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January 17, 2017 Vbare Iberian Properties SOCIMI S.A. Opportunities in the Spanish Residential Market
January 17, 2017
Vbare Iberian Properties SOCIMI S.A. Opportunities in the Spanish Residential Market
The Opportunity
• Real Estate capital values in Spain, are at the lowest levels seen in recent years, representing a unique opportunity for future capital gains.
• The Spanish economy has reached the floor and is recovering in most of the key economic and real estate indicators.
• Expected positive evolution of both the rental and the sale price of the Spanish residential market in the next 3-5 years.
• Highest levels of GDP growth in the EU (3.5% GDP growth in 2015, and 2016 in the same range)
Source: Instituto Nacional de Estadística (INE)
0
10
20
30
40
50
60
70
Economic Confidence Index
Economic Confidence Current Economic Situation
Economic Expectations
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
100,000
120,000
140,000
160,000
180,000
200,000
220,000
240,000
260,000
280,000
300,000
00
Q1
00
Q3
01Q
10
1Q3
02
Q1
02
Q3
03
Q1
03
Q3
04
Q1
04
Q3
05
Q1
05
Q3
06
Q1
06
Q3
07
Q1
07
Q3
08
Q1
08
Q3
09
Q1
09
Q3
10Q
110
Q3
11Q
111
Q3
12Q
112
Q3
13Q
113
Q3
14Q
114
Q3
15Q
115
Q3
16Q
116
Q3
Nominal GDP (seasonally adjusted)
0
5
10
15
20
25
30
Unemployment rate evolution (%)
Spain Madrid
Source: Centro de Investigaciones Sociologicas (CIS)
Source: Instituto Nacional de Estadística (INE)
Why Residential?
• Prices are at all time low – c. construction cost
• Although Spain is traditionally an owners market (more than 80% of Spain’s population own their homes), the Spanish government has taken measures to increase the rental market in the country, including, among others, establishing the Socimi regime
• High rental demand – time to lease app. 3 weeks
• No institutional landlords/multifamily assets – difficult to acquire a critical mass
• Average rent increased by 6.7% in 2016 – pushing yields higher.
Spain Residential Market Overview (1/2)
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Source: Ministerio de Fomento
Source: Ministerio de Fomento Source: Idealista Index
• Since 2008, major global players such as Apollo, Blackstone, Fortress, TPG and others have invested significant amounts in the Spanish RE Market.
• 40% of the amount invested in Spanish RE in 2015 (~€15 Billion), were invested in Madrid, ranking the city at number 5 in Europe in real estate investments.
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
€ M
illi
on
Residential Housing - Total transactions (value)
Spain Madrid
0.0
500.0
1,000.0
1,500.0
2,000.0
2,500.0
3,000.0
3,500.0
€/m
2
Residential Prices Madrid vs. Spain (€/m2)
Spain Madrid
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
€/m
2
Rental evolution Madrid (€/m2) (Madrid)
Spain Residential Market Overview (2/2) The Time is Now!
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“Renting will consolidate as the main way to fly the nest, as happens in countries with
a similar development to Spain” (Spanish Property Insight - February 2016)
“In general the rental prices will stabilize in the following years, because the lease market has arrived to Spain to stay”
(Fotocasa Index - May 2016)
“The rental market is expected to continue to expand in 2016 and the ratio of rented housing (14.9% in 2014) will continue to
converge towards the Eurozone average.” (CBRE - February 2016)
“As long as the recovery of the real estate market consolidates, residential become more attractive for investors. Acquiring residential assets , is nowadays a high
return operation with a low risk” (Expansion - March 2016)
Structure
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Socimi Structure
Zero Taxation (capital gains and rents)
95% reduction on Transfer Tax (6% in the Madrid area)
Going public within 2 years
• Originally introduced in 2009 to support investments in Spanish Real Estate following the financial crisis
• There are several large SOCIMI’s that are traded on Madrid’s main market (Merlin, Lar, Hispania etc..), and 27 Socimis traded on the MAB, most of which are not truly public
• VBA is the first dedicated residential public SOCIMI – on December 2016 the company registered on the MAB
Strategy
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• Acquiring distressed mid level residential assets in main cities
• Acquisitions done mainly from banks or other distressed sellers, at prices significant lower than current market prices (backed by an international non affiliated appraisal) creating significant capital gain in the short term.
• Dedicated on the ground local operational and managerial personnel
Lease Property
Management
Origination Acquisition Refurbishment
Creating Substantial Added Value Over Time
Examples of our assets
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Contact
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Vbare Iberian Properties SOCIMI S.A. C/ Almagro, 3 – 5º Dcha. 28010 Madrid (Spain)
Yair Ephrati Director T +972 3 622 3381 M +972 54 4866 866 [email protected]
This presentation has been prepared by Vbare Iberian Properties SOCIMI, S.A. (“VBA”). This presentation does not constitute and should not be construed as an offer to sell or issue, or the solicitation of an offer to buy or acquire securities. This Presentation is solely for informational purposes and should not be treated as investment advice. In addition, this Presentation does not take into account the specific investment objectives, financial situation or particular needs of any recipient in any jurisdiction nor does it contain all the information necessary to fully evaluate any investment or transaction.
Accordingly, no part of this Presentation nor the fact of its distribution should form the basis of, or be relied upon in connection with, any contract, commitment or investment decision in relation to any securities or otherwise. This presentation was not prepared for the purpose of being used in connection with any offering of securities. VBA does not make any representation, warranty or undertaking, express or implied, and no reliance should be placed on the fairness, accuracy, completeness or correctness of the information, opinions or projections contained in the Presentation. VBA shall have no liability whatsoever for any loss whatsoever arising from any use of this Presentation or its contents or otherwise arising in connection with this Presentation.
Some of the information contained in the presentation including, among other things, forecasts, goals, assessments and estimates related to events and or future matters, realization is uncertain and is beyond the control of VBA (the "Forward Looking Information"). Forward Looking Information as stated above does not constitute a proven fact and is based solely on VBA’s subjective estimates. Whether or not the information will materialize and will be affected, amongst other things, by risk factors inherent in the Public Investment Vehicle’s operations, as well as developments in the general environs and external factors that affect the Public Investment Vehicle's operation, which cannot be estimated in advance and that are not within the control of VBA.
This Presentation and the information contained in the Presentation are provided as of the date of this Presentation and are subject to change ,and VBA is not under any obligation to update, complete, revise, verify, amend or keep current the information contained herein. Furthermore, anyone who is interested in making an investment, should consult with legal, regulatory, tax, business, investment, financial and accounting advisers to the extent that he deems necessary, and should make his own investment decisions based upon his own judgment and advice from such advisers as he deems necessary and not upon any view expressed by VBA or expressed in this Presentation.
This Presentation shall be governed and construed in accordance with the laws of Spain without regard to its conflict of law provisions and the receiver of this Presentation hereby irrevocably consents to the exclusive jurisdiction of, and venue in, the competent jurisdiction located in Madrid, Spain.
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