Investment summary

The Pozuelo Project will involve the purchase of a plot of land for the later construction of two villas.

The construction of these two properties will follow an Opportunistic strategy. In this way, it will be possible to obtain very valuable assets of a renewed aspect, allowing investors to acquire new properties.

This strategy allows obtaining very attractive assets with a renewed aspect, allowing investors to generate low-risk returns after the sale of the assets.

The development plot is in Pozuelo de Alarcón (Madrid). The location is one of the project's strengths as it is in one of the areas with the highest per capita income in Spain. For this reason, its prime location will make the marketing of the properties easier.

The surroundings are residential and bordered by green areas, villas, townhouses, and low-rise buildings.

The resulting properties will be approximately 400 square meters per unit. Each property will have a semi-basement, a garden, and a swimming pool.

The Toro de Piedra development team, a highly qualified and versatile group of people with extensive knowledge and experience in the real estate sector, will be in charge of the project's development. Gallardo Llopis Group, a company with over 40 years of experience, will design the architecture of this project. Thanks to these companies, the project will benefit from the added value of such professionals.

This development will require a total investment of €2,420,695. Of this total amount, €610,000 will be raised through Equity Crowdfunding, and €300,000 will be contributed by the developers. Additionally, there will be a loan of €1,211,400 for which the developers have offers from different banks. On the other hand, the early sale of the properties will finance the construction work for an amount of €299,295.

Regarding a more conservative view of the project, the construction work is not expected until the sale of both properties. There are already several interested parties in the properties.

The round amount will finance the construction work to be executed through the Special Purpose Vehicle (SPV) established for the project development. Investors will enter as shareholders in this SPV, which means that the investors own 100% of the investment vehicle and the asset (the principal collateral for the business).

We must bear in mind the Conservative Scenario on which the business has been modeled, i.e., any possible deviations in costs, terms, or sales prices are more likely to be in favor.

Location

Market

The area of influence presents a rating of 83% (Fragua- Atlas RE) in sales, with few vacant homes and low unemployment, presenting a high investor attractiveness.

The market starts from €3,488/sqm to €3,628/sqm, including assets to be refurbished and refurbished, considering that there is little supply of new construction.

The selected area has high prices, low supply, and moderate liquidity, which causes a low stock turnover. Given that there are no crucial differences depending on the state of the properties, the conservation state does not play an essential role in the area (as seen in the graph below). There are currently few newly built properties in the area.

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Financial plan

This project will require a total investment of €2,420,695.  Investors will enter as shareholders in the Special Purpose Vehicle (SPV) created for the project, owning 100% of the investment vehicle and the asset (main business guarantee).

Of the total capital required, €610,000 will be raised via Equity Crowdfunding (private investors). A developer loan will provide €2,476,678 (the developers have offers from different banking institutions). On the other hand, the early sale of the properties will finance the construction work for an amount of €299,295.

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Real state scoring

Our Scoring relies on a transversal evaluation of the business, evaluating the different metrics that we obtain from our financial analysis, its structuring, the possible intrinsic and extrinsic risks, the analysis of the environment, and the developers' experience.

According to this analysis, the company obtains a B- rating.

Project: The project will require a total investment of €2,420,695. Of this amount, €610,000 will be financed via Equity Crowdfunding (private investors). These private investors will enter as shareholders in the Special Purpose Vehicle (SPV).

Capital Structure: the project structuring will acquire 50% through a bank loan and the other 50% from the developer and Fellow Funders investors (33% and 67%, respectively).

Developer: One of the strengths of the project. The developer team has extensive experience in the sector.

Market: The market study indicates a high level of investor attractiveness due to the scarce supply of this type of new construction assets and the high average income level in the area.

Financial Risk: Although there is a bank loan, the financial risk is reduced since the developers have offers from different entities. In addition, their many years of experience in the sector play to their advantage in granting the loan.

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Project steps

El plazo de inversión comenzará cuando se protocolice la Amplicación de Capital.

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Operation coverage

Once the capital increase finishes with the new partners from the crowdfunding round, the investors will own the majority of the equity of the Special Purpose Vehicle created for the business, turning into the owner of the assets.

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Risks

• Variation of Execution costs: the Execution costs are analyzed by the project developer. However, they can always suffer variations due to conditions not foreseen beforehand.
• Technical or Execution Problems: in any work or project, technical or material execution problems may arise which, due to their nature, are not foreseen and may cause delays in the deadlines as well as cost increases.
• Administrative procedures: projects always rely on their regulatory and administrative suitability. However, they can always be affected by circumstances beyond the control of the promoters and the project that may imply delays in deadlines or increases in administrative fees.
• Variation of sale or rental prices: the price of the assets for sale or rental may be subject to upward or downward variations depending on various market factors. The project's developers have experience in these markets. They will be who will act following the situations that may arise to maximize profits and minimize risks.
• Liquidity: there may be market situations in which part of the investment takes more to liquidate. In this case, the company will take the appropriate measures to resolve them as quickly as possible.
• Changes in financing conditions: bank financing conditions may vary depending on several factors. However, the European Central Bank forecasts point to a long period of low interest rates.
• Political instability: regulation in Spain depends on many administrations. There may be political changes that could lead to changes in town planning, tax or administrative regulations.
• Loss of capital or unexpected monetary return: the return on investments may be lower than expected since all future analyses bases on business expectations and may vary. Therefore, the risk of not obtaining this return and losing part or all of the invested amount always exists.

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