From ‘equity’ to ‘lending’ without a mortgage guarantee, and from ‘lending’ without a mortgage guarantee ‘lending ‘with home equity. Housers, the real estate investment platform, has given a turn in the last year to its business model focused on the financing of ‘real estate’ projects thanks to the existence of a real guarantee so that, in the event that the promoter breaches payment commitment or fails to meet the debt, investors can foreclose to get their money back.
The company leaves, or wants to leave, behind stock issues with one of the founding partners, and it does so with a capital increase just out of the oven, with a new system to finance small real estate projects in Spain, Italy and Portugal, with which it also aims to attract large institutional investors.
To do this, as required by the regulations governing participatory financing platforms in Spain, they have a guarantee agent – a figure widely used in Anglo-Saxon law – who is in charge, on behalf of investors, of take the guarantee, guard it and execute it in case it is necessary. In the case of Housers, said agent will be Bondholders.
Ruth Ugalde
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With this change, Housers intends attract a greater number of investors, especially institutional, which, in turn, will allow put on the table greater capital to finance small developers. “The developer needs financing and investors can provide that financing,” Juan Antonio Balcázar, Housers CEO for two years, explains to El Confidencial. “Of course, from now on, the promoter you will have to provide a guarantee, as happens with banks when granting a mortgage, and said guarantee will be guarded by a guarantee agent, who, if necessary, would execute it. In other words, their role is to block the property to protect the investor. ”
“This evolution in our business model will allow us expand our ‘portfolio’ of clients, until now small non-institutional investors. With the guarantee, we will be able to bring institutional investors into our projects “, continues the Housers manager, while acknowledging that, precisely, the company is working on the entry of a fund that allows you to catch cruising speed and to reach a greater number of promoters, “a sector that, for several years, has seen how banks are increasingly demanding with the number of pre-sales to grant financing”.
“We can be an alternative to banking and offer developers greater flexibility,” says Balcázar. Under this modality, the company has already managed to finance half a dozen projects. One of the last, in Puerta de Oriente, in the Almeria town of Vera. A project, as it appears on its website, of 250,000 euros of investment over 18 months, with an annual return of 8%, 12% in total.
It aims to attract a greater number of investors, especially institutional ones
In the case of Puerta de Oriente, the asset that acts as a mortgage guarantee is a property in the same urbanization valued at just over 670,000 euros in the current state – without finishing construction – and of 1.8 million upon completion. In this case, the loan to the developer amounts to 250,000 euros, which represents a ‘loan to value’ (LTV) of 37%.
Almost half a dozen are added to this project. The first of them was signed in Gran Canaria: 600,000 euros for the developer to finance the construction costs and promotion of 20 homes with 21 storage rooms and a commercial premises. That loan, signed in July 2020, has a repayment term of 18 months and an annual interest for investors of 8%.
A very bulky profitability?
In a context of low interest rates, talking about this type of returns puts any investor on alert. “It is as profitable as any other real estate operation. The alternative investment funds are asking the promoters 14-15% interest, while we charge a ‘fee’ or fees of 7-8% at the beginning “, explains the CEO of Housers, who assures that,” as with bank financing, the developer does not receive all the capital at once, rather, it is being disbursed in phases. ”
“The coronavirus crisis and its reflection in financial markets has shown that investment options exist such as participatory financing, whose returns are not so exposed to the fluctuations of the markets, which places them as interesting alternatives, in times of great volatility due to their uncorrelation with the future of the markets “.
After the departure of Brusola, we have covered a round of capital increase of 500,000 euros
Housers wants to leave behind his past, the shareholder confrontations, his discrepancies with the CNMV and with some disgruntled investors. To do this, in recent months it has brought very relevant changes to the platform. In April of this year, it closed a half a million euro round that will allow the company to comply with the business plan for this year, and that same month, agreed to the departure of one of the founders, Tono Brusola, after two years of confrontation in the courts and after winning the arbitration that would force him to sell 20% of the capital of the crowdfunding platform to the rest of the partners and to pay 600,000 euros of penalties.
“We’re evolving in product and as a company. After the friendly exit in April from Brusola, we have covered a round of capital increase of 500,000 euros and two new partners have entered, one from the ‘real estate’ and the other from a ‘startup’. This capital gives us box for day to day. Both the equity war and the coronavirus clipped our wings in full growth. After the reorganization in 2019, and after trying to survive in 2020, in 2021 we bet on financing with mortgage guarantee and on expanding the business to other countries of the European Union in addition to Italy and Portugal, where we are already present “.
The short-term objective is to raise four million euros. For this, the company will launch, in September, an investment fund that facilitates the entry of institutional investors. “We hope to be able to raise 40 million and achieve in 2022, again and as it happened in 2019, the company’s breakeven point.”
More than 100 projects financed
Housers reached 50 million in 2020 euros returned to investors through its participatory financing platform. In 2020, investment in projects developed through the platform increased by 11.4%, to exceed 120 million euros, and the number of users grew by 7%, to 125,000, with the aim of reaching the 300,000-400,000 in 2024.
“This figure, which corresponds to the capital paid by the promoters plus the interest generated by the more than 100 projects already closed that have been financed through Housers, supposes more than 40% of the total capital invested by users (more than 120 million euros) since the beginning of the activity of the company in 2015 “, explains the CEO of Housers.
E. Sanz
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Of the 50 million euros returned to investors, the majority (42 million) corresponds to real estate projects developed in Spain, while the located in Italy and Portugal they concentrate volumes of returns of 5.5 and 2.5 million euros, respectively.
“We want to strengthen, in the short term, our presence in both countries after exceeding, throughout 2020, the 300 financing projects “. An objective that they hope to achieve thanks to the European ‘crowdfunding’ regulation, approved in 2020, and which will come into force in 2021. A regulation that, as explained by Housers, “will allow to unify criteria between regulations and will allow companies to have a European passport for, from 2022, be able to operate in any EU country “.
“This passport will allow us to finance any promoter across the EU and, in our opinion, will bring movements between platforms and companies in the sector with mergers and concentrations in France, Germany, Switzerland or Belgium between 2023 and 2024 “, concludes Balcázar.
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