Neinor put the sector on alert in 2019

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

Neinor starred in the biggest scare in the real estate sector in 2019.

In April Neinor announced that he would not be able to deliver the homes he had promised in his business plan for the next few years. Specifically, the company reduced delivery forecasts by half, from 3,500 to 4,000 annual properties between 2019 and 2021, to an estimated 2,000 floors per year during the three-year period.

This reduction brought with it the consequent profit warning, which put the entire sector on alert and ended up affecting the rest of Spanish listed developers. The company expects to achieve a gross operating result (EBITDA) of 71 million euros at the end of 2019 and a minimum of one hundred million euros in 2020.

At the same time, the company announced the agreed resignation of Juan Velayos, the manager who led the company's IPO in 2015, after fulfilling the two years of commitment that he sealed after the debut in housing stock.

The company's Chief Operating Officer, Borja García-Egotxeaga, was appointed as new CEO in place of Velayos, while Jordi Argemí assumed the position of Deputy CEO and the historic Juan Pepa was in charge of managing the company representing the maximum shareholder at that time, the investment fund Adar Capital.

In December, Pepa also left the company, in this case due to the incompatibility of the increase in the activity planned for his company Stoneshield Capital and the consequent reduction in the time that the manager, one of the top responsible for the IPO of Neinor with Velayos, could dedicate to the board of directors of Neinor.

In addition, Adar Capital has also ceased to be the company's largest shareholder in 2019. The Israeli fund, which in 2018 touched the obligation to launch a bid on the company after raising its stake to 28.6%, becoming the main shareholder After the departure of Lone Star, it reduced its positions to 19.3% for the benefit of the French investment fund Orion European Capital, which went from controlling 15.4% of the company's securities, to 28%.

This operation brought about a change in the board of directors of Neinor, since the proprietary advisor Francis Btesh, representative of the Israeli fund, left him in September. Currently, Orion has a package of 22.18 million company titles, valued at more than 250 million euros.

On the other hand, Neinor's shareholding is also formed by Bank of Montreal, with a 5.2% stake, and King Street Capital, with 3.9%. Despite these changes in management, the company now managed by García Egotxeaga he managed to close the first nine months of the year with a profit of 25.2 million euros, leaving behind the losses of 5.7 million euros he recorded in September 2018.

At the same time, the developer has increased its income 55% year-on-year, reaching 242 million euros, mainly from housing development, which reported 207 million euros to the company's accounts.

Until September, the company had handed over the keys of 572 homes of the total of 1,200 properties that were part of the new forecast for 2019. In this sense, 400 of the assets pending sale were in the process of delivery in November and between 200 homes and 300 homes were waiting to get the first occupancy license. In any case, the company has 95% of the properties to be delivered before December 31 forecasted.

On the other hand, at the end of September, Neinor reported a gross operating result (EBITDA) of 46 million euros, multiplying by five the 9.5 million euros it presented in the accounts of the first three quarters of 2018.

After its entry as maximum shareholder of the company, the French fund Orion has proposed to increase its portfolio of assets. Argemí explained in October that this growth can be “organic or inorganic”, that is, from the company's own business or with corporate operations.

In any case, any purchase made by the company will be “correct, at a correct price and suitable for the shareholder”. The company does rule out the merger or acquisition of other companies. In parallel, Neinor also opted for the two major trends of the current real estate market, the build-to-rent and the development of industrialized housing, which would reduce the construction times of the new developments by almost half.

In this sense, García-Egotxeaga explained in October that "industrialized promotion is the future of real estate." The company has already announced its first project using this technology and has reaffirmed its commitment to “materials that can survive the cycles”. In addition, it is also negotiating the development of a project of 1,300 homes for the rental market.

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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