Tag: Oak Hill Advisors

Azora & Oquendo Capital Join Forces to Finance the Real Estate Sector with €300M

6 November 2018 – El Confidencial

The fund manager Azora, created by Fernando Gumucio and Concha Osácar, and Oquendo Capital, the Spanish private debt fund manager led by Daniel Herrero and Alfonso Erhardt, are joining forces to facilitate access to alternative financing for companies in the real estate sector. The alliance is creating a “direct lending” real estate platform, which is going to launch its first fund with €300 million destined to financing debt and all types of operations related to real estate, as well as to direct management mandates for individual operations based on their characteristics.

That is according to confirmation provided by sources close to the agreement speaking to El Confidencial. They indicate that any project worth more than €4-5 million will be considered, in both Spain and Portugal, ranging from the purchase of land and logistics warehouses, to the repositioning of hotel assets and subordinated debt, an area in which Oquendo Capital has a lot of experience, given that it already has three funds dedicated specifically to financing corporate debt.

The main objective of the platform promoted by Azora and Oquendo Capital is to cover a market segment that is looking for alternatives to debt to complement traditional bank financing, given that in the midst of the real estate recovery, access to financing to launch real estate project is continuing to represent a real handicap for many companies in the sector.

According to the sources consulted, the investment strategy that the platform proposes will focus on offering flexible financing solutions for small and medium-sized real estate operations, with a moderate risk profile, accessing those transactions in a unique way based on the combination of the successful trajectories of Azora and Oquendo in the real estate and alternative financing markets.

Alternative financing is taking off

With this fund, three vehicles have now been created in the last three months to facilitate access to financing in the Spanish real estate sector. The first to leap to the fore was Ibero Capital, a platform launched by two former directors of Sareb, Walter de Luna and Luis Moreno, with €400 million on the table. A few days ago, that firm closed a €35 million financing arrangement with a property developer in Málaga. The money will serve to pay for three plots in Mijas for the construction of 147 homes, as well as to repay part of its bank debt and finance some of the construction. The remuneration of this operation involves a fixed cost component plus a variable element, depending on the final result of the project.

Behind that fund is Oak Hill Advisors, one of the largest investment funds in the world, with more than USD 30 billion in assets under management, and which has invested more than €1 billion in Spain since 2005, primarily in real estate projects. According to the founders of Ibero Capital, that operation in Málaga will be followed by three or four more operations over the next few months.

Also, three months ago, Colliers International received the exclusive mandate from MCAP Global Finance, the London subsidiary of the manager New York Marathon Asset Management, to manage €200 million dedicated to the financing of buildable land purchases. The firm led by Mikel Echavarren is finalising its first financing deal amounting to €3 million. In its case, unlike with Ibero Capital, the financing will be restricted to land purchases only.

The financing of real estate projects by non-banking entities is an established market in countries such as the US, the UK and France, but not in Spain, where it is still in the development phase. Investment in these types of projects is characterised by its attractive profitability/risk profile with a focus on capital preservation and regular distributions in the form of interest (…).

Original story: El Confidencial (by E. Sanz)

Translation: Carmel Drake

Overseas Funds Compete to Finance & Buy Land in Spain

15 April 2018 – Voz Pópuli

At the beginning of 2012, at the height of the economic crisis, one of the directors of the Bank of Spain – José María Roldán, now the President of the AEB – faced a tough meeting with investors. One of them told him that land in Spain was worth nothing. “If that’s the case, then I’ll take it all”, replied Roldán.

And if he had done so, today, the executive would be a millionaire and the same funds that raised doubts over the banks’ balance sheets would today be knocking at his door to buy that land and finance developments on it.

The good times in the Spanish economy and the real estate recovery are causing the opportunistic funds to look for ways to take advantage of the situation. They are buying assets, real estate companies – Habitat and Inmoglacier are the most recent examples – and trying to fill the gap left by the banks in the financing arena. That is where they have set their sights on land, the last bastion, where traditional entities are still wary of lending.

“Bank financing is available for projects and occasionally for parts of plots, but it is inflexible and restricted to certain locations and pre-sales levels. Ours (financing) is flexible in terms of volume, periods and conditions”, says Luis Moreno, Senior Partner at Ibero Capital Management, a firm that has just teamed up with Oak Hill Advisors to lend the property developer at least €400 million. In just a few weeks, they already have projects on the table exceeding that amount.

Types of investors

“Bank financing is still almost non-existent and is only granted in very low percentages in situations of high pre-sales”, says Pablo Méndez, National Director of Capital Markets at Savills Aguirre Newman.

The example of Oak Hill is just one of many. Julian Labarra, National Director of Corporate Finance at CBRE, explains the different types of investors that are interested in land. A first group comprises funds that provide bridge loans. Whilst the banks require “that a development already has the necessary permits and a certain level of pre-sales”, some of the funds financing certain projects with “yields of 14-15%”. And they exit after 18-24 month, by which point the development meets the requirements of the traditional banks (…). Active funds in this segment include Incus, Oquendo and Avenue.

Other funds have chosen to team up directly with Spanish property developers: they put up the capital to buy and develop land and the managers contribute their knowledge. There are several examples: Lone Star with Neinor, Castlelake with Aedas, Cerberus with Inmoglacier; Bain Capital with Habitat; and Morgan Stanley with Gestilar.

Another similar, more recent, example is the association between FS Capital – from Finsolutia – and Inmobiliaria Espacio, a company owned by the Villar Mir group, to relaunch the construction business and sell homes by investing €400 million on land purchases (…).

Other funds also interested in land are those committed to financing the whole process, such as Oak Hill, and those that are buying portfolios of land from the banks and from Sareb, but not to resell them, such as Deutsche Bank and Blackstone.

By location, the experts agree that financing has gone from being limited to the large capitals to appearing in increasingly more cities. “(…). Until two years ago, interest was limited to Madrid, Barcelona, Málaga and the Balearic Islands. Now we are seeing operations along the whole coast, as well as in Sevilla, Zaragoza and Pamplona, amongst others (…)”, says Labarra, of CBRE. “This year we will see operations in cities such as Bilbao, Vigo, Salamanca, Zaragoza and Murcia, which have recently come onto the radar of the large investment groups”, adds Méndez, of Savills (…).

Original story: Voz Pópuli (by Jorge Zuloaga)

Translation: Carmel Drake

Oak Hill to Allocate €400M to Finance Residential Developments

3 April 2018 – Expansión

The American investment fund Oak Hill Advisors has arrived in the Spanish residential market hand in hand with the recently created management firm Íbero Capital Management. The fund is planning to allocate at least €400 million to finance the construction of homes in the country.

Walter de Luna, former CEO of Acciona Inmobiliaria and Executive Chairman of Íbero Capital Management, explains that, given the lack of modern, structured capital for the construction of residential developments and the high-level of unmet demand for new homes, the objective of the platform is to channel financing from Oak Hill Advisors and to offer customised solutions for the real estate project.

Oak Hill Advisors, with more than USD 30 billion under management, has invested more than €1 billion in Spain through corporate loans and investments in assets and companies. The alliance between Íbero Capital Management represents its debut in this segment.

The fund is currently negotiating to offer €50 million in financing for the development of around 500 homes in several developments in the Costa del Sol and Madrid. The heads of the platform explain that they will select new projects in other regions and open the door to extending their coverage to Portugal.

Sources at Íbero Capital Management explain that the requirement to access financing is that the property developers’ plans are “commercially viable” with a minimum of €5 million. Moreover, unlike what happens currently with bank financing, they will offer funding for the purchase of developable land or plots where little (urban planning) management required.

Another difference with respect to current bank financing lies in the fact that property developers do not need to have a certain volume of pre-sales to access the funds; moreover, payment of interest and commission will not be triggered until the homes are handed over.

The investment and divestment horizon for the €400 million financing initially planned has been established at six years. “The fund has the capacity and appetite for more”, adds Luis Moreno, Director General of Íbero Capital Management.

The financing solutions proposed by Íbero Capital Management are mainly aimed at small- and medium-sized property developers, although the firm is also open to reaching agreements with large listed companies for land co-investment agreements or specific projects.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Benson Elliot, Walton St & Highgate Buy Hotel Silken Diagonal For €80M

4 May 2017 – Real Estate Press

The British real estate fund Benson Elliot and the joint venture created by Walton Street and Highgate, have completed the purchase of the Hotel Silken Diagonal, located in the 22@ district of Barcelona, which will be managed by Highgate.

The establishment, which is located on the Barcelonan avenue in the 22@ district, has 240 rooms spread over nine floors and will now be renamed the Gates Hotel Diagonal Mar Barcelona.

Benson Elliot reached an agreement with the owner, a group of investors led by Oak Hill Advisors, at the end of last year. Nevertheless, it has only just formalised the operation, with the participation of the other two investor partners.

The new owners have decided not to disclose the amount of the operation, but, according to real estate sources, the figure amounts to around €80 million.

It is the second operation that Benson Elliot and Walton Street have completed after they acquired a portfolio of eight hotels worth €420 million in October 2015. Moreover, three years ago, the British fund purchased a plot of land on which to build offices, which it sold to Colonial last year for €45 million. In addition, it sold an office building located in Poblenou to a fund managed by UBS for €80 million.

Benson Elliot was founded in 2005 and is headquartered in London. It specialises in real estate investments and currently has €1,500 million in assets under management.

Original story: Real Estate Press

Translation: Carmel Drake