The originator presents you a new project that consists of granting a loan for the acquisition and renovation of a building already built in the historic center of San Sebastián de los Reyes (Madrid), in the 1980s. The building is currently owned by the developer with a resolutive condition of deferred payment. The developer will transform the building to house 16 spaces: 8 homes and 8 professional offices, known as lofts.

It is located on Calle Tanger nº 2, in the municipality of San Sebastián de los Re yes , Madrid . 12 minutes walk from the Baunatal metro station and 14 from the Reyes Católicos bullring. In front of the building is Parque la Marina and 1.5km away is the Alcobendas - San Sebastián de los Reyes train stop . The promotion has already begun to be marketed and has 11 of the 16 reserved units.

San Sebastián de los Reyes is a municipality located 18km north of Madrid with more than 90 thousand inhabitants. The town has a wide transport network (Renfe, Metro, Bus) that connects it with Madrid in 20 minutes.

PROJECT DESCRIPTION

The company designated for the construction of the development is EDIFIK MADRID, which has a team of technicians and professionals who offer a complete global service that ranges from architecture to technical, urban, and investment advice. They are specialized in the development and execution of small-medium and large-scale projects.

The promotion being financed will consist of  8 homes and 8 lofts. Marketing of the development is already advanced: it has firm reservations for 5 of the 8 homes and 6 of the 8 lofts. Average sales prices are around € 2,580 / m2.

The building was acquired by the developer in August 2020 for a value of € 570,000, (€ 636 / m ² for a building already built), under a purchase-sale contract with a final condition. The resolutive condition allows the developer to pay for the acquisition within a period of up to 36 months, including an interest rate of 2.5% per annum. The loan that Urbanitae investors grant to the developer allows him, with a first disposition, to cancel the resolution condition and make the payment for the building in advance. In this way, when said condition is eliminated, the property will become entirely the property of the promoter, free of charges. The rest of the loan amount will allow the developer to pay the corresponding work certifications.

The developer is pending to close the financing with Urbanitae to lift the resolutive condition and begin the reform of the building. The developer says, and l project does not need a license for major works, which substantially speeds up the start of reforms (should only present the project to the City Council by sworn statement).

The association of the developer with Urbanitae investors takes the form of a  fixed-rate loan, with which the acquisition of the building and its renovation will be financed. Additionally, the project will be financed with the promoter's own funds and with the amounts paid on account by the buyers (10% of the value of the house with the signing of the deposit contract, 10% after 90 calendar days of the signing of said contract and the final 80% of the price at the signing of the public deed contract).

The final target client of the promotion is people from the area who consider it to be acquired as an investment object or as a first home. The promotion is being marketed by three APIs in the area.

STRUCTURE

This operation will be structured through debt, where Urbanitae Investors will grant a fixed-rate loan to the company created by the developer exclusively for the project:  JAI Desarrollos Inmobiliarios SL   The financing will be used to cover the costs of acquiring the building and the reform of this, as well as all the costs derived from the operation until the delivery of the houses. The promoter does not plan to resort to bank financing.

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

• Amount: 1,300,000 €.
• Fixed-rate loan of  17.5% per annum.
• Loan term:  15 months.
• Interest on the loan will be paid upon maturity.

The total or partial early amortization will be allowed only from month 12, with monthly amortization windows until month 15, including the interests calculated on a daily basis accrued until the repayment date, without a partial cancellation fee.

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

• Pledge on all the shares of the SPV JAI Desarrollos Inmobiliarios SL, through a Guarantee Agent.
• Mortgage on the 4 registry properties that make up the building, through a Guarantee Agent.
• The figure of Project Monitoring is incorporated into this project. The funds, after the first disposition to execute the purchase, will be disbursed as the work certifications are presented and are approved by the aforementioned Project Monitoring.

WHY INVEST?

There are several reasons to invest in this project: 

• The promotion has 11 of 16 units sold and all buyers have committed to partial payments on account.
• The return that the investor will obtain will be  17.5% per year in 15 months (21.88% on the invested capital).  
• The project has a mortgage guarantee on the building.
• The Promoter will have the funds available as it certifies the work, but will accrue 100% of the interests agreed from the moment of granting.
• Structured operation via 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. There are several promotions with similar characteristics in the environment. However, some of them are distinguished from this promotion, in the facilities they have (common areas/garages etc).

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  15 months, although the developer can repay the loan in advance from month 12, without penalty. The essential milestones of the project are the following:

• May 2021, granting of the loan by Urbanitae to the developer.
• Second-quarter 2021, the start of works.
• Second-quarter 2022, the opening of the early repayment period of the loan.
• 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: 

• 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 projects (procedures with the City Council, Responsible Declaration, etc.).
• Diversion of the fixed costs associated with the investment, unforeseen events in the construction that compromise the service of the project's debt.

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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 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 their investment to investors.