Xenia Capital and funds managed by Oaktree Capital Management have joined forces to boost alternative real estate financing in Spain. Both companies plan to invest €220 million in the Spanish real estate sector by September 2023.
They will finance projects in residential, coliving, build-to-rent, student housing, tourist apartments, aparthotels, five-star hotels, and other alternative assets.
This agreement represents a further step for Xenia Capital’s activity in Iberia, as it now offers financing throughout all stages of the project. The company has been present on the Peninsula for five years and has already financed the development of 2,000 homes. It initially provided bridge loans and mezzanine debt for the early stages of real estate projects. With the support of Oaktree, it aims to diversify its range of products and solutions and expand its scope of action. Through this agreement, over €128 million has already been invested, and another €90 million is currently in the due diligence phase, expected to close in the next three months.
In its operations since entering Spain, Xenia Capital has provided an average of €15 million. These include financing for the purchase of an office building in the center of Madrid for its conversion into a short-stay apartment project with 170 units, the development of 28 homes in central Madrid, and the financing of a 200-room five-star hotel in Estepona with a top-tier international operator.
«This agreement with Oaktree represents an opportunity to provide private capital for the development of the Spanish real estate sector. At the same time, it allows us to expand our scope of action to cover the entire project development and finance it from start to finish. We hope this is the first step in a lasting alliance that creates value for the country and our investors,» said Rory Buchanan, CEO at Xenia.
Gonzalo Barrios, Managing Partner at Xenia, referred to the current state of alternative financing in Europe and specifically in Spain, stating, «The alternative financing market is currently experiencing a series of market dynamics that are creating very attractive short-term investment opportunities: an environment characterized by credit constraints from traditional banks, rising interest rates, and asset valuation readjustments.»
From his perspective, «this can generate profitability opportunities with an attractive risk profile, potentially allowing the private capital market to capture market shares above the current 10%, following the trend in the UK (25%/75%) or even the US (40%/60%). The coexistence of traditional financing and alternative financing is essential for this market; it is important to see it as an opportunity that provides the sector with greater liquidity at any stage of the project.»
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