We present a new project that consists of a loan for the development of residential development in Madrid of a building with 9 homes,  6 parking spaces and 9 storage rooms. The developer has already tested the commercial potential and has 5 of the 9 reserved homes.

The development is located in the Lucero neighborhood, within the La Latina district, southwest of Madrid. Specifically, it is located on Calle Alhambra 18, 300 meters from the Lucero metro station and just 15 minutes from the Casa de Campo in Madrid. The neighborhood has a population of around 38,000 inhabitants and has direct communication with Madrid Centro (metro, suburban, buses, A5, M30 and M40). 

PROJECT DESCRIPTION

The promoter of this opportunity is HOME FIRST, a company created and directed by specialists from the world of investment and promotion, with more than 15 years of experience. His work focuses on a market niche of small promotions between 8 and 20 units, which are not attractive for the large promoters and common investment funds in the sector.

The developer has previously worked with Urbanitae on the Hortaleza Project.

The investment is structured as a fixed-rate loan granted to the vehicle company created by HOME FIRST,  HOME FIRST ALHAMBRA 18 SL  (exclusively for this project) so that the developer can acquire the plot (on which a contract has been signed with the property). de deposit )   and develop the work. The entire project will be financed through a combination of sources: a part of the Urbanitae loan, the promoter's own funds and contributions from clients' accounts, so the project does not need to resort to bank financing.

The promotion consists of 9 homes in a 6-story building; in the basement, there are 6 parking spaces and 9 storage rooms. All the houses have two bedrooms, two bathrooms and a terrace except for the penthouses, which have one bedroom and one bathroom. The penthouses have a terrace of 20 m ² , and the ground floor, with a private patio of 45 m ² . In addition, the project includes a community garden of almost 60 m ² .

The commercialization of the homes has already begun and is aimed at first homes. The project was presented for approval in April 2019 and is very close to receiving the building license, so the developer plans to start the works during the second quarter of 2021. The promoter has signed a deposit contract on the ground. 

STRUCTURE

This operation will be structured via debt: Urbanitae Investors will grant a fixed-rate loan to the company created by the promoter exclusively for the project:  HOME FIRST ALHAMBRA 18, SL   The financing will go to the acquisition of the site (the promoter has a deposit contract with the property) and the financing of the works, together with the contributions of the buyers. The developer has reserved the possibility of canceling the loan early (with a penalty) in the event of contracting a developer loan with a bank.

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

• Loan amount: € 1.30 0.000.
• Fixed-rate loan of 8.5% per annum.
• Loan term: 18 months.
• Interest on the loan will be paid upon maturity.

Total or partial early amortization will be allowed in two-time windows:

• Month 6,  paying the corresponding interest accrued to date, plus a cancellation fee of 3% on the principal amortized on the loan.
• Month 12,  paying the corresponding interest accrued to date, plus a cancellation fee of 0.5% on the principal amortized on the loan.

The loan guarantees are instrumentalized through a Guarantee Agent, external to Urbanitae. The role of this figure allows creditors to take collateral in their own name. The Guarantee Agent is involved in the loan granting process and appears as a representative of all Urbanitae investors to clarify access to the guarantees themselves. In this case, the loan guarantees are:

• Pledge on 100% of the vehicle's shares, through the Guarantee Agent
• Mortgage promise on the site.

WHY INVEST?

There are several reasons to invest in this project: 

• The project has already confirmed its commercial viability, with 5 of the homes already booked by clients.
• The project is promoted by a company linked to HOME FIRST, an entity with more than 15 years of experience in the real estate sector in the area and with whom we have previously worked. 
• The promoter of the work is investing its own capital in it, which aligns the interests of all the agents involved in the investment.
• The developer acquires a plot with a pending license, which substantially shortens the period of obtaining it.
• The return that the investor will obtain will be 8.5% per year, which is 18 months represents 12.75%. 

MARKET

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

Although there are new construction developments in the area, all of them contemplate sales prices higher than the HOME FIRST project. In addition, the building has an elevator and parking spaces, both of which are very scarce in the area and therefore represent an added value to the project.

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 RECOVER THE MONEY INVESTED?

The agreed term for repayment of the debt is  18 months, although the developer can repay the loan in advance from month 6 with a penalty. The essential milestones of the project are the following:

• April 2021, granting of the loan by Urbanitae to the developer.
• Second-quarter 2021, the start of works.
• October 2021; the window for a total or partial amortization, with a penalty (3%).
• April 2022; the window for a total or partial amortization, with a penalty (0.5%).
• Second-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: 

• Risk of not reaching the expected sales rates and consequently the delay in the deadlines.  
• Risk of not achieving the expected sales prices in the developer's business plan.
• Risk of insolvency arising from (some of) the buyers, who cannot meet the agreed payments on account or cannot access a mortgage.
•  Increase in the deadlines foreseen in the project, due to potential delays derived from the administrative management of this type of project (connections, LPO, etc.).
• Diversion of fixed costs associated with the investment, unforeseen in construction. 

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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 promoter 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 additionally, a 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 up to 25%, maintaining the same investment conditions. Urbanitae warns that the financing objective of the project may be exceeded by up to 25%, and therefore the commission to the promoter may be increased proportionally, but all this while maintaining the same investment conditions for investors. 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 of 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 their investment to investors.