Madrid-based private equity real estate manager Azora has signed an agreement with a global institutional investor to launch a new Spanish build to rent residential vehicle, BRISA.
Including leverage, BRISA will have an implied total investment capacity of comfortably over €1 billion and will target the development of more than 8,000 units over the next five years.
BRISA’s strategy will be the same one Azora has implemented since the launch of its first residential vehicle back in 2003, with a primary preference for turnkey projects in long-term strategic collaborations with national and local developers but also complemented by land acquisitions for own-development opportunities, in order to ensure a sizeable and stable rhythm of production of new BTR units, Azora said.
”The capital will be deployed across a number of strategic micro-locations in Spain which have been identified as having fundamentals that support purpose-build PRS outperformance. These include locations in and around Madrid, Barcelona, Seville, Malaga, Palma de Mallorca and Valencia, amongst others.”
The portfolio will be property managed and leased by Azzam, Azora’s wholly owned residential leasing and property management subsidiary, which was established more than a decade ago and currently manages c.15,000 PRS units on behalf of Azora and other institutional investors.
The Spanish residential for rent market is one of the European real estate markets with the largest potential, supported by strong structural tailwinds and with the current deficit of homes for rent estimated at c.2.5 million over the next 15 years. Additionally, the market is currently characterised by fragmented ownership and a low share of professional institutional players, which presents an opportunity for investment managers with deep local knowledge and understanding to aggregate a large and institutional-quality portfolio.
Concha Osácar, Founding Partner of Azora, commented: “There is still an acute shortage of good quality rental housing in Spain, most notably for affordable accommodation targeting middle income earners. BRISA aims to help alleviate that issue through the delivery of more than 8,000 sustainably developed new homes in the most supply constrained micro-locations across Spain over the coming years. The success of this capital raise demonstrates that international investors continue to recognise Azora as a market leader in Spain in general and in the residential sector in particular.”
Javier Rodriguez Heredia, Senior Partner of Azora and responsible for the Real Estate Vertical, commented: “Housing is the most important social infrastructure a country has. We’re very excited to continue investing in a segment with such a high social impact and which is so important for the wellbeing and development of the younger generations and families in Spain. The affordable rented residential space is key in providing solutions to the real housing needs of this segment of the population, which is having great difficulties in accessing good quality housing and which constitute the social backbone and future of Spain. It’s a major challenge which we believe we can address through the collaboration and strategic partnerships with the top Spanish developers.”
Lazard acted as private placement agent for the fundraise and Freshfields Bruckhaus Deringer and Clifford Chance acted as legal counsel.
