Terrassa IN

 Equity
Project listed: 04.08.2020
Terrassa,
Spain
13.7%
Annual yield
Term: 14 months
Interest payment schedule:
At Project Completion
Interest payments
25.10.2021
Pending

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Risk rating

CriteriaFrom -2 to 2
Property type0
Skin in the Game1
Leverage0
Experience1
Macro location2
Micro location0
Purpose of the loan0
Investment length1
EBITDA Margin0
EvoEstate Risk rating is of an informative nature only and can not be considered investment advice.
Project rating
B
Originator rating
B-

Descripton

EvoEstate presents its Investors another opportunity to invest into a deal originated by Inveslar. This opportunity offers expected returns estimated by the deal originator of at least 13.7% in 14 months. However, this is in the pessimistic scenario projected by Inveslar. Attached in the documentation you can find out 3 scenarios with different sales prices, which in some cases even projects up to 22.5% returns.

The purpose of this investment is to buy a property which was acquired in an auction well below the market price. The funds will be used to also cover the acquisition expenses and renovation costs.

The total amount of the required capital is 86,440 EUR.

Price competitiveness 

There are several houses in the same area with similar characteristics:
1st Apartment in Terrassa
Surface: 93m2
Rooms: 3
Floor: 5
Price per square meter: 1522 € / m2
Price: € 141,500
Listing’s website

2nd Apartment in Terrassa
Surface: 78m2
Rooms: 3
Floor: 4
Price per square meter: 1872 € / m2
Price: € 146,000
Listing’s website

3rd Apartment in Terrassa
Surface: 75m2
Rooms: 3
Floor: 5
Price per square meter: 2092 € / m2
Value: € 156,900
Listing’s website

4th Apartment in Terrassa
Surface: 76m2
Rooms: 3
Floor: 1
€ / m2: 2474 € / m2
Value: € 188,000
Listing’s website 

Nonetheless, it’s important to understand that even though this is an undervalued property, Terrassa real estate market isn’t as liquid as Barcelona’s or Madrid’s.

Skin in the game

Borrower the Gestora is investing 35,040 EUR of own capital, which is equal to 40.54% of the total funding amount.

Margin of safety

There are 2 components providing a margin of safety to the investors. The duration of the project: it’s noted that the developer expects to sell the property within 14 months, however, this duration could be much shorter because the expected renovation duration and repossession period from auctions shall be shorter than 3 months.

Another component of margin of safety is the property acquisition price which even after the acquisition taxes & costs and a renovation outcompetes other properties in the surrounding area.

Fees structure

Up to an IRR of 10%, 100% of the net profit of the operation will go to the Investors. Once the IRR of 10% is exceeded, 80% of the net profit of the operation will go to the Borrower and the remaining 20% to the Investors.

EvoEstate success fee

EvoEstate does not charge any investment fees to the investors if the returns are 15% or below. In case the investment yields returns above 15%, EvoEstate will charge 20% from the surplus, i.e. the investment yields 17%, EvoEstate will charge 0.4% from the invested amount, while returning 16.4% to the investors.

Additional information

  • This investment will become active once the fundraising for the whole amount of 51,400 EUR is completed.
     
  • There is no need for any development licences for this renovation.
     
  • Attached in the documentation you can find the business plan in english and supporting documents in Spanish.
     
  • EvoEstate will not with-hold taxes, unless you are a private client and resident of Estonia.

Summary of Risks

The investment in this project involves the following risks: risk of not obtaining the expected monetary return, risk of falling prices, risk of not completing the financing, political risk, risk of rising rates, risk of lack of liquidity to recover the capital invested, risk of total or partial loss of the invested capital and risk of fraud.

Risk of falling prices: That the price of the property falls due to the increase in supply or decrease in demand in the area. There may also be a general fall in property prices due to many factors.

Liquidity risk:  Unable to find a buyer when you want to sell the property.

Mitigation: The sales team knows the dynamics of the market and is structured with a team of partners in intermediation services to reduce this risk.

Risk of rising rates: Increase in the cost of financing in the purchase of real estate. What would push down the demand of the housing market.

Political risk: What happens if political instability grows during this year.

Risk of loss of total capital or of not obtaining the expected monetary return:   It is important to keep in mind that there is no safe investment, and as in any investment, there is always the risk, not only of not obtaining the expected returns, but of losing all of the invested There may be a bankruptcy or bankruptcy by the developer or the estimates of your business plan for various reasons are not met.

Fraud risk: It should be noted that there may be a risk of fraud due to the improper use of the money obtained for the project. There may be fraudulent use of money from any real estate transaction.

 

Project originated by:

Documentation

13.7%
Annual yield
Term: 14 months
Interest payment schedule:
At Project Completion
Interest payments
25.10.2021
Pending
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