The Capriles Family will Set the Tone for Operación Calderón with Flats Priced from €5,700/m2

14 February 2019 – El Confidencial

It is a question of weeks. Gran Roque, the investment vehicle owned by the Venezuelans Miguel Ángel and Áxel Capriles, is going to start marketing homes in its most affordable development in Madrid within the next few weeks. The development comprises 105 homes and is located just 600 metres from the Vicente Calderón stadium. The properties are going to be put on the market for €5,700/m2. That price will, undoubtedly, serve as a reference for the potential buyers of the plots in the future Operación Mahou-Calderón, which is currently on standby until the plans for the urbanisation and Reparcelation of the area have been definitively approved.

As reported by El Confidencial, in October 2017, the Venezuelan clan purchased buildable land from Prosegur, just a few metres from where Operación Calderón is going to be built. For that plot, which has not required any type of urban development procedure and which is designated for residential use, as provided for in the General Urban Development Plan (PGOUM) for Madrid dated 1997, they paid around €25 million, approximately €2,900/m2. That price is close to those what is being considered for the plots owned by Atlético de Madrid.

According to explanations provided to El Confidencial by various sources, the development comprises five 5-storey buildings – except for one that has 4 storeys – and to optimise the price, Gran Roque has decided to start by marketing just two of the blocks, which contain 55 flats. In other words, like other property developers have been doing in Madrid, if the first homes maintain a high rate of sales, all indications are that the prices in the subsequent phases will be higher.

The construction permit will be ready by the end of April or the beginning of May, and so the marketing cannot officially begin until then. Nevertheless, 20% of the 55 units have already been reserved, according to assurances given by those same sources.

The project includes 2-, 3-, and 4-bedroom homes, all of which have a parking space and storeroom included in the price. The smallest units will go on the market from €450,000 plus VAT; the 3-bedroom homes will start at €550,000; and the largest homes will cost more than €600,000. That equates to a price of €5,700/m2, which is very high for many Madrilenians, but well below the prices typically charged for luxury developments.

Located just a few metres from Madrid Río and the Río Manzanares, the development will contain two swimming pools (one for children and one for adults), a gym, a children’s play area, a bicycle room and 24-hour surveillance, amongst other features. In total, it will have 1,719 m2 of common space (…).

Original story: El Confidencial (by E. Sanz)

Translation: Carmel Drake

Neinor Evaluates Rental Market but Insists on Maintaining its Margins

31 October 2018 – El Economista

Neinor Homes sees a clear business opportunity in the rental market in Spain. Nevertheless, it is not going to enter the segment if doing so would reduce its profit margin.

That is according to Juan Velayos (pictured above), the CEO of the firm, who indicates that Neinor “must be clear about what it is and what it wants to be, and we want to be a property developer, and as such, our profitability is sacred”. On that basis, Velayos recognises that “there is a clear business opportunity in that sector and very few companies have the capacity that we have to produce rental homes”.

In fact, he says that “many players who want to take positions in the rental market are approaching us, and although I am not going to close an operation tomorrow, we are evaluating lots of options, whenever they are coherent with our business model. Common sense tells me that we ought to be capable of meeting that need in the market and for the business to be profitable for Neinor”, said Velayos.

The property developer, which had managed to multiply its operating EBITDA by four by the end of September, to reach €9.5 million, expects to close this year in the black, “in a comfortable way”, highlights Velayos, who believes that the firm’s EBITDA at the end of December will amount to around €50 million, in line with the consensus of the market.

At the end of September, the firm had recorded a loss of €1.2 million and revenues of €156 million. “The most interesting aspect is that €100 million of that turnover came from the development arm, whilst €32 million came from the Legacy business and €23 million from Servicing”, highlights the director.

Neinor has committed to handing over 1,000 homes this year, spread across 14 promotions. “Nine of them have already been handed over and during the last quarter, the keys to the remaining five will be handed over, given that they now have their final construction certificate”, specifies the director, who assures that the 1,000 units are almost all pre-sold. “We only have 2% left, which we have not been marketing because we are waiting until the end to maximise the price of the best units”.

“We have been on a journey that has involved a lot of work over the last three years and now we are starting to hand over a significant volume of homes, which actually represent more than all of our major competitors put together. Neinor started first and so now we are reaping the rewards”, highlights Velayos.

Specifically, the company has an order book comprising 3,049 homes, which represent a volume of pre-sales of €1.019 billion. Moreover, comparing units with the same characteristics, the property developer has managed to achieve an 8.2% increase in prices and has also increased its margin to 28%.

That has allowed the firm to handle rising construction costs, which have increased by 3.8%, without any problems. Those costs “are expected to continue to rise, by 6%, but we will also seek to increase our margins”, says Velayos.

For next year, the company has set itself the target of handing over 2,000 homes in 31 developments where building work is already underway. “We also have some very solid pre-sales figures for 2019 of 78%; and the rest are not being marketed, given that the best way of protecting our margin is to wait to sell those units”, explains the CEO of Neinor (…).

Currently, the company has one of the largest land banks with capacity for 13,700 homes (…).

Original story: El Economista (by Alba Brualla)

Translation: Carmel Drake

Juan Velayos: “Spain Needs to Create a Large Rental Player”

22 October 2018 – Eje Prime

Neinor Homes is going to reach “cruising speed” in 2019. The listed property developer is working to close the year with the delivery of almost 1,000 homes, half the number planned for next year. In the growth plan for the real estate company for the next few years, its CEO, Juan Velayos, does not rule out selling entire developments to a large rental home manager, a type of player that “Spain needs to create”, assured the director at a breakfast meeting held yesterday in Barcelona.

Velayos recognises that, for the time being, there are not any real estate companies specialising in rental “with such a large volume that would allow them to offer us an attractive margin, but we would be delighted to negotiate with any of them”.

The possibility of expanding its portfolio of clients through agreements with large asset managers could prove attractive for one of the property developers with the largest land bank in Spain and which forecasts starting to hand over 4,000 homes per year from 2020 onwards.

In total, the listed company has buildable land on which to construct 13,500 homes spread over 180 developments all over the country. The external valuation of this portfolio amounts to €1.813 billion, according to sources at Neinor.

“The company has already started to hand over homes and generate a positive cash flow and result”, highlights Velayos. The property developer currently has cranes at sixty developments, which will introduce 5,000 homes onto the market. Following the latest purchases of land in Bilbao, Sevilla and Madrid, “we have the land bank covered until 2021”, confirms the director.

In financial terms, Neinor recorded revenues of €78.9 million during the six months to June. That figure reflects a lot of activity in the marketing area. As at 30 September, the property developer had pre-sold 3,000 of the 7,000 homes that it had on the market, resulting in revenues of more than €1 billion for the company controlled by the Israeli fund Adar Capital.

“We will reach cruising speed in 2019”.  

Velayos trusts that the increase in productivity this year will allow Neinor to reach “cruising speed in 2019”. Next year, the listed company will have more than 120 developments underway, with a percentage of pre-sales that already exceeds 75%.

On this roadmap to lead the Spanish residential segment, Neinor trusts “wholeheartedly” in Cataluña, confirmed Velayos. It represents the firm’s current “star” location, as proven by the fact that 50% of the 5,000 homes that the property developer currently has under construction in Spain are located in this region and, primarily, in the metropolitan area of Barcelona.

“We are working on quite a few operations in the first ring”, said the director. In terms of the profile of the property developer’s buyers in Cataluña, young couples stand out, accounting for 39% of its customers, ahead of families with children (33%). In this sense, it is worth noting that 15% of its clients are investors, a percentage that exceeds Neinor’s average at the national level (11%).

Regarding the moratorium that Ada Colau is planning to launch in Barcelona, and which will oblige 30% of all new developments to be reserved for social housing, Velayos is clear: “That measure will not affect us because we won’t buy land in Barcelona” (…).

Original story: Eje Prime (by Jabier Izquierdo)

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

Neinor Invests €275 Million Up to September and Accelerates the Pace of Development

31 October 2017

The company has available land valued at 1.4 billion euros, enough to build 12,000 homes.

Neinor Homes accelerated the pace of its investments and pre-sales in the third quarter of 2017. In the first nine months of the year, the developer acquired 24 plots of land to develop more than 3,000 homes for 275 million euros, of which 103 million euros were invested just in the third quarter.

The company, which went public on March 29, finalised sales worth 169.4 million euros, in line with forecasts, and closed September with a net loss  of 6.1 million euros and a positive gross operating profit of five hundred thousand euros.

So far this year, Neinor has delivered five developments with a total of 185 homes, which has allowed it to generate revenues of 39 million euros. The rest of the proceeds came from its servicing business (21 million euros), through a contract that it has with Kutxabank for the management of the bank’s real estate assets, and especially the legacy assets, for 109 million, through the divestment of assets acquired as part of the agreement reached in 2014 with the financial entity.

The developer, led by Juan Velayos, has 71 developments in production, including some 5,500 homes, of which 2,000 units are in the construction phase, and will not reach cruising speed before 2020 when it expects to deliver between 3,500 and 4,000 homes annually.

Neinor executed pre-sales for 370 homes in the third quarter, totalling 1,080 pre-sold homes for the year, worth 368 million euros. The company’s total accumulated pre-sales reached €697 million with 2,101 homes.

Arrival in Portugal

The CEO of Neinor, Juan Velayos, explained that with the last quarter’s investments, the company had completed 100% of the purchases projected in its strategic plan for the whole of this year and 42% of its objectives for 2018. The company continues to analyse opportunities and has a pipeline worth 300 million euros.

Velayos announced that the company is studying investments in new markets such as, among others, Portugal. “The Portuguese market fits in with our strategy, the macroeconomic environment is propitious, there is limited supply and real demand, and the next step is to identify if land is available that can be bought at the prices we want, without forgetting the time factor. Licensing takes more time in Portugal than it does in Spain. ”

Taking advantage of opportunities in Catalonia

As for Catalonia, Velayos has indicated that Neinor’s exposure in the region is limited. Thus, although 16% of its total number of homes – some 30 developments and 1,900 homes – are in this area, of which, 1,500 homes are already in production, and more than 900 have been pre-sold.

In this way, only 4% of the value of its assets in Catalonia have not been taken up. “Catalonia has been a good play during these last two years even though there was already some political uncertainty; I am much more optimistic than just a few weeks ago. I think that common sense in Catalonia is going to recover,” he added.

Regarding the purchase of land in Catalonia to launch new developments, the CEO of Neinor explained that the firm is studying some operations in the region and that if they fit with their strategy, they will take advantage of them. “If windows of opportunity are opened, we are going to take advantage of them, Catalonia is an engine of the Spanish economy, and it continues to be so despite the circumstances,” he assured.

New board member

The company has altered the composition of its board of directors after the reduction in Lone Star’s participation, which sold 27% of the developer promoter in an accelerated operation, last September.

Thus, Neinor has announced the departure of proprietary director Dominique Cressot, Lone Star’s representative, and the appointment of Alberto Prieto as independent director. Thus, the number of independent directors now amounts to four out of a total of seven.

Prieto is currently Managing Director for Real Estate at BDO Spain and has extensive experience in the residential land market developed over more than 20 years at Knight Frank, of which he was CEO, and at BDO.

Original Story: Expansión – Rebeca Arroyo

Translation: Richard Turner

Insur Records Profits Of €3.7M During First 9 Months Of 2017

30 October 2017 – Eje Prime

Grupo Inmobiliaria del Sur (Insur) has seen its results soar thanks to the good times that the residential sector in Spain is enjoying at the moment. The company recorded a profit of €3.7 million during the first nine months of the year, according to a statement filed by the group with Spain’s National Securities and Exchange Commission (CNMV).

The group’s turnover also soared during the first nine months of the year. Insur’s revenue amounted to €59.7 million, which represents an increase of 82.2% compared to the same period last year. The acceleration in Insur’s property developer activity and the rise in pre-sales (up by 43.1%) helped this growth.

By category, property development contributed €32.4 million to Insur’s total turnover during the first nine months of the year, compared to €21 million in the same period last year. Revenues from construction, leases and management contributed €18.3 million, €7.5 million and €1.5 million to the group’s turnover, respectively, during the nine months to September.

One of the group’s milestones in recent months has been its entry into the co-working sector, with the launch of the iSspaces business centre in Sevilla, a building with a surface area of 1,800 m2 comprising 30 offices.

Original story: Eje Prime

Translation: Carmel Drake

Neinor Homes Had 60 Active Developments During Q1

27 April 2017 – Observatorio Inmobiliario

Neinor Homes accelerated its development activity during the first quarter of 2017 by beginning construction of three developments and launching another seven. By the end of the period, it had 60 active developments, corresponding to almost 4,000 homes, according to a statement made by the Company in the presentation of its quarterly results to the CNMV. The reported margin of the work-in-progress projects was around 22% higher than the Company’s target margin.

Juan Velayos, CEO of Neinor Homes, highlighted that “the company has had a magnificent performance during the first quarter, placing it well on the path to fulfil the objectives for the year. Pre-sales have been exceptionally high in what is traditionally a slow quarter. The acquisition of land is continuing with margins exceeding targets and the company’s development activity is accelerating, focused on protecting the margin. One development was successfully completed and the complementary lines of business are continuing to generate cash to finance the growth of the development activity”.

At the presentation of its quarterly results, Neinor Homes also highlighted the acquisition of seven buildable plots of land for €51.6 million for the construction of almost 700 homes. According to the company, all of the acquisitions have a target margin of around 20%.

The property developer also declared pre-sales worth €116 million, relating to 319 homes during the first quarter. The cumulative pre-sales for the year “exceed expectations by 60% in terms of volume and by 46% in terms of the number of homes. The company recorded a 4.5% increase in prices during the quarter and cumulative pre-sales amounted to €483 million and 1,511 homes”, according to its results report.

Meanwhile, the company reported that “the complementary lines of business are continuing to generate cash to finance the growth of the development activity: legacy sales amounted to €57 million, 1% above their accounting value and 41% above the cumulative forecast for the year. Servicing generated revenues of €6.5 million, 4% higher than the cumulative forecast for the year”.

Original story: Observatorio Inmobiliario

Translation: Carmel Drake