|Criteria||From a+ to d||Project rating|
Macro Location Analysis
EvoEstate Risk rating is of an informative nature only & can not be considered investment advice.
Purpose of the loan
We present a new project that consists of the acquisition of office space for its subsequent adaptation, reform, leasing and sale to a patrimonial investor, located in the Sagrada Familia neighbourhood (Barcelona).
The project is located at 233 Roger de Flor street, in the heart of Barcelona, next to the main tourist attractions of the city and the Poblenou and La Dreta de l'Eixample neighbourhoods. It is a consolidated residential area, surrounded by numerous services such as schools, restaurants, and shops (Mercado de la Sagrada Familia and Mercado de la Abacería) and that benefits from the extensive public transport network in the city center.
The Eixample district occupies the central part of the city and is the most populated district in Barcelona (around 265,000 inhabitants). Eixample includes some of the best-known streets and squares in Barcelona, highlighting the Passeig de Gracia, the Rambla de Catalunya and the Plaza de la Sagrada Familia.
The promoter of this opportunity, PSQUARED, is a company linked to the digital and real estate sector led by a management team with more than 10 years of experience. PSQUARED's activity is focused on the acquisition of office spaces of up to 2,000 m 2 , mainly in Barcelona, for their subsequent retrofit, rental and commercialization. The promoter will be the integral manager of the opportunity and will carry out all phases of the project development (more information about the promoter can be found in the documents section).
The project materializes in the purchase of a 638 m 2 office space distributed on the ground floor and basement, with an independent entrance, located in a mixed building in the Sagrada Familia neighbourhood (Barcelona). The developer will reform and adapt the office space and will sign a lease (already negotiated) for a period of 15 years with a mandatory compliance of 5 years that will come into effect in December 2021, once the reform is completed.
Throughout the life of the contract, PSQUARED will sublease the office space to a final tenant , under the commitment to comply with the rent agreed in the lease . The promoter already has a letter of intent signed with a Barcelona-based startup for the sublease of the space. The adaptation of the office space will include the implementation of the final tenant, so that the furniture and equipment will remain under the ownership of the vehicle company created for the development of the project. The project will be able to distribute the rents on a quarterly basis , once the work is completed.
The lease contract with PSQUARED provides for a staggered rent , so that the net rent that will be paid will increase from € 17 / m 2 / month at the start of the contract to € 21 / m 2 / month in September 2022, date target for sale to an equity investor at a target exit return of 6.5% . Income will be reviewed annually by applying the percentage variation, exclusively upward, experienced by the General Price Index (CPI). You can review a draft of the lease that will be signed with the developer within the documentation.
The building permit for the reform is processed through a Responsible Declaration ; therefore, it is not necessary to open a file with the Municipal Administration, so the works will begin once the capital increase has been carried out by Urbanitae investors.
The project has a capital gains strategy, which consists of an alliance with the developer to face the acquisition of the space and the costs of adapting and selling it. The contributions of Urbanitae investors will be delivered to the promoter through a capital increase to the vehicle company that develops the project: PSQUARED THE HAUS, SL
The operation will be structured via equity (capital increase) , where both the promoter and Urbanitae investors will make a capital contribution to the company vehicle of the operation. The contributions will allow the complete development of the project, including the acquisition of the asset, its subsequent reform and all the costs derived from it. The operation does not plan to resort to bank financing. The seller will transmit the property free of charge to the company.
The promoter will be dedicated to the integral management of the development, including the reform and marketing to the final investor. He will also be an investor in the project, contributing about 11% of the total investment capital.
There are several reasons to invest in this project:
The developer expects to generate an income of 2,456,300 euros from the sale of the office, in addition to an income of 131,237 euros from the rental of the space during the first 10 months of the contract, from December 2021 to September 2022. The profit resulting from the operation will be distributed according to the structure capital of the vehicle company. In total, a net profit is estimated for the Urbanitae investor (after expenses and taxes) of around 1.17 CoC in an approximate period of 15 months.
A market study has been carried out to determine if the rental income and the sale price raised by the developer are reasonable. There are office floors for rent with similar characteristics in the area, along with some office floors for sale that, unlike The Haus project, are sold without a tenant.
There is information available on the market within the documentation, "Sales witnesses", where you will find a list of offices for rent and for sale in the area.
WHEN WILL I RECOVER THE MONEY INVESTED?
The estimated term of this project is 15 months .
It is important to bear in mind that in any real estate development the terms can vary both upwards and downwards.
The commercialization to the equity investor will begin simultaneously at the beginning of the project and the promoter expects to materialize the sale throughout the 15-month duration of the project.
All investments carry risk. We detail the clearest risks we have identified for this project:
Psquared is a company linked to the digital and real estate sector led by a management team with more than 10 years of experience. Psquared's main activity is focused on the acquisition of office space in Barcelona for its subsequent retrofit and commercialization. Psquared is a company linked to the digital and real estate sector led by a management team with more than 10 years of experience. Psquared's main activity is focused on the acquisition of office space in Barcelona for its subsequent retrofit and commercialization.
|Total Purchase||€ 1,413,700||€ 2,215 / m 2|
|Asset Cost||€ 1,373,500||€ 2,152 / m 2|
|Intermediation Costs||€ 40,200||€ 63 / m 2|
|General Costs||€ 556,050||€ 871 / m 2|
|Reform||€ 418,689||€ 656 / m 2|
|Other Costs||€ 137,362||€ 215 / m 2|
|Urbanitae Commission (s / VAT)||€ 120,250||€ 188 / m 2|
|Total investment||€ 2,090,000||€ 3,275 / m 2|
|Promoter contribution||€ 240,000||€ 376 / m 2|
|Urbanitae investors contribution||€ 1,850,000||€ 2,899 / m 2|
|Total revenue||€ 2,437,974||€ 3,821 / m 2|
|Office Sale||€ 2,456,300||€ 3,850 / m 2|
|Rental Income||€ 131,237||€ 205 / m 2|
|Tax Forecast||€ 149,563||€ 234 / m 2|
|Total benefit||€ 347,974||€ 545 / m 2|
|Urbanitae Investor Benefit||€ 308,015||€ 482 / m 2|
|Promoter Benefit||€ 39,959||€ 62 / m 2|
|Total profitability||17 %|