MADRID (STL.News) – AEDAS Homes, a leading developer in Spain’s new real estate cycle, has reported a 32% increase in sales in the first half of the year, as well as a 55% increase in revenue over the same six-month period in 2018. These revenues of €22.9 million were generated by the 102 homes delivered between January and June of this year.
During the first six months of the year, the company also registered losses of €11.6 million, which was expected. This is due to the way the company books its direct marketing costs for all the units it currently on the market, despite only 1.4% of this total being delivered in this period.
After the last valuation carried out by Savills in June 2019, the company’s GAV stood at €1.931 billion, 9.2% higher than what it was in December 2018, while its GDV reached €5.239 billion. The residential developer’s net financial debt stands at €191.3 million, which represents a Loan-to-Value ratio of only 10%.
“The company’s operational data once again demonstrate that AEDAS Homes has a solid Business Plan and the trust of its customers and investors, who can see how the company is accelerating its ramp-up,” said David Martínez, CEO of AEDAS Homes.
Discretionary Share Buyback Programme
The company has announced a discretionary treasury stock repurchase programme. This programme, which will use surplus cash expected to be generated in 2019, will have an initial investment of €50 million.
“I can’t think of a better investment to channel our excess treasury than buying our own landbank at a 40% discount,” said David Martínez.
“The cash surplus being generated in 2019, the future positive cash flows, and the current undervaluation of our share on the stock market – all this has given us a unique and risk-free opportunity to create value for our shareholders,” Martinez concluded.
The company has made it clear that this treasury stock repurchase programme will not alter the land investments it has planned. This is due to the fact the current land bank not only ensures that the company will comfortably cover the Business Plan targets it has committed to, but also because future land investments will be made using cash already earmarked for that purpose. In other words, the share buyback programme will only be carried out using a cash surplus and as such will have no impact on the company’s strategic plan. It’s also worth remembering that in May, the homebuilder announced the creation of a new investment vehicle which will guarantee access to high-quality strategic land, while at the same time minimising risk and exposure to future price volatility
The capacity of AEDAS Homes to generate surplus cash will increase significantly as it approaches its run-rate. The company will be reviewing all options for allocating surplus capital in a way that will maximise value for its shareholders, and this will include any potential future share buybacks, depending on the market’s valuation of the company at that point in time.
Acceleration of the ramp-up phase
During the first half of the year, the developer accelerated its ramp-up phase by putting 1,340 new-build homes on the market, with a total GDV of €425 million. Since its start in 2017, AEDAS Homes has put 5,028 homes on the market, which translates into a GDV €1.829 billion, and has closed a total of 2,927 sales, valued at more than €1 billion.
In regard to the expected deliveries in 2019—1,055 units as planned—most will occur in the second half of the year, when the company will see a significant boost to its balance sheet. As of June 30th, 92% of the units to be delivered this year had already been sold, which demonstrates the strong interest on the part of AEDAS Homes’s customers in the high-quality product on offer. Furthermore, more than 40% had already obtained the Final Construction Certificate, a major milestone in the delivery schedule of new-build homes.
High-quality landbank for more than 15,200 new-build homes
The developer has kept up the pace with land investment in order to comfortably ensure its delivery targets. To that end, it allocated €21.7 million in the first half of 2019 to further increase its land portfolio, for the purchase of plots to develop 395 new homes, giving the company a landbank for over 15,200 units as of the end of June.
In addition, AEDAS Homes acquired land in NPL format for the potential development of 103 additional units and signed purchase options and agreements for the future acquisition of land on which to develop another 728 units, bringing its total investment in both acquisitions and options up to 1,226 units.
About AEDAS Homes
The developer AEDAS Homes became a listed company in Madrid on October 20, 2017, with a market capitalization of over €1.5 billion and is a leader in the nation’s residential development industry. The company plays a key role in the new cycle of the Spanish real estate sector, which must be marked by professionalism and adherence to rigorous standards.
AEDAS Homes has the highest-quality land bank in Spain, according to analysts, since most of this land is classified as ready-to-build. The company has a portfolio with more than 1.8 million square meters to build over 15,200 homes in the nation’s key real estate markets and economic centres, and their surrounding areas: the Centre, Catalonia, the East & Balearic Islands, Andalucía and Costa del Sol.