Tag: local property developers

Baupost Finalises Purchase Of Luxury Property Developer Levitt

19 October 2017 – Expansión

The luxury real estate construction sector is retaining its shine. One of the property developers that survived the previous cycle, Levitt-Bosch Aymerich, is on the verge of changing hands. A consortium of American investors, led by the fund Baupost Group, is holding exclusive negotiations to purchase the property developer that specialises in luxury homes, which has a market capitalisation around €200 million.

Sources in the sector explained to Expansión that the operation is in the due diligence phase (the assets are being audited) and that, although no agreement has been reached yet, the operation may be closed soon if the negotiations continue.

Baupost will team up with a local operating partner, Alpine Grove, for the operation. The advisors on buyer include PwC and the law firm Garrigues, on the legal side. Meanwhile, Deloitte Legal is the legal advisor on the sell-side.

According to the latest available information from the Mercantile Register, Levitt-Bosch Aymerich’s net equity amounted to €162 million at the end of 2016. The company recorded a turnover of €61 million and an attributable net result of almost €6 million. Besides Baupost, several other US investment funds that are very active in Spain also submitted bids for Levitt. In this way, market sources indicate that Lone Star, Värde and Castlelake all expressed their interest in the company over the last 12 months.

Levitt, founded in 1929, with the construction of a luxury residential development in New York, arrived in Spain in 1971 with the help of José María Bosch Aymerich, who died in 2015.

In 1973, the company undertook its first development on the Monteclaro urbanisation on the outskirts of Madrid. Since then, it has constructed several high-end developments in Madrid and Barcelona, as well as some office complexes.

In this regard, in October 2014, the company sold five office buildings in Madrid to Merlin for €130 million in order to focus on its residential business.

The firm is currently working on some developments in Valdemarín (Aravaca), in one of the most exclusive areas of Madrid as well as on the El Juncal urbanisation in Alcobendas, amongst others.

Shopping fever

If this deal is closed in the end, it will join the fever of property developer sales that has been happening in Spain in recent years. Examples include Lone Star, which purchased Kutxabank’s real estate subsidiary Neinor in 2014 for €930 million. Also, in February, Värde acquired Vía Célere for €90 million and merged it with DosPuntos – the former real estate subsidiary of the SanJosé group -. In addition, that same fund purchased Aelca from Grupo Avintia for €50 million in June 2016.

Meanwhile, Castlelake, which started to back the Spanish housing market back in 2013 with the purchase of land, launched Aedas Homes just a year ago. Other investors are also backing the market through agreements with local groups to build homes, such as the case of Morgan Stanley and Gestilar, and Green Oak and Ibosa, amongst others.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Sareb Emulates The Funds By Teaming Up With Local Developers

23 November 2015 – El Confidencial

Two years after its creation, Sareb has decided to change its strategy and instead of selling large portfolios of land to opportunistic funds, it will now develop these plots of land itself and whereby benefit from the resulting margins.

Aware that the bulk of the large operations have now been completed, the President of the entity, Jaime Echegoyen, has decided to adopt a retail sale strategy, in which one of the main growth drivers will be the formation of partnerships with local developers, to jointly develop the greatest possible volume of land.

For these co-investment agreements, Sareb will provide the land, whilst the local partners, which specialise in the business, will take care of the construction and development of the homes, in projects that would be very difficult for them to aspire to if they had to purchase the land, since many domestic companies are still unable to make that kind of financial commitment.

Sareb hopes to lay the first stone in this new initiative in Andalucía, where it is currently finalising an agreement with a local property developer. And it will soon add other projects in Madrid, where the entity owns various plots on which it is looking to develop several promotions through this kind of co-investment formula.

On the trail of the large funds

These types of agreements between Spanish property developers, who know the business, and financial institutions, have been one of the main drivers behind the emerging recovery seen over the course of the last year, above all in Madrid and Barcelona, which have enabled international funds to now be financing the development of 10,000 homes.

For example, Castlelake, which acquired around twenty plots of land from Sareb in two different operations – the Crossover portfolio and 76,100 m2 of land in Boadilla del Monte – have a total surface area large enough for the development of 1,200 homes. It is working together with its local partner, Aelca, on this project.

Other examples of partnerships between international funds and local property developers include: Renta Corporación and Kennedy Wilson, Momentum Real Estate and Harbert Management, Uniq and Bream Real Estate, and InmoGlaciar and the German fund Aquila.

To become a partner of reference for domestic companies, Sareb has the experience and position of having more than 17,000 debtor companies, with which it is trying to negotiate solutions, such as “daciones en pago” and other conversion formulae. In fact, between January and June this year, it managed 5,413 proposals from property developers, around 30 proposals per day, according to its half yearly report.

During this period, the entity led by Jaime Echegoyen also completed six real estate developments, resumed another 11 and approved the development of 13 plots of land, where it plans to build another 780 homes.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake