Neinor co-invests €50M with Orion and closes its first BTS JV

Neinor co-invests €50M with Orion and closes its first BTS JV
Malaga aerial view

Neinor Homes and Orion Capital Managers through its Orion European Real Estate Fund V have agreed to purchase a plot of land in Malaga as part of their build to sell (BTS) joint venture for the development of 429 homes for sale.

The plot is located in the neighbourhood of Cortijo Merino, a growing area close to Teatinos, where Neinor has already delivered more than 300 homes for sale and 146 for rent. This neighbourhood is very consolidated and has a wide range of professional services on offer, such as the University Campus of Malaga, the Virgen de la Victoria University Hospital, the Justice Campus and an excellent metro connection to the centre of Malaga, just 15 minutes away.

With this investment, Neinor and Orion have been able to achieve their investment commitment of 50 million euros through the acquisition of three plots located in the communities of Barcelona, Valencia and Malaga to develop 582 new homes for sale until 2028 with a potential GDV of approximately 250 million euros. Orion holds a 90% stake in this vehicle, while Neinor owns the remaining 10% and acts as a delivery partner overseeing project design, licensing, marketing and construction.

In total, since the announcement of its co-investment business in March 2023, Neinor has managed to raise €300 million from a diversified group of investors with complementary profiles in terms of product, target customer, geographic exposure and expected returns. The 5-year target is to raise a total of €500 million, and in only 9 months Neinor has been able to meet 60% of the target, demonstrating a higher than expected investor interest in investing in the buoyant Spanish residential sector.

Neinor's co-investment strategy plays a key role in the strategic plan announced in March 2023, as Neinor places greater emphasis on optimising its balance sheet, while pursuing capital efficient growth. By 2027, Neinor plans to invest around €1 billion in new land acquisitions, half of which will come from new partners.

Borja García-Egotxeaga, CEO of Neinor Homes, explained: "We are very proud of this acquisition and of having reached our target of co-investing €50 million with Orion. Together with the €100 million planned in the AXA vehicle we are demonstrating our ability not only to raise capital but also to invest. In the current environment of high interest rates we see a good opportunity to continue investing and buying land with expected returns of 15-20% per annum in a country where the fundamentals of the residential sector remain intact offering very attractive returns".

Jordi Argemí, Deputy CEO and CFO of Neinor, said: "Higher than expected interest in Neinor's JV business has allowed us to meet 60% of our 5-year target, well ahead of our best expectations. In addition, we have been able to secure a diversified group of investors with a complementary profile and now aim to continue investing with a beneficial proposition for Neinor's shareholders and our co-investment partners".

Gauthier Renaud, Partner at Orion Capital Managers, commented: "We are very pleased with this acquisition and to have reached EUR 50 million of investment in key cities in Spain. Strong underlying indicators, including an imbalance between supply and demand, make it increasingly clear that there is a need to increase construction. However, challenging market conditions mean that only highly efficient and experienced organisations can meet this demand. Neinor Homes continues to excel and demonstrate excellence in this regard". 

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