French asset management giant Primonial confirmed on Thursday that it is joining forces with Spanish construction and property group Lar to invest up to €400 mln in the Spanish build-to-rent sector.
The investment programme, which was first reported by PropertyEU in July, is targeting a portfolio of up to €1 bn in the long term, the company said in a statement.
Grupo Lar had been looking for an international partner to help build up its residential arm which is forecast to own a portfolio of 5,000 units by 2025. The partners are targeting major cities such as Madrid and Barcelona, dynamic cities such as Zaragoza, Alicante or more specific markets depending on the opportunities - like Pamplona and Valladolid - in order to ensure good geographic diversification.
An initial portfolio of 500 housing units has already been secured, with delivery planned by the end of 2020 in Madrid, Málaga and Valladolid, and 27 projects are currently being studied.
The operation is the first major investment by Primonial in Spain, where the French asset manager has only carried out minor investment activities so far.
The initiative is part of Primonial’s plans to diversify the portfolio further and roll out a housing investment strategy across Europe. Primonial made its first meaningful acquisition in the sector in 2017 with the purchase of a €430 mln portfolio in Marseille from listed firm ANF Immobilier. It recently said it is targeting a €4 bn housing portfolio across Europe and launched its first European residential fund.
‘The Primonial group and Grupo Lar signed this agreement with a long-term ambition: to become the leader in real estate management in Spain,’ Primonial said, noting that the partnership already represents the largest operation in Spain for the creation and operation of a residential rental portfolio.
‘In a context marked by uncertainty, this key partnership proves the ambitions of the Primonial group and its ability to project itself into the future by actively pursuing its development strategy on a European scale. Residential real estate in Europe is one of our preferred areas of development, driven by strong rental demand and supported by favourable demographic trends, generating yield and added value over the long term,’ said Laurent Fléchet, managing director in charge of the Primonial Group's property business.
Miguel Ángel Peña, residential general mnager Spain at Grupo Lar added: ‘The alliance of a long-term investor, with the extensive real estate knowledge of Primonial, together with the experience and ability for property development and management provided by Grupo Lar, ensures that the platform will be a national benchmark.’
Deutsche Bank and Savills acted as M&A advisors, JLL and Deloitte as real estate consultants, and Uría Menéndez and Clifford Chance as legal advisors.
