A Morgan Stanley fund has closed an agreement with the Madrid developer to create a joint venture with which to promote at least 15 residential projects throughout Spain.
A new alliance between international funds and Spanish real estate companies has been forged in the market. In this case, the protagonists are the Morgan Stanley Real Estate Investing fund and the Madrid developer Gestilar.
Created in 2009 by Javier García-Valcárcel, this real estate agency specialized in residential development has become a benchmark in the northern area of Madrid, after developing and delivering more than 800 homes in just four years. With García-Varcárcel as the sole shareholder, the company launched the so-called Orizone project, with the aim of finding a strategic partner. Through a process led by A&G, more than a dozen international funds were invited and were interested in the project, with the Morgan Stanley fund finally winning.
“This investor was looking for a partner in Spain and after a year of negotiations, we closed an agreement. “We never looked for a corporate operation but rather a single strategic partner for the next four or five years,” explains Javier García-Valcárcel, president of Gestilar.
The agreement between the fund and the real estate company has materialized with the creation of a joint-venture, where the former will have a majority stake in the capital, while Gestilar will be in charge of the search for land and the promotion and sale of apartments. “The objective is to launch 14 or 15 new projects, with about 1,000 homes,” says the executive.
Currently, Gestilar has a portfolio of 1,000 homes under development, which will generate income of 500 million euros for the company. Its land portfolio has involved an investment of more than 350 million euros.
After closing the agreement with Morgan Stanley, Gestilar has already selected three lands to contribute to the joint venture, to which new assets will soon be incorporated, says its president.
"Although our current development is focused on Madrid Catalonia, after the agreement with Morgan Stanley, Gestilar will be able to increase our activity throughout Spain," the company explains.
This is not the first time that the real estate company closes an agreement with a fund to jointly invest in housing. However, this time, it is a long-term alliance and for more than one promotion.
I return to spain
The agreement between Gestilar and Morgan Stanley marks the return of one of the investors who bet the most on Spanish real estate before the bubble burst.
Thus, in 2006, the American fund announced that it had 1,000 million euros from different funds to invest in real estate assets in Spain.
As part of its commitment to this market, Morgan Stanley launched a joint venture with another real estate group Lar (managers of the Socimi Lar España). In February 2005, the fund joined forces with the Pereda family's real estate company to promote shopping centers and coastal vacation homes. In 2009, they closed this company after investing in 5 vacation home projects (with more than 1,500 units) and ten shopping centers.