Investment summary

UPDATES 18 NOVEMBER 2022 

Already 8 of the 11 available homes have been reserved, all with deposits. As a result, the risk situation of the project would be as follows: 

Execution risk - Already with license and only execution of work. 

Commercial risk - 77% of total sales reserved for the development (with a return of €15,000 per reservation). 

Financial risk - 93% of the total estimated costs of the project would be covered with the current pre-sales. There should be no problem in obtaining the developer's loan. 

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The Reconquista Project entails the acquisition of a building for its demolition to subsequently construct a building of 11 apartments plus a storage room, parking space, and commercial premises. These apartments are in the Ceares neighborhood (Gijón, Asturias), just 700 meters from the San Lorenzo beach. The location lies in a residential area right next to a school, just a few meters from the city center. 

It is a very attractive new business opportunity. It is the first project we are launching in Asturias, in a highly demanded area due to the scarcity of new construction. 

The asset has an area of 1,086.81 sqm to build 11 apartments between 55 sqm and 100 sqm, approximately (depending on the property). These apartments will contain one to four bedrooms, comprising an entrance hall, a hallway, a living/dining room/kitchen, bathroom/s, and a laundry room. The apartments will have ample interiors, large windows, and a private terrace. They will also include a storage room and parking space. 

The commercial premises have an area of approximately 29 sqm. 

The project development and management will be carried out by Asprusa, which specializes in renovations, rehabilitations, and developments of real estate assets. This company has a relevant track record in this business model and has developed many projects in Asturias. 

NOTE: due to the real estate nature of the project, once the company reaches 100% of the objective, the project will conclude (there is no possibility of "overfunding" up to 125%). 

ECONOMIC SCENARIOS  

According to the criteria of the CNMV (Spanish Securities and Exchange Commission), two additional scenarios must be included, in addition to the moderate scenario proposed by Fellow Funders for Equity projects, to show potential variations in the business plan.  

The unfavorable scenario contemplates a 10% increase in construction costs and a 10% decrease in the selling price.  

The moderate scenario reflects the costs and returns as proposed by the developer and analyzed by Fellow Funders.  

The favorable scenario considers a 5% increase in construction costs and a 5% increase in the selling price.  

Location

Market

The catchment area has a 51.66% for-sale rating, few available properties in the area, low unemployment, and a strong preference for properties of three, four, or more bedrooms. 

According to household income and university education level, the socioeconomic level of the area is high. The population is middle-aged and high density. 

This study shows a limited supply of new housing, resulting in a median price range for both new and second-hand homes. For this reason, the average sale price range is between 1,161 €/sqm and 2,500 €/sqm. 

The selected area is of average prices, with an ample supply of second homes but a shortage of supply in new housing. Consequently, the property's condition plays a crucial role in the area. When upgrading the property, the average difference in price is 56%, making it one of the project's strengths. 

On the other hand, the perimeter has characteristics typical of a residential area. The price per square meter of bigger apartments tends to be cheaper than the price per square meter of smaller apartments. Moreover, compared to the same month last year, prices per square meter in the area have increased by 3%, whereas total prices increased by 2% in the same period. 

 

 

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Financial plan

The project will require an estimated investment of €2,910,452. From this amount, €580,000 will be obtained via equity crowdfunding, and €100,000 will be provided by the developer. The remaining amount will be provided by a loan of €1,282,743. 

Investors will enter as shareholders together with the developer's contribution to the vehicle created to develop the project, Special Purpose Vehicle (SPV).   

 

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The following forecasts are mere estimates that may vary depending on the economic, social, and other circumstances that may arise during the life of the project. 

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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 project obtains a B+ rating. 

• Project: The development project will require a total investment of €2,400,701. Of this amount, €580,000 will be financed via equity through private investors who will enter as shareholders in the Special Purpose Vehicle (SPV). 

• Capital Structure: The structuring will be 85% provided by Fellow Funders investors. The developer team will provide the remaining 15%. 

• Developer: The developer team has extensive experience in the sector, specializing in this type of project, strengthening and mitigating this risk. One of the project's strengths. 

• Market: According to the market study, it is a highly attractive investment given the scarce supply of this type of new construction asset and the high demand in the selected area. 

• Financial Risk: Opportunistic type of investment, thus the risk involved is higher. To mitigate this risk, we have studied the development from a very conservative perspective so that the sale price can be reduced up to 15% below the estimated price without generating losses. Moreover, the asset will be sold in advance, which can be used to finance the project. In any case, it will count as collateral. 

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Project steps

The investment term will begin when the Capital Increase is formalized. 

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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 developers 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. 

 

NOTE: due to the real estate nature of the project, once the company reaches 100% of the objective, the project will conclude (there is no possibility of "overfunding" up to 125%). 

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