Bain funds its Spanish developer’s residential drive

The credit arm of the US private equity giant has lent €240m for land purchases to Habitat Inmobiliaria, which it acquired earlier this year.

Spain’s residential comeback has brought an opportunity for Bain Capital Credit, which has recently backed Spanish developer Habitat Inmobiliaria with a €240 million loan for land acquisitions.

The debt financing will back Habitat’s new business plan, through which the firm aims to invest more than €500 million in land purchases for residential developments within the next three years. The Spanish developer hopes to gain traction in the market with the support of Bain, which became its largest shareholder in January.

“We are currently focused on business growth through a significant increase in [residential] developments, with the aim to put 2,000 homes on the market annually from 2021,” a spokeswoman for Habitat told Real Estate Capital.

So far this year, Habitat has completed 16 land purchases totalling 200,000 square metres in Madrid, Seville, Valencia, Cantabria and the Canary Islands. These land purchases have totalled an investment of €70 million and Habitat plans to spend €50 million for further land purchases in the next few months. The “strong” investment drive for the next few years is due to Bain’s commitment to the company as a major shareholder, said José Carlos Saz, Habitat’s chief executive officer.

When it acquired Habitat, Bain had already gained ground in Spain through acquisitions of non-performing loans, leases and real estate valued at more than €3.5 billion since 2014.

“We believe Spain is one of the most attractive NPL and real estate markets in Europe and Habitat’s sizeable land plots in major cities are a great opportunity to expand our footprint in the residential development sector,” Fabio Longo, a managing director and head of Bain’s European non-performing loan and real estate business, said in January.

Demand for residential developments in Spain has surged, following economic recovery in the Spanish market after the financial crisis. Last year, the licences granted for new-built residential units totalled 80,786, up by 26.1 percent, data from Spain’s Ministry of Public Works show. The increase in new-builds has been underpinned by increased investment, up to €1.9 billion in the first nine months of the year, from €142.4 million over the same time a year ago, data from CBRE show.