AEDAS Homes has entered the BTR market through a strategic alliance for the turnkey development of 500 units for rent across the Madrid region
This strategic alliance is through a fund managed by an affiliate of Ares Management Corporation (NYSE: ARES), a leading global alternative asset manager
AEDAS Homes is the first Spanish listed homebuilder to sign an agreement under the BTR scheme. BTR is expected to capture a significant market share of the newly built housing market thanks to its strong benefits to developers and residential property platforms
MADRID, April 12, 2019 /PRNewswire/ -- In April 2019,AEDAS Homes entered into a strategic alliance through a fund managed by an affiliate of Ares Management Corporation (NYSE: ARES) for the development of approximately 500 build-to-rent homes in four projects located in Madrid.
AEDAS Homes consolidates its positioning as a leading pure homebuilder-player in the Spanish market, securing and de-risking its Business Plan by accessing untapped demand of renters with no commercial risk.
The agreement will result in a 20% increase in the number of units launched to the market in 2019, bringing forward the launch of these projects 3 years and improving AEDAS Homes' cash flow, EBITDA visibility and overall de-risking AEDAS Business Plan. The Agreement will also improve the supply and demand dynamics of the Madrid rental residential market, favoring the rental housing offer of the municipalities where the projects will be developed..
David Martinez, the CEO of AEDAS Homes states that, "we have finalised this agreement at a moment in which the market is questioning the capacity of some residential to achieve their targets. At AEDAS Homes, we want to take this opportunity to confirm our Business Plan. This initiative will allow us to increase the number of units we launch onto the market this year by 20%, demonstrating the strength of our land bank and our management capacity."
Deloitte, Garrigues and CBRE have acted as advisors in the Transaction.
The first development
The first project signed, that AEDAS Homes will develop as part of this strategic alliance, will be built in Torrejón de Ardoz, one of the most active real estate markets in the Madrid region due to its large population and dynamic economy, forming part of the most significant logistics corridor in Spain. With planning permission already in place, the construction is scheduled to start next month, and the project is expected to be delivered in 2021.
A business opportunity
"This initiative is in addition to the projects we are planning to launch this year - it will accelerate our ramp-up phase and in turn, generate greater value for our shareholders by increasing the rate at which we turn over our assets," David Martinez explained. He pointed out that these types of developments make accessing housing easier – mainly for for young people - while meeting a growing demand for rental units and leading to greater market professionalism.
The CEO concluded by saying that, "given the concentration and location of our excellent land bank, we will explore further opportunities in the Build to Rent sector as long as the conditions bring value to our company. Any potential projects should not only improve our asset turnover and financial returns, but also must have development margins in line to what we would require from any new investment."
About AEDAS Homes
The developer AEDAS Homes became a listed company in Madrid on October 20, 2017, with a market capitalization of over €1.5 billion and is a leader in the nation's residential development industry. The company plays a key role in the new cycle of the Spanish real estate sector, which must be marked by professionalism and adherence to rigorous standards.
AEDAS Homes has the highest-quality land bank in Spain, according to analysts, since most of this land is classified as ready-to-build. The company has a portfolio with more than 1.8 million square meters to build over 15,000 homes in the nation's key real estate markets and economic centres, and their surrounding areas: the Centre, Catalonia, the East & Balearic Islands, Andalucía and Costa del Sol.
Ares Management Corporation is a publicly traded, leading global alternative asset manager with approximately $131 billion of assets under management as of December 31, 2018 and 18 offices in the United States, Europe, Asia and Australia. Since its inception in 1997, Ares has adhered to a disciplined investment philosophy that focuses on delivering strong risk-adjusted investment returns throughout market cycles. Ares believes each of its three distinct but complementary investment groups in Credit, Private Equity and Real Estate is a market leader based on assets under management and investment performance. Ares was built upon the fundamental principle that each group benefits from being part of the greater whole. For more information, visit www.aresmgmt.com.