Why we invest in land development
In 2012, Sareb issued bonds valued at €50,781 million in order to acquire almost 200,000 financial and real estate assets. The sale of this portfolio over the course of 15 years should generate enough resources to repay this debt, but the process is closely linked to the economic cycle.
Due to the fact that demand in some areas has pushed the price of some assets below what Sareb initially paid for them – prices were set by the Bank of Spain – the company decided to explore new avenues that would allow it to increase revenues and therefore fulfil its commitment to repay the debt guaranteed by the State.
This is how it developed a value uplift strategy for its property portfolio that involves investing in property refurbishments or developments, as there is higher demand for completed properties. This plan is being implemented in areas where the real estate sector is already recovering.
In terms of land, the company is constantly researching how to maximise its appeal on the market, with feasible risk levels. Completing the planning procedures required to obtain a use classification for a plot of land not only adds value to Sareb's property portfolio, but can also lead directly on to property development projects developed by Sareb itself or in collaboration with other companies. By being involved with the asset from the initial stages right up until it has been fully developed, the company can ensure the highest returns possible and move closer to achieving its objectives.
Within this context, the company has launched Árqura Homes, a Bank Asset Fund (FAB) that controls a large part of Sareb's development activity, including plots of land, works in progress and incomplete residential projects, valued at over EUR800 million. The vehicle is partly owned by Värde Partners and managed by Aelca, and plans to invest over EUR2,200 million to build 17,000 homes across almost every region of Spain.