtake Offices in 2018

16 February 2018 – Eje Prime

The Spanish real estate sector is going to continue on its path to recovery in 2018. The real estate market is expected to continue to spark great investor appetite although some of the cards may change their order in the deck. For example, the residential sector is set to climb to the top of the ranking in terms of investment demand for the first time since the change in the cycle, whereby surpassing the office segment. Together, the two segments look set to ensure that the sector maintains an investment volume of around €13 billion for the year as a whole, just like it did in 2017.

The keys for the continuation of the positive trend in the sector are the “strong economic forecasts for Spain, favourable financing conditions, the cycle of maturity in the market, the products for sale in the pipeline and the corporate operations underway”, according to the consultancy firm CBRE in its Real Estate Outlook for 2018 report.

The housing market will reign in the real estate sector this year, attracting one-third of all investment in the sector as a whole, according to the consultancy firm and experts consulted by CBRE. Nevertheless, the office segment, which will be demoted to second place in the investment ranking, will not be far behind the residential segment in absolute terms, accounting for 27% of total investment. The remaining third of the investment volume is expected to be split between retail (18%) and logistics (12%), as well as less significant amounts in hotels and other types of assets.

The recovery of the residential sector, therefore, will be strengthened over the coming months, according to the consultancy firm. House prices will continue to rise across Spain in 2018, with rises of around 5% and 6% p.a., and the highest increases in the two most dynamic markets, Madrid and Barcelona. CBRE forecasts that demand for housing will amount to between 550,000 and 570,000 units, primarily second-hand homes.

Nevertheless, following residential development growth in 2017, “we can establish that the trend in the sector will be positive for at least the next three years and that the construction output levels will be absorbed by demand (…), says Samuel Población, National Director of Residential and Land at CBRE Spain.

The executive explained that the sector is immersed in a process of concentration amongst the property developers, where “the ten largest property developers in the country will account for more than 15% of domestic output”. Of those, the director highlighted the listed companies Neinor Homes, Aedas Homes and Metrovacesa, as well as Aelca, Vía Célere, Pryconsa, Amenabar and Kronos, amongst others.

In 2018, the promotion of homes will continue to boom, supported by the high existing demand, with 100,000 permits forecast for the year as a whole. Moreover, Población estimates that, between now and 2020, new homes will reach a rate of demand of between 130,000 and 140,000 units. In terms of the large cities, Madrid stands out “with an average need for 25,000 new homes per year” (…).

Development of new offices and logistics spaces 

Offices and logistics are two segments that grew at record rates in 2017. Above all, in Madrid, where both segments experienced a year of great growth, and that boom is not expected to decrease this year. According to the report, the office market will continue to progress with its recovery (…).

For the Catalan capital, more surface area will be handed over this year than in any year since 2010, most of it in the form of new build properties. Even so, Barcelona will remain well behind Madrid in terms of leasing volumes, given that CBRE estimates that leasing volumes in the Spanish capital will amount to 600,000 m2, compared with 350,000 m2 in the Mediterranean city (…).

In the case of the logistics sector, the segment is currently one of the most attractive markets for investors. After registering record figures in 2017, with more than 1.5 million m2 of space leased, this year, more land will be added to the stock. CBRE estimates that for the sector in Madrid, its main stronghold, 850,000 m2 of space will be leased. That would result in an increase in investment in the logistics sector, which could amount to €1 billion in 2018 (…).

Original story: Eje Prime (by Jabier Izquierdo)

Translation: Carmel Drake

Kronos & King Street Buy Land in Madrid from Sareb

27 December 2017 – El Confidencial

The scarcity of land that is starting to be seen in cities such as Madrid and Barcelona, and the increase in property prices there, is forcing property developers to sign partnerships with international funds and expand their areas of operation outside of the large capitals, towards peripheral towns and dormitory cities.

One example of this growing trend is the recent deal signed by Kronos Homes, a high standing real estate company that has just joined forces with King Street to buy two important blocks of land from Sareb in the belt around Madrid. Specifically, they have acquired 128,000 m2 of land in Colmenar Viejo, a town located 30km to the north of the capital, where it plans to build 200 homes, according to a statement issued by the property developer.

Moreover, according to sources consulted by El Confidencial, it has also agreed to acquire 230,000 m2 of land in Torrejón, which is located 20km to the northeast of the capital. Both of these operations have been advised by Cuatrecasas and Almar Consulting.

Given their location, these acquisitions contrast with the steps that Kronos has taken in Madrid to date, where it has limited its activity to the centre of the capital. Moreover, they represent the first sales of land under management, for development over five or six years, that Sareb has made to a fund like King Street, according to the same sources.

A property developer born out of the recovery

Kronos Homes is a property developer created at the beginning of this real estate cycle to focus on exclusive homes, many of them accompanied by the stamp of famous architects such as Rafael de la Hoz and Joaquín Torres.

The latter has put his signature on the development of 82 homes that the property developer is currently building in the exclusive Madrilenian district of Puerta de Hierro, whose prices range between €488,000 and €1.4 million. Meanwhile, Kronos is working on a less elitist development in Cuatro Vientos, to the south of the capital, where it plans to build 2-, 3- and 4-bedroom homes.

With the acquisitions in Colmenar and Torrejón de Ardoz, Kronos is pushing ahead with its objective of acquiring a land portfolio for the construction of 4,500 homes over three years. Last March, the company said it already owned land worth €200 million, with capacity for the construction of 3,000 homes, and that it planned to invest another €100 million acquiring more plots.

Since it started operations in 2014, the company has closed several operations both with Sareb, as well as with financial institutions and has participated in the acquisition of non-performing loans backed by residential assets of interest.

Meanwhile, King Street is an international investment giant, which, in Spain, has been behind important debt operations, such as the one linked to Realia and the deal involving the radial highways. Currently, it is a shareholder of Neinor, in which it owns a 3.5% stake.

Original story: El Confidencial (by R. Ugalde & C. Hernanz)

Translation: Carmel Drake

Kronos Group Buys Former Tacacalera Plot In Tarragona

31 October 2017 – Diari de Tarragona

Construction cranes can be seen on the horizon in the city of Tarragona once again. And the empty plots of land that no one has paid attention to for years are now sparking interest in the real estate sector, which is starting to recover after a long time dormant, eager to restore itself. And if there is one area where this dynamism is almost tangible, it is the surroundings of the former Tabacalera tobacco factory. In recent months, several new real estate developments have been launched and players are busy making moves to ensure that they don’t miss out on the latest opportunities.

One of the most significant operations in recent times has been the purchase, by a European real estate fund, of the Tabacalera parking lot. This area, which will no longer be used as a park and ride site, from 21 November onwards, is getting ready for the beginnings of a new real estate development.

According to sources in the know, the operation was closed at the beginning of October, when Pachirisu SL purchased land from Altadis. That has been confirmed by the tobacco company itself, which said that, following the sale, “we have now sold everything we owned in Tarragona”.

The buyer company forms part of the Kronos group, which specialises in real estate development, and which started its activity in Spain in 2014, with the aim of competing with the major property developers and funds that are busy building homes across the country. A few months ago, the group’s management made a public appearance to announce that they plan to put 4,500 new homes on the market over the next three years; the development of Tabacalera will likely form part of the projects that the group is going to develop to that end. Cataluña, together with Madrid, the Costa del Sol and Alicante, are the regions where the company is investing.

The details of the project that the real estate group is going to promote in the city have not been revealed yet. “For the time being, everything is up in the air”, said the Kronos group, when asked about their plans (…).

Original story: Diari de Tarragona (by NAºria Riu)

Translation: Carmel Drake

 

Kronos To Build A New Shopping Centre In Galicia For €35M

28 September 2017 – La Región

Kronos, a company that develops and manages both residential and commercial assets and that has projects all over Spain, is going to embark on an important operation on the San Cibrao das Viñas industrial estate (in Ourense). The firm is going to build a large retail park on a plot of land measuring 40,000 m2, of which 18,100 m2 will constitute the net sales area. The park will be located on the site of the former Muebles Calvo factory, on the main road of the industrial estate, next to the access roundabout, by the Reboredo exit. The property’s façade overlooks the road, along which more than 20,000 vehicles travel per day (…).

Kronos has been looking for a site for this retail park for a year and a half “in areas where the market is interesting, and Ourense undoubtedly appealed to us for that reason”, says Manuel Holgado, Partner at the property developer. In addition to the 18,100 m2 of sales space, the retail park will have 750 parking spaces and the total investment is expected to amount to around €34.5 million. The company calculates that 250 direct jobs will be created as a result of the operation, as well as 96 indirect roles.

The largest store will be occupied by a DIY company

Enrique Feduchy, Partner at Kronos, says that the names of the commercial brands that are going to move into the park cannot be confirmed yet “because we are still holding negotiations”, but he did reveal that the largest retail space, around 8,000 m2, will be reserved for a DIY company.

In addition, there will be a food space, which will occupy 2,000 m2; another space measuring 1,500 m2 for domestic appliances; and the rest of the stores will house retail, sportswear, household goods, textiles and leisure goods, according to the first version of the plans “which may be subject to changes”, according to the company.

Feduchy specifies that the model that they are going to introduce in San Cibrao “does not exist in Ourense, because it is going to be a retail park with specialist stores, serving a sector of the public that will travel from Vigo, Santiago and A Coruña”. According to the developer’s plans, the first phase of the construction work will be undertaken during the first half of next year (…) and the park is expected to be open by the end of 2019 (…).

In terms of other opportunities, Manuel Holgado says that “we are looking at other options in Galicia for residential and commercial operations, but we have not signed anything yet” (…).

Original story: La Región

Translation: Carmel Drake

The RE Kings Are Building Thousands Of Homes In Spain

18 September 2017 – El País

The house building sector in Spain is back after a decade adrift during which many of the large firms went to the wall (…).

But the same crisis (that harmed so many) has also given rise to a new, more institutionalised house building sector, which claims to have learnt from the mistakes of its predecessors (…).

In this new industry, there are some familiar faces, such as Realia, Quabit, Amenabar, Pryconsa, Ferrocarril, and ACR, amongst others (…). But the market now is dominated by new firms. They are the new generation of property developers, or rather, they are real estate giants, and their names include Neinor Homes, Vía Célere, Aelca, Aedas Homes and Kronos, poised to ride the new wave in the residential sector. Ahead, they face some major challenges, such as facilitating housing for young people, cutting costs, the industrialisation of the sector, putting clients first to avoid the errors of the past, and improving the image of the sector by being intolerant to all forms of corruption.

At the helm of these giants are overseas investment funds, which have chosen to back the Spanish residential market, with the economic cycle in full swing – new build permits rose by 29% in 2016. These foreign players are investing thousands of millions of euros in the purchase of large portfolios of land, at still low prices, in strategic locations and they are benefitting from low construction costs, at least for the time being. In this way, the funds have engaged managers with extensive experience in the traditional property developers to lead these firms, such as Juan Antonio Gómez-Pintado (Vía Célere) and David Martínez (Aedas Homes), amongst others (…).

The firms themselves talk about reaching a cruising speed of between 3,000 and 4,000 new homes per year (per firm) over the next three years (…). The largest 50 property developers and managers by volume of homes sold (based on completions due from 2018) “plan to build around 45,000 homes over the next three years”, according to Raúl Templado, at Alimarket Construcción. This figure is low if we consider that various trade associations, such as APCE and CEOE, calculate that Spain needs 150,000 new homes per year to ensure a healthy residential market.

That is why international funds are so interested in doing business in a sector that, despite its sharp decline – the number of housing permits represents less than 10% of the level in 2007 – “continues to carry significant weight: 15% of domestic GDP” (…).

Foreign capital

The arrival of foreign funds, such as Värde Partners, Lone Star and Castlelake, has been like a breath of fresh air. “They have provided strategic vision and they made the decision to invest when we were still in a bearish cycle, identifying opportunities and giving credibility to a sector that was and still is attractive for investment, when nobody else was interested. On the other hand, their way of working with a more financial vision has resulted in structural and organisational changes that before were not considered”, says Gómez-Pintado (…).

The result is a sector in full transformation, where movements are happening non-stop, and so it is hard to know who is leading the market. The Institute of Governance and Applied Economics, an independent research centre, calculates that the largest 20 property developers in the country will build 80,000 homes between now and 2020. Their ranking is led by Metrovacesa, Neinor Homes and Aedas Homes, although family groups, local businesses and cooperative managers also feature (…).

Original story: El País (by Sandra López Letón)

Translation: Carmel Drake

Sareb Sold 900 Plots Of Land In YTD Apr17

30 May 2017 – El Español

Sareb (…) has started its fifth year of life in a rather surprising way, by doubling its overall sales between January and April, and by tripling its land sales.

The upwards trend has been on the cards for a couple of years, with the emergence of property developers, such as Neinor, Aedas, Aelca and Kronos. These new stars of the real estate market, which are mainly financed by large investment funds and managed by Spanish professionals, have had to buy up land to support their business plans.

Improvement following the migration of assets to the servicers.

In addition to this overall improvement in the real estate environment, sources at the bad bank also defend the role played by the servicers engaged by Sareb (Altamira, Haya, Servihabitat and Solvia) in this exponential increase in sales. “Last year, not all of the assets had been migrated to their respective platforms, but this year, now that the migration has been completed, the results have improved significantly”, say the sources.

(…) The 3,260 properties sold by Sareb between January and April represent an increase of 87% compared to the same period a year ago. In the case of land, the number of plots sold has tripled, in such a way that the bad bank has managed to divest almost 900 plots of land during the first four months of the year, which is the same number that it sold during the whole of 2016.

Nevertheless, the increases in sales do not correspond to a similar increase in revenues, another trend that has also been seen over the last two years.

Twice as many sales, at half the price

In 2015, Sareb sold 421 plots of land for €335 million, i.e. an average plot price of €800,000. Last year, that average decreased to €400,000. It is true that the number of plots sold increased by 220%, to 927, but the corresponding revenues only grew by 9%, to €366 million.

Sources at the bad bank chaired by Jaime Echegoyen justify this gap by explaining that “increasingly smaller plots of land are being sold now. Moreover, the geographic spectrum has been expanded (…)”.

Call for caution

If the trend recorded until April continues, Sareb should be able to shed around 1,500 plots during 2017, which, at the average price of last year, would allow it to generate revenues of around €600 million. Nevertheless, sources at the bad bank prefer to be prudent. (…).

Unsustainable increase in land prices

The increases in house and land prices, which are being seen in certain areas of Madrid, Barcelona and the Mediterranean Coast, were one of the most talked about phenomena amongst professionals in the real estate sector last week, when they met at SIMA, the Real Estate Conference in Madrid.

In this context, the President of Spanish Property Developers, Juan Antonio Gómez-Pintado, called for caution. He is not talking openly about the existence of a new bubble and maintains that the increases are still technically a rebound after almost a decade of near paralysis in this market, but he did admit that “the increases that are being seen are not sustainable”. He believes that there isn’t sufficient housing demand to sustain the amount of land that has been acquired over the last year.

Original story: El Español (by Juan Carlos Martínez)

Translation: Carmel Drake

Kronos To Close 2015 With €100M Inv’t & 1,200 Homes

6 November 2015 – El País

The real estate investment, management and development company Kronos Investment Group expects to close the year with a portfolio of 1,200 homes and investment of €100 million, which will generate projected sales of between €400 million and €500 million. And it expects to double these figures, at least, by 2016.

The company, which marks its first anniversary in Spain this week, is here to stay. (…). In 2016, it intends to create its own investment fund and in fact, it is already in talks with some of the large funds operating in Spain regarding possible investments.

The group’s activity focuses on investment and management of residential plots of land for development. (…). It sources its assets from banks, individuals, bankruptcy proceedings and from Sareb.

To date, it has invested more than €80 million purchasing land for the development of around 570 homes, located in Puerta de Hierro (Madrid), Sotogrande (Cádiz), Playa Natura (Estepona), Playa San Juan and General Marva (Alicante) and Cala de Bou (Ibiza). The development in Madrid will have between 150 and 170 homes split into two phases, which will be sold for around €3,500/m2. Next week, Kronos will close its eighth operation – in Barcelona – investing another €20 million and adding another 250 homes to its portfolio. Next year, the group will continue focusing on Madrid, Barcelona, the Costa del Sol and Levante, but it will also look for land in Málaga, Sevilla, Valencia and the other provincial capitals with little stock and strong latent demand.

According to Manuel Holgado, a partner at the company, “We are interested in locations that make sense from the point of view of supply and demand, given that we want to develop and not speculate. This year, we have focused on Madrid, Barcelona and the coastal areas where the market is working well (Estepona, Sotogrande, Alicante), but next year we will expand our focus to include other towns with built-up demand and limited new housing supply”. The group’s residential portfolio is currently split 50:50 between first and second homes.

One of the aspects that distinguishes the group is that it does not necessarily purchase land that is ready to build on (suelo finalista), but rather it is capable of managing all types of land, if necessary. “We look at relatively small plots, as well as large sites that require urban planning and development. The price of a plot of land must be sufficiently attractive to allow us to sell the end product at a competitive price in the current market environment”, says Holgado.

The company, which has offices in London, Madrid and Luxembourg, does not have any projects up for sale yet. Next year, it will launch five and so will implement a network of national and local agents, as well as its own website for clients who want to reserve their homes online. (…).

Original story: El País (by Sandra López Letón)

Translation: Carmel Drake