Madrid, 23 September 2024 - Neinor Homes, the leading listed residential property developer in Spain, reaches an agreement with Merak IMS, S.L. (“Merak”), a holding company controlled by funds managed by Bain Capital, to acquire a 10% stake in Promociones Habitat, S.A. (“Habitat”) and enters into an agreement where Neinor will provide development and management services to Habitat’s ongoing developments and land bank.

High quality and complementary land bank with a 44% exposure to Madrid

At the end of June, Habitat had a land bank with the capacity to develop c.8,000 residential housing units. Of the total land bank, Habitat has nearly 50% launched with c.4,000 housing units in different stages of development, of which c.2,200 units are currently under construction or completed and c.2,000 units are already sold.

As part of the deal, Neinor will provide services to a high-quality land bank that complements its own. Madrid represents c.3,500 housing units or 44% of the total land bank, located in key areas such as the new southern-west developments of Berrocales, Ahijones and Valdecarros, but also located in high growth areas located to the east of the city, such as Retamar de la Huerta and Brunete.

With this agreement, Neinor will operate the largest residential portfolio in Spain (either on its own behalf or providing services to Habitat), with +10,500 units active, of which +6,000 are under construction or already completed.

Achieves €1.2bn in AUMs in 18-months, more than doubling its €500mn 5Y target

Neinor’s co-investment strategy plays a key role within its Strategic Plan announced in March 2023 as the Group puts a greater emphasis on optimising its balance sheet while pursuing equity-efficient growth. Neinor had a target to raise €500mn from new strategic partners through to 2027. With the sixth partnership announced to date, Neinor will more than double its 5-year target by achieving €1.2bn in assets under management in the last 18-month period.

Since March 2023, Neinor has signed four partnership agreements with renowned investors AXA IM Alts, Orion Capital, Urbanitae and Avenue Capital to invest +€300mn in build-to-sell (BTS) projects. Through these, Neinor has already acquired five land plots comprising nearly c.1,700 housing units located in Madrid, Barcelona, Malaga and Alicante for a total investment of c.€130mn.

Additionally, in July 2024, Neinor announced a fifth partnership agreement with Octopus Real Estate to invest €200mn in the Spanish Independent Senior Living sector.

Strategic decision to accelerate investments with +€800mn deployed since Mar-23

As part of its Strategic Plan, Neinor targeted to invest €1bn in new land acquisitions until 2027, with €500mn of this €1bn to come from Neinor and the remaining from its partners. After this transaction announced today with Bain Capital, Neinor has achieved a total land investment of +€800mn with its strategic partners to develop more than c.9,500 housing units. Of the total amount invested, Neinor has contributed c.€50mn and is targeting a +25% IRR. Furthermore, Neinor still has another €400mn ready to be deployed as part of its partnerships with AXA, Urbanitae and Octopus Real Estate where it should contribute up to €60mn of additional equity.

Earlier this year, Neinor has refinanced its corporate debt, extending maturities to 2026-27 and increasing the size from €140mn to €200mn while maintaining its cost. This refinancing helps to ensure that Neinor has the flexibility to accelerate land acquisitions beyond its annual target of €40mn for 2024.

Borja García-Egotxeaga, Neinor Homes’ CEO comments that: “This deal is bound to transform the growth paradigm in the Spanish residential sector, where in recent years existing platforms haven’t been able to scale meaningfully. Today, thanks to our dealmaking and execution capacity we are strategically positioned to seize growth opportunities in ways that are highly accretive to both shareholders and co-investors. Additionally, the expected strength of the Spanish macro in the next three years is set to act as a tailwind clearly playing into our advantage. Over this period, Neinor’s equity story will transition quickly from being the highest dividend yield in the EuroStoxx600 with c.30% expected return in the coming 18-months towards a double-digit earnings growth.”

Ali Haroon, a Partner at Bain Capital said: “Our residential housing strategy is closely aligned with our firmwide thematic investment approach to create lasting value. With demand for housing growing across Spain, we believe there is a significant opportunity to develop high quality housing for the high concentration of households seeking the dream of homeownership. Bain Capital is a global player in the real estate business with significant investments and a clear investment strategy in the Spanish market. We have a solid track record in focusing on value-add real estate assets, enabling us to successfully deliver for investors.”

Jordi Argemi, Neinor Homes’ Deputy CEO and CFO says: “This transaction marks a breakthrough in the execution of Neinor’s Strategic Plan as it accelerates both the timing and scale of our JV business, whose value is yet to be priced by the market. So far with the €1.2bn AUMs, Neinor has far exceeded its initial expectations and deployed c.€50mn targeting +25% IRR. Moreover, we are extremely pleased that with an innovative structure, we've been able to earn Bain Capital's trust as its main partner in Spain, reinforcing our ability to manage their platform and maximise returns.”

Nikolay Golubev, a Partner at Bain Capital commented: “We look forward to building upon this partnership with Neinor and leveraging our deep industry expertise to deliver quality housing in Spain. Since our acquisition of Habitat, we have created around 5,500 units in a market facing a real shortage of residential housing, a strategy making a big impact across the homebuilding sector.”