Urbanitae CEO talks on his company and the Latin American market

December 1, 2019
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This article was written and published in Spanish and has been translated into English via Google Translate. Click here to read the original article.

Interview with Urbanitae CEO reveals what his platform is doing for the sector.

Diego Bestard, CEO of Urbanitae, reviews the news of his company and real estate crowdfunding in idealista/news. The Chief Executive of the company states that "they claim to be a serious platform of the sector" and points to small residential developments in urban centers as a "great opportunity" to make investments.

What is Urbanitae?

Urbanitae is a real estate micro-finance platform, which is dedicated to unifying a typology of small-to-medium investors to have enough financial muscle to carry out large real estate projects. Some projects that have normally been closed to the circle of professional investors, large funds, hotel groups, etc.

Why and when was the platform born?

It was launched almost three years ago, at the beginning of 2017. From the beginning, we bet on having our own computer development, with which we were practically a year and a half into the development of the tool. We then had to wait for the authorization of the CNMV and Banco de España for two years, which are the regulators that are responsible for the crowdfunding activity.

How has Urbanitae been funded?

Mainly with the money of those of the founding partners. While it is true that we closed a round of financing a little over a year ago with different venture capital funds. It is likely that we will close some more soon to start making the brand known to the public.

"We use sources as an idealist to study the projects to be financed."

How much do you plan to bill next year?

Billing will be more than one million euros next year, almost certainly. The beauty of this type of business model is that, although it is a startup, it has a monetization model and a very clear business model. It is a very sustainable model.

What are the most attractive projects for your company?

Right now we are seeing a very good investment opportunity in new residential construction with a very clear typology: small promotions of 7, 10 or 15 homes, in urban centers and with very specialized promoters.

How do you analyze the projects that are likely to be funded?

We use sources as an idealist, we carry out different comparable market studies, we visit the Apis (real estate agents) in the area, making sure that the sales hypothesis that the developer brought us is credible and reasonable ... We also analyze how much It is taking time in that area to give the building licenses, how long it is taking to sell and so on. We are a "financial bug" that we have no commercial pressures.

What type of investor is interested in Urbanitae?

From the beginning we wanted to be the serious platform of the sector. We wanted to be rigorous and almost spend more time explaining the risks of the investment than the benefits of it. I was pleasantly surprised because we are attracting an investor typology that is very meticulous when it comes to investing. Everything is studied very well and then makes investments that are well above the market average: over 5,000 euros.

What is the minimum ticket?

Right now it's at 500 euros. Many times investors tell us: ‘Hey, this 500 euros is very small’, but the truth is that very few people invest this amount. In the end we came to the conclusion that we did not want to put aside people who did not trust completely and would like to try a small amount. We intend to get our average ticket of 5,000 euros without forcing the minimum. Anyway, we may increase it if we detect that the average amount drops, but today it is not a problem.

Urbanitae is only responsible for financing the project or also promotes, manages ...?

We are a pure and hard marketplace. And not only because we want to be a pure and hard marketplace, but because the regulator marks it as such. That is, a crowdfunding platform is a crowdfunding platform and cannot do other things and should not do so. We are at the center, we are absolutely impartial and we have to look after the interests of the promoter and our investors. Our job is to filter the projects, do the due diligence of the promoter and the project and make sure that in the end the investor is contributing money in something that is reliable. What I mean by this is that we cannot enter or manage the work, or promote, or sell, or do everything that involves a work or a real estate project.

"With some exceptions, and mainly foreign ones, the sector has not been attacked in a completely professional way."

How many projects have uploaded to the platform?

We do not want to open too many. We could have two or three projects financing at the same time, but we have decided to go one by one. Mainly because the timing in this type of projects is important. It is necessary to meet certain deadlines, for example, for the purchase of land or for the execution of the option to purchase possible land that the developer has brought to us, and so on. At the moment, we have uploaded a project in Malaga and it is very similar to the others we have done since June. It is basically a small land in the center of Malaga, very close to the main commercial street of the area, to make seven small houses, which have a very clear objective that is rent (for residential or holiday). This type of works makes a lot of sense because in the area there is a lot of demand, very little supply and there is a lot of interest from tour operators to buy entire buildings of that style to put them on holiday rental platforms.

How does the platform user get a return on his investment?

The user has a piece of that property and the way to earn money is via dividends. In the case of Malaga, for example, on the day that all floors are sold or someone comes and buys the entire building, all dividends are distributed to the partners in proportion to what they have contributed to the company. It should be noted that we do not have any type of link with the administration of the vehicles. It must be the developer who creates these vehicles, the one who manages them and the one who manages them, which is what it is for.

Is there distrust in real estate crowdfunding?

I think there is ignorance of the sector, because the vast majority of people do not know what crowdfunding is. I also think that, today, with some exceptions and mainly foreign ones, the sector has not been attacked in a completely professional way. And this is a financial product in which people are investing their money and I understand that you have to be very rigorous and I think that so far it has not been done quite well. We pretend to be the serious platform, this does not mean that the others are not, but we want to be a real alternative to investment and financing.

"It is much easier to agree on 500 investors than three."

Do you promise any kind of returns?

Anyone in the financial sector knows that promising returns in some cases is even illegal. We do not promise profitability, but we have studied the projects and we believe what the promoter tells us. And what the promoter tells us is an estimate of the returns. The promise of profitability in this type of assets makes no sense. When someone invests in the platform they will have a deed where their name as owner of that investment vehicle comes out, and that is the guarantee you have behind. After it is sold or not and in what term (the asset) can always vary, but both upwards and downwards.

How do so many investors agree within society?

It is much easier to agree to 500 people than to agree to three. When you have 500 anonymous investors who don't know each other, who don't have quarrels, don't have fights, don't have any kind of relationship... what usually happens? That they agree and common sense is imposed, by normal general.

The interests of alternative financing are usually higher than the promoter loans granted by banks, what are the interests of Urbanitae?

The issue of interests is different from banking and I think it has been difficult for the promoter sector to understand. They were used to finance the purchase of land and to finance the entire promotion, with very low interest rates. Of course, private or alternative investors cannot lend at 2% because the cost of capital is higher.

What is the goal for 2020?

We are very sure that we will exceed 20 million euros in investment, although we do not want to set goals in such an incipient company.

This article was written and published in Spanish and has been translated into English via Google Translate. Click here to read the original article.

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December 1, 2019

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