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The largest ‘build to rent’ transaction in Spain


Mega deal in the rental market: Axa IM buys 919 apartments from Tectum for 150 million in Spain’s largest ‘build to rent’ transaction.

Mega deal in Madrid’s rental market. The real estate arm of insurer AXA, AXA IM Real Assets, has closed the purchase of 919 apartments, previously owned by Tectum Real Estate, for €150 million. This transaction is the largest build-to-rent transaction in Spain in terms of price and volume to date.

With this transaction, which has been advised by Colliers, AXA IM dethrones what until now had been the most relevant project under this format: the purchase of 400 homes located in Valdebebas by the Ares fund from the developer Amenabar for around 110 million euros.

The 919 units that AXA has acquired, through a turnkey agreement, are subsidized and are distributed among seven developments located in the Community of Madrid. Only one of the projects has completed construction and is currently 100% leased, three are under construction and the last three have just received building permits.

The expected delivery dates will be from 2020 to 2022, with each asset being transferred to AXA IM – Real Assets upon completion of construction and being fully leased, according to the company.

The previous owners of these projects, Tectum Real Estate, specialized in the development of rental housing, together with Locare Real Estate, a developer with extensive experience in the subsidized housing sector, will be in charge of carrying out the development of these projects.


Renting will emerge stronger from the crisis: funds redouble their bets

The 919 homes will be added to AXA IM’s Iberian residential portfolio, currently comprising 2,700 apartments located in Madrid, Barcelona and Lisbon. This transaction is part of the firm’s long-term strategy, implemented for its clients through exposure to the residential sector, relying heavily on the location component, in the context of a residential portfolio of approximately €20 billion under management in 15 countries.

“This transaction brings us a unique opportunity to increase the sought-after supply of high quality social housing in Madrid, a market that has historically had low levels of supply” explains Esther Escapa, Head of Acquisitions and Developments (Iberia) at AXA IM – Real Assets.

“Leaving aside the current paradigm caused by the COVID-19 pandemic, we have great confidence in the economic and demographic trend that has supported demand for this type of residential accommodation, allowing us to generate stable future revenues for our clients,” she adds.

Fund appetite for rental properties

The closing of this transaction, in the midst of the pandemic, only confirms what industry experts have been saying for months: rental will be the mainstay of real estate after the crisis. Thus, the market consensus expects profitable housing to better withstand the impact of Covid-19, not only in terms of prices, but also due to the consolidation of a demand that will probably be even greater after the crisis.

The lower purchasing power of the population, due to the increase in unemployment, and the impact that this crisis will have on the potential buyer’s confidence, will transfer part of the demand to the rental market. This situation further encourages funds, which already had an interest in this market in Spain, to close build to rent operations and also pushes developers to relax their price targets and close deals.

Most of the large real estate firms in the sector had already taken the step of entering the rental market before the crisis. However, each of them has adopted different strategies. On the one hand, there are those that have entered this market as property developers. This is the case of Neinor, which plans to become one of the major managers of rental apartments with a portfolio of 5,000 units. Others such as Realia and Pryconsa have also opted to create their own rental housing portfolios, but have done so with a more modest size.

Aedas Homes, which positions itself as a developer of rental projects under the turnkey format and was precisely one of the first to enter this market through an agreement with the Ares fund, is working with a different strategy.

Acciona Inmobiliaria, Aurea Homes, Amenabar, AQ Acentor or Vía Célere are some of the developers that have also carried out sales operations of complete turnkey projects and the truth is that most of the firms in the sector are analyzing this type of projects at the hands of the funds.


Characteristics of the new projects

All the homes that make up AXA IM’s new operation, which will form part of one of the largest real estate portfolios specializing in subsidized housing built in Spain, will be rented in accordance with the subsidized housing regime established by the Community of Madrid, VPPB and VPPL, intended only for those citizens who meet certain criteria set by the Community.

Each asset will consist of one-, two- and three-bedroom homes, built for the rental market and with a high level of amenities.


The funds expect an adjustment in the prices of build to rent operations after the crisis.

Specifically, “tenants will have access to a wide range of services within the complex, such as concierge, swimming pool, playgrounds, storage rooms and parking spaces, among others. The seven assets are located in consolidated areas of the Community of Madrid with high demand for this type of housing. All locations benefit from a good transport infrastructure, with easy access to the main ring roads, as well as a good public transport network,” the company points out.

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