Detailed Description

INFORMATION ABOUT THIS PROJECT

Video of the project.

We present a new project that consists of the granting of a loan for the development of a development of 17 homes, 39 parking spaces and 7 storage rooms in Nerja, Malaga province (Andalusia).

The building includes 2 levels of underground parking and a communal patio-garden with a pool. It is located in a corner of the center of Nerja, in the area of ​​the Parador Hotel, 700 meters from the "Balcón de Europa", surrounded by beaches and all kinds of restaurants, shops and services. Specifically, it is located on Calle Huertos 70, located a few meters from Carabeillo Beach. 

Nerja is a municipality in the province of Malaga that has more than 20,000 inhabitants and since the 1960s it has been a preferred tourist destination for foreign residents. 

PROJECT DESCRIPTION

The promoter of this opportunity is a company made up of professionals linked to the ADU Group, a business group specialized in advising and managing real estate projects, mainly in the residential sector. The ADU Group belongs to CONCOVI (Confederation of Housing Cooperatives of Spain) and is currently developing 8 projects in Madrid and Malaga under the cooperative regime.

The promotion being financed consists of  17 homes, 39 parking spaces and 7 storage rooms. The building is developed on 3 levels (ground floor, first and second floor), and two underground floors of garages and storage rooms. The back of the building has a community pool. The 17 homes will be divided into 1 to 3 bedroom apartments: 5 homes on the ground floor, 6 homes on the first floor and 6 homes on the second floor.

The commercialization of the development is already advanced: it has 16 of the 17 homes already sold, 31 of the 39 parking spaces and 7 storage rooms sold. The various buyers, who operate through a local law firm, have already paid 33% of the price.

The land (a single registered property) is owned by the developer and currently has a mortgage charge whose creditor is an Investment Fund that granted a bridge loan to the developer for the development of the development, and that will be paid with the contribution of investors by Urbanitae.

The developer completed the excavation work in 2020 and is currently awaiting funding to begin the construction of the building. The project already has a building permit. (Images of the current state of the site are attached "Work Progress Images").

The association of the promoter with Urbanitae investors takes the form of a fixed-rate loan, with which the mortgage burden currently on the project's land will be amortized. The construction will be financed with the developer's own funds, part of the Urbanitae investor loan and the amounts paid on account by the buyers (with 11 buyers, installments have been agreed to against construction milestones). The commercialization is being carried out by the promoter and the construction will be contracted to a company outside the promoter.

The use of the amounts on account of the buyers is possible thanks to the agreement that the promoter has reached with an insurance company to secure said contributions. The prerequisite for such an agreement is the cancellation of the current mortgage burden on the land, and that is what justifies granting the Urbanitae loan.

The final target customer of the promotion is foreigners looking for a second home on the Costa del Sol (14 of the 16 homes sold are to Europeans from northern countries: Norwegians, Swedes, Dutch and English).

STRUCTURE

This operation will be structured via debt, where Urbanitae Investors will grant a fixed-rate loan to the company created by the promoter exclusively for the project:  EUROGEST NERJA PROJECT MANAGERS SL   The financing will go to the amortization of the current mortgage charge of the solar, to the continuity of the construction and the payment of the corresponding certifications until the delivery of the promotion.

The main characteristics of the debt are  (more information in the Loan Report document) :

• Loan amount: € 80,000.
• Fixed-rate loan of 10% per year.
• Loan term: 18 months.
• Interest on the loan will be paid upon maturity.

Early amortization will only be allowed from month 12, paying the corresponding accrued interest until the cancellation date and without penalty.

Regarding the repayment guarantees of said loan, the following is established in the debt contract:

• Personal guarantee of the company EUROGEST NERJA PROJECT MANAGERS, SL (owner of the site and promoter of the project).
• Personal guarantee of several companies linked to the promoter.
• Personal guarantee of 2 staff responsible individuals of the project.

WHY INVEST?

There are several reasons to invest in this project: 

• The project is promoted by a company linked to  Grupo ADU,  a leading entity in the promotion of housing and management of cooperatives.
• The development has 16 of 17 homes sold, and an agreement with 11 of its buyers to finance construction costs through guaranteed payments on account.
• The return that the investor will obtain will be  10% per year in 18 months (15% total on the invested capital).  
• The promoter of the work is investing its own capital in it, which aligns the interests of all the agents involved in the investment.
• Structured operation via a loan, where it will not be necessary to wait for the sale of all the units to receive the loan returns. 

MARKET

A market study has been carried out to determine if the sales prices raised by the developer are reasonable. Currently, there is only one new construction project in the area (1.4 km) where the houses do not include a garage or storage room. The following new construction developments in the area are located more than 7 km away, in the Torrox area.

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

WHEN WILL I GET BACK THE MONEY INVESTED?

The agreed term for repayment of the debt is  18 months, although the promoter can repay the loan in advance from month 12 without penalty. The essential milestones of the supporting project are as follows:

• March 2021, granting of the loan by Urbanitae to the developer.
• First-quarter 2021, the start of works.
• Third-quarter 2022 repayment of the loan and accrued interest.

RISKS

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

• Insolvency, fraud, promoter incompetence.
• The repayment of the loan will be made with the funds obtained at the time of the deed of the homes sold: it is essential that international mobility returns to be able to sign the sales at the time of delivery (2022).
• That some of the marked sales are not written down, and therefore the expected cash is not generated.
• Risk of potential contributions necessary by the promoter to the project. If not all the contributions are foreseen by the buyers arrive, the promoter must provide the necessary cash.

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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.

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

The estimated return on the investment is net to the investor. In any case, the withholdings established by tax regulations will be applied to the income obtained, and in addition, 0.3% corresponding to the commission of the payment entity Lemonway will be deducted.

Urbanitae expressly informs that, in the event of non-compliance with the total investment volume of the project, the term for the capture may be exceeded by up to 25%, maintaining the same investment conditions. Likewise, the project may be financed by Urbanitae when at least 90 percent of the financing objective has been reached, after discounting the participation in the project that the platform itself may have. All of this in accordance with the provisions of Article 69 of Law 5/2015 on the Promotion of Business Financing.

The investment in the projects published on this Website may entail certain risks, such as the risk of total or partial loss of the capital invested, of not obtaining the expected monetary return or lack of liquidity. Therefore, we advise investors to only invest an amount that they are willing to lose and 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 to investors.

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