Neinor published FY23 results delivering 2,559 homes and despite a backdrop of high interest rates and elevated inflation, recorded its highest margins ever with 29% and 23% gross margin and EBITDA, respectively. Adj.Net Income came in at €99mn, +10% above market consensus and guidance. Accordingly, stronger-than-expected cash flows allowed the developer to finish 2023 with a 14% LTV vs 20-25% guidance.

According to its Strategic Plan (2023-27), over the coming 24-months, the developer expects to distribute €325mn to its shareholders (DPS: €4.34/sh) equivalent to a +40% yield, the highest on IBEX35 and Stoxx600. Target deliveries to self-fund these dividends are currently 100% under construction and have a high percentage of pre-sales in place. The company continues to enjoy from a prudent balance sheet with no refinancing or interest rate risks until 2026.

The other key pillar of its Strategic Plan is equity efficient growth through which the company expects to invest €1bn in new acquisitions of which €500mn are expected to be undertaken by new Strategic Partners. Over the last year, Neinor signed three joint-venture agreements with renowned investors such as AXA, Orion and Urbanitae to raise €300mn to invest in build-to-sell projects.

Due to the advanced execution of this equity efficient growth strategy, where the company is targeting €500mn AUMs, Neinor is increasing its mid-term net income guidance (2027) by up to 10% to c€80mn per year based on the financial contribution of this new business line.

With a strong comeback after the financial crisis, Spain is quickly emerging as one of the safest residential markets worldwide as it is undersupplied, underleveraged and underpriced.

According to Mario Lapiedra, Neinor Homes, CIO, “lessons from the GFC have been learned by households, banks and developers. Today we see a prudent capital structure, low levels of supply and an affordable market with widespread mortgage availability. Furthermore, nowadays, the Spanish development market offers one of the best risk adjusted returns in the European Residential sector.”