The funds obtained are for the acquisition of urban land for residential use to develop 1,700 houses in 2017 in the Community of Madrid and other areas with high demand potential. Quabit anticipate beginning the acquisition process immediately after achieving this objective.
After successfully completing the capital expansion in the last financial year, the company, presided over by Félix Abánades, will continue to fulfil its objectives as detailed in their strategic plan to 2020. After attracting the capital for new investments and the development of new residential, the company can now achieve their goals.
The most relevant clauses in the contract establish that disposal of this capital will be to finance 70% of land acquisitions, with the 30% remainder financed by Quabit. Thus, the funds made available in the first year, will be restored to pay off the credit line (4 years). There is a possibility of arranging mortgages in advance and to reuse the funds to make new investments, which could increase the value of the aforementioned credit line up to 85 million euros. The type of interest applied will be 16% annually on the available sum, payable until the expiry date. This financing only will apply to the costs of acquiring the land (which currently sits at around 30% of the costs of each development) and not on the totals of each project. But the societies could get banking finance on the acquired land through the mortgage market, which would considerably reduce the cost of the financing, and could increase the financing capacity of the agreement.
Finally, Quabit will concede to Avenue warrants on shares which will add up to 6% of the, by means of the subscription of new shares in several tranches. This will be conditional on the amount of the line of credit available.