Strategic move by AEDAS Homes to guarantee a long-term supply of quality land

Strategic move by AEDAS Homes to guarantee a long-term supply of quality land

Strategic move by AEDAS Homes to guarantee a long-term supply of quality land

David MartA­nez_CEO de AEDAS Homes

The homebuilder has created an innovative mechanism for gaining access to land in the long term that will markedly reduce the risk and volatility in the price of future acquisitions

The company has reached an agreement with its main shareholder to create Special Purchase Vehicles for each plot of strategic land acquired

By opening the door to possible agreements with other investors and owners of non-fully permitted land, the residential developer is diversifying its asset investment strategy

May 2019.-AEDAS Homes, a leading homebuilder in Spaina??s new real estate cycle, is diversifying its strategy for acquiring residential land with the signing of a first framework agreement with the American fund Castlelake to acquire non-fully permitted assets, that is, land which is pending administrative approval.The mechanism is simple yet powerful. A Special Purpose Vehicle (SPV) will be set up each time a non-fully permitted asset is identified and acquired; AEDAS Homes will have a minority stake (around 10%) in each SPV and will reserve the right to exercise a purchase option on a percentage of the plots in each development. The homebuilder, whose team has extensive experience in land, will manage these vehicles and oversee the transformation of the plots until they achieve ready-to-build status.This new investment strategy will make it possible for AEDAS Homes to recognise these assets on its balance sheet in the future in two ways: by converting its participation in the SPV into plots and, additionally, by exercising a Right Of First Offer(ROFO) on a percentage of the assets once all the necessary administrative permits are secured.The company has earmarked approximately a?¬15 million for strategic investments in 2019 and will be focusing on locations in Seville, Madrid and Valencia.a??Thanks to this agreement, we are guaranteeing the company, in the medium to long term, a supply of ready-to-build land, with a controlled measure of risk and without penalising the return on capital. This initiative will let the company acquire land in sought-after locations under very favourable financial termsa??, explained David MartA­nez, CEO of AEDAS Homes.This new strategic line will increase the companya??s visibility on its Business Plan beyond 2023 and will complement its disciplined core investment strategy, which focuses on fully permitted land in Spaina??s most in demand markets.Attachment

David MartA­nez_CEO de AEDAS Homes
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