San Sebastián de los Reyes

 Equity
San Sebastian de los Reyes, Spain
Status
Done
900 000 € (100%)
900 000 €
Term: 22 months
Interest payment schedule: At Project Completion
14.97%
Annual yield
-
LTV
Yes
EVOEstate skin in the game

EvoEstate comment:

Equity deals in general are the riskiests ones. We, personally believe that the best portfolio is diversified portfolio which consists of all types of projects (equity, loans, rent)

The land that the developer puts in to the deal as his equity part is valued at 575k or 1940 euros per square meter. Similar lands sell at an average of 2000€ https://bit.ly/2nRl4OZ

The cost of construction 1100€ per square meter is quite high and we believe that the promotor can build for less.

The general risks are:

1. the project might take longer (developer has already submited documents for obtaining license)

2. The sales price might be smaller (it might also be higher)

3. The cost of construction might be higher

 

Urbanitae description:

From Urbanitae, we present a new project that consists of the development of a residential development of 10 new construction homes in San Sebastián de los Reyes (Madrid). H.H. de los Reyes is a municipality located north of the city of Madrid, adjacent to the municipality of Alcobendas. 

Located less than 20 minutes from Chamartín station, SS. de los Reyes has a census population of more than 85,000 inhabitants. It forms an urban unit with the adjoining town of Alcobendas. Of the economic and social environment, the low unemployment rate stands out, 8.01% compared to the same data in the Community of Madrid (11.5%) and Spain (14.3%).

PROJECT DESCRIPTION

The promoter of this opportunity,  PROMOCIONES BARRIO 2005, is a Madrid real estate developer, where its managers and partners have more than 20 years of experience in the real estate development sector in the Community of Madrid. Specifically, they have actively worked in municipalities such as Alcobendas, Madrid (Vallecas, Aravaca, Arturo Soria, Tetuán, Canillejas), Leganés, Torrejón, San Sebastián de los Reyes, Algete or Vicálvaro.

The project has a capital gains strategy, which consists of an alliance with the developer to develop a residential building in the urban center of San Sebastián de los Reyes. The promoters already own the lot that is the object of the promotion, which they will contribute to the investment vehicle already established for the development of the promotion.

The project is located in Francisco Navacerrada 10, just 600 meters from the town hall and 7 minutes walk from the Reyes Catolicos metro stop, which connects the municipality in a direct line with the center of Madrid (line 10). The environment is formed by a historic housing park that has been undergoing a process of rejuvenation and revitalization for 15 years, with the construction of new promotions built replacing old homes

The proposed project consists of  10 homes, structured in 1 and 2 bedroom homes,  parking spaces and 10 storage rooms . Each house has approximately 55 m2. The complex is distributed in 3 homes with 1 and 2 bedrooms on the ground floor, and 4 homes with 1 and 2 bedrooms on the first and second floor. The construction of a basement with a storage room is planned for housing, and will be enabled for 8 parking spaces with access through the same street of the promotion.

STRUCTURE

The operation will be structured through a company already constituted exclusively for this project by  PROMOCIONES BARRIO 2005,  called Promociones Barrio Alfa SL. In this company, a capital increase will be carried out where the developers will contribute the lot and part of the capital and the investors of Urbanitae the remaining capital necessary for the development of the promotion. The company will be the promoter vehicle that will contract the work to an independent construction company. The commercialization of the houses will be in charge of a local agent of the area specialized in commercializing new construction. 

Investors will be shareholders in proportion to their contribution to the project, the company will be entered via capital increase. In parallel, the developer has already applied for the demolition and works license on February 12, 2019 (see attached documentation). 

PROMOTIONS BARRIO 2005 will  not only be dedicated to the full management of the promotion, but will  also hold 58% of the capital necessary for its development, thanks to the contribution of the site, so that they will also become majority partners of the vehicle of investment.  

The remaining 42% will be invested through Urbanitae. The project has preconceived a promotional credit for the financing of the work, once the works license is obtained and a percentage of the sales (still to be determined with the financing entity, but will range between 5 and 7 sales).

WHY INVEST?

The main points of the San Sebastián de los Reyes project are the following: 

  • Investment opportunity in a new construction promotion project  .
  • The estimated net profitability of the project by the promoter of the opportunity is 27.44%,  in  22 months.
  • The project will be promoted by  PROMOCIONES BARRIO 2005, an entity with special relevance and experience in the Community of Madrid.
  • Promotion in a consolidated residential area in the northern part of the capital, where the demand for flats at low prices for young people is very high, as well as retail investors looking for homes to buy and rent.
  • The promoter of the work invests its own capital in it,  which aligns the interests of all the agents involved in the investment

COST EFFECTIVENESS

The developer estimates that the sale of homes and garages will generate a total income of  1,984,000 euros, which would mean a net gain for the investor (after expenses and taxes) of  27.44%  of the amount invested. 

MARKET

A market study has been carried out to determine if the sales prices raised by the promoter are reasonable.

Recently the housing development park is being activated in the center of San Sebastián de los Reyes. As we have seen, there are several similar operations, which have managed to obtain a high volume of presales in a short period of time, which may clarify the current demand for this type of product (small houses between 1 and 2 bedrooms).

You can see more information in the documentation, Witnesses of Sale, where you will find a list of homes for sale in the area.

WHEN WILL I RECOVER THE INVESTED MONEY?

The estimated term of this project is 22 months.

The planned deadlines for the promotion are as follows:

  • February 2019 presentation of the project to demolition and new construction license.
  • June 2019 public deed of the lot.
  • November 2019 start of works.
  • December 2020, end of construction.
  • March-April 2020, first occupancy license and home delivery.
  • May-June 2020, liquidation of the company.

Within the rhythm of sales in the area, the developer plans to sell 5/7 homes on the map until the first quarter of 2020. The rest of the homes will be sold during the course of the work.

It is important to keep in mind that in any real estate development, the terms may vary both upwards and downwards. 

RISKS

All investments carry a risk. We detail the clearest risks we have identified for this project: 

  • Increase of the deadlines foreseen in the project, due to delays in the construction or in obtaining the license.  
  • Deviation of fixed costs associated with investment, unforeseen in construction. 
  • Risk of not reaching the expected sales rates and consequently the delay in terms.  
  • Risk of not getting the expected sales prices in the promoter's business plan. 

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Warnings and Risks

Urbanitae Real Estate Platform PFP (Urbanitae) does not hold the status of an investment services company or a credit institution and is not attached to any investment guarantee fund or deposit guarantee fund. The information published by Urbanitae Real Estate Platform PFP on its Website is for informational purposes only and in no case may it be considered as recommendations to investors.

Participatory financing projects published by Urbanitae on its Website are not subject to authorization or supervision by the National Securities Market Commission or the Bank of Spain, therefore, all the information provided by the developer in relation to the Projects have not been reviewed by them.

The investment in the projects published on this Website may entail certain risks, such as the risk of total or partial loss of the invested capital, of not obtaining the expected monetary return or lack of liquidity. Therefore, we warn investors that they only invest an amount they are willing to lose and we suggest that they diversify their investments to minimize and mitigate potential risks. In the event that the promoter is unable to return or remunerate the funds received, Urbanitae will not return its investment made to investors. 

 

Project originated by:
Status
Done
900 000 € (100%)
900 000 €
Term: 22 months
Interest payment schedule: At Project Completion
14.97%
Annual yield
-
LTV
Yes
EVOEstate skin in the game