¿Por qué solo las promotoras Neinor y Vía Célere han saltado al mercado de bonos? Jordi Argemí.

In our case, the bond issue is marked by the absorption operation of Quabit, which as you know was approved last January by the boards of directors of both companies and legally the closing of this operation will occur now, this month of May. And there you have to understand that Quabit is a company that had high indebtedness and also the cost of its debt was tremendously high, it paid up to 16% annual cost, and this is a cost level that is unsustainable for a developer, much less for Neinor. So in this context, Neinor covered the problem of high indebtedness by negotiating haircuts with the debt funds behind Quabit, and the problem of high cost we have covered with this bond issue, achieving that the cost automatically reduces from that double digit that Quabit was paying today to the cost we have issued, which has been 4.5%, which ultimately generates a very relevant synergy for our company and our shareholders from day one. And not only that, but we also achieved that the debt maturity occurs in almost six years, which allows us to put in value the land bank of Quabit, we don't have much time ahead. And then there is the concept of the green bond, which you were also pointing out. I would say that the concept of the green bond is a consequence of the sustainability standard that we have had at Neinor since day one when we were born as a company, and now it is a primary axis in our DNA. Not only Neinor, but the large developers in this country in the new cycle, and the market is recognizing these investments in green format. Obviously, this green format has an impact on investor appetite; there are more and more investors with more desire to invest in what is green, and it also has an impact on the final price of the bond cost. It is very difficult to quantify, but it has that positive impact.

In the operation, the big message I would launch is that it has been a resounding success. Being completely honest, we are very satisfied with the operation carried out. And you have to understand why we are satisfied. When we went out, we found a demand equivalent to 1.5 billion euros, which implies an oversubscription equivalent to five times the amount of the bond issue, which was 300 million euros. That means we were able to generate a lot of interest and appetite from international investors from all over the world. And it's not just a matter of demand for the sake of demand, but this has allowed us to optimize the price of the bond and also allowed us to be selective with the investors we want to have behind this bond. So not only in quantity but also quality. As for the type of investor, there has been all types, it's much more technical, but Anglo-Saxon terms: hedge funds, which are perhaps more speculative and opportunistic, and long-only funds, which are more stable long-term investors. In our case, I would say that we have tried to accommodate all of them because it's always good to have a good mix within the bond issue or even in any stock market format. But logically, within our possibilities, we have prioritized having the large long-term investors with the greatest reputation in this market. And as this strong oversubscription shows, we have been lucky enough to be able to accommodate this type of investor. We cannot give names, but all the big ones in the global sector are behind Neinor, and that gives a lot of comfort to the market. The evidence of that comfort is if you look at how the bond has traded in the secondary market, it has traded very well, around almost 4%, and that means that all investors have made money, and quite a lot of money in just three weeks of trading. And that's why we are very, very happy.

Without a doubt, without a doubt, more will join. And now you have to understand why. There is a rationale that explains why only Neinor and Vía Célere have come out recently in the bond market. The first big reason is that to access this type of market, you need to demonstrate that you are capable of doing your business well, and that basically means looking at the past and showing that you have achieved results and also of a certain size. As of December 2020, the only two developers that have achieved this have been Neinor and Vía Célere. Neinor has had two years of achieving more than 100 million in sales each year, and Vía Célere just this year 2020 was able to make a rebound due to its large deliveries and achieved 90 million in sales. So that is sufficient volume, sufficient historical track record to be able to opt for this type of market. And the second big reason, I would say, is the momentum we are experiencing in the debt market. There is a lot of liquidity in the market, and with it, bond prices have been adjusting in recent months. For example, if Neinor had wanted to come out last year, we could have, because we already had more than 100 million euros in sales, but the cost would have been between 5% and 6%, and that compares to the 4.5% we have achieved now, and with much higher investor quality. That cost of 5-6% was not a level we could accept, and that's why we didn't do it. Now is the time to do it. Obviously, I think the work that both companies have done, I mean Vía Célere and Neinor Homes, and their track record, is the positive result we have achieved. Investors have made money with a cost that has been decreasing on the issuances. Without a doubt, it will allow other developers to follow this path, and I would even say with greater ease in terms of time and cost, because the market understands what a developer in Spain is, and therefore they don't have to get into the macro, they don't have to understand the country risk. Many things are already discounted today by the work that Neinor has done in these weeks in the bond market. Basically, in other words, we have opened the door to the bond market for the rest of the developers. Today it seems easy, but at the time, two months ago, it was not easy at all, I can assure you. And that's why I think both companies, and I'm going to say the name that I shouldn't, but I think both companies are really proud of this placement.

Of course, obviously not, but I don't know, maybe you have analyzed that all this oversubscription could be channeled in another way. Actually, what happened during the process is that with this oversubscription, it was not the advisors or investment banks, but the investors themselves who wanted to increase the line, and that sometimes happens, to increase the request from 300 million to 400 million euros to absorb more of the demand that was there. But sincerely, I think debt for the sake of debt doesn't make much sense. I think when you have indebtedness, it means there is a specific objective. Our objective was very clear, the key and the figure is closed, so it doesn't allow room. We would only be able to issue another bond or expand this bond line once we are known. And now, yesterday, it is even easier because there is a demand that was left there because they already know us and by the fact that they have money, so you are in the perfect moment. We would not lose out if we find where to invest and that investment is good and profitable for Neinor. If we achieve that, possibly we could come to the market again. If we don't identify it, we are not going to indebt the company.

There is a very obvious mnemonic rule: the investor wants to earn a good return with a reasonable or assumable level of risk. Nowadays, there is a lot of liquidity in the market for all sectors, but it is true that there are few projects to invest in that have a solid perspective. What has happened now is that investors, looking at the Spanish residential sector, have realized that the developer business in this new cycle has been able to eliminate many of the historical risks, leaving behind speculation and short-termism, and has become a more resilient sector. And that could be demonstrated in its 12, 15, or 18 months with COVID in between. So with this important adjustment of risk and that perception of the Anglo-Saxon world towards Spain and towards the developer business, many investors have begun to see for the first time attractiveness in the developer sector. And that's why they have started to invest, I repeat, being the spearhead, Neinor in this case, but obviously it opens the door to any other player that wants to opt for this. And surely more will come with this bond issue.

Yes, to lead. As you know, everyone says they are the leader, but but but I think that in terms of our business plan, we are obviously more than covered. When I say more than covered, it's because we have extra liquidity in our relevant advance that will allow us to grow and close operations if we find ones that make sense for us. So we are in a very, very good position, in which operationally we are meeting and growing a lot, and we also have the ability to look at the very long term, which is always very difficult in the developer business. With that liquidity and those six-year debt maturities, it allows us to think long term, and that is perfect. That way we avoid any disruption, erroneous decision thinking about tomorrow, not next year. When you have short-termism, as managers, you don't make the right decisions or can't make correct decisions.

There were perhaps 3 or 4, summarizing the three big objectives. One was to deliver more than 2,400 homes to continue complying with our business plan, a capital markets commitment. That said, it involves growing at least 50% compared to last year's deliveries, which is a lot of growth. The second big objective is more than economic-financial, which is profitability. We set out to achieve around 150 million euros in recurring EBITDA, which is similar to last year 2020 when we did 110, so it's a very strong growth of 40 million euros. The third objective was land acquisition. We want to buy land now because it's the opportune moment, and that will imply buying at least 150 million euros, and that was before the bond issue, so now we even have capacity to go up to 250 million if we find opportunities. And the fourth objective, beyond the operational part of moving to sell, is the entire rental platform issue. You know that we have been a very relevant component, last year we were pioneers and launched this new business line. And obviously all the development that will take us a few years is running in parallel. So I think these were the objectives at the beginning of the year, they continue, they are the current objectives. For us, they are ambitious objectives, especially with COVID in between. So surely we will be busy for the rest of the year.

In total, in our land bank we have identified around 3,500 homes for build to rent. Out of this portfolio, this year we are going to end with 550 operational homes, not only finished but also presumably rented. The first development actually produced by Neinor Homes is in Malaga and will be completed in two months, in July, before summer. So this year, I repeat, 550 operational homes. Then in parallel, this year we will have launched with cranes another 1,700 homes, which will be completed between 2021 and 2022, and maybe some in 2023. So in the medium term, I would say we would be in a position to operate 2,500 homes, which is a pretty nice portfolio. Despite the long term, we have always said we would like to have a bit more size and scale up to 5,000 homes. So we don't set a deadline because we will see it according to opportunities that arise, and without any rush.

I think the market is more rational today. The reason is that in recent years, perhaps there was more volatility in land prices. There were players and operators trying to create their land bank. In the last two and a half years, when you had competitors, you didn't have such a strategic position to buy land, so you competed, and competing means the seller is in the most comfortable position to increase prices. We couldn't make the numbers work, so in those two years we practically didn't buy anything because with margins that we believe are rational and sensible for a market like the Spanish developer sector, we simply couldn't meet the price at which transactions were being made. What happens now is that some of those players are no longer in a position to keep buying, they have much more work now in putting their land bank into production. So there are fewer competitors in a strategic buying format. Other players, due to their financial and economic situation, have been affected and didn't have healthy balance sheets, so they can't opt for that. And so we are left with other clients, and we are in a position to buy, but with more sensible competition. And now, with the margins we have always wanted, it seems we are able to close operations. We will see in this Q2 if we are able to give good news in that regard and close good land in good locations.

At this moment, and especially perhaps the segment of new housing, increasingly, I say this as part of the developer, it may be subjective, but the reality is that the numbers are out there. There is more demand than product in the market, that is a reality, and this prevents prices from falling. If you look and analyze what has happened in the market in the last year, you will see that prices have not only not fallen, but new housing has even risen. And the derivatives are that there is little product, we lack land from a private perspective. Obviously, the public perspective can also help, with collaborations, to have more product. And not only that, but also what happened because of the economic perspective, there is a very important factor: the quality of life, which I think has been highlighted more this last year with the issue of COVID. People spend much more time at home, even teleworking, and therefore we need more space, more rooms, terraces, larger outdoor areas, common areas, etc. And what is happening is that housing was already important before COVID, but post-COVID, during COVID, it is gaining more weight. And that again creates more demand, less product, so prices are not only not dropping but could even rise. In that context, I would recommend housing, obviously it is an asset to consider, each in their sound judgment, but to consider.

Thank you, the pleasure has been mine. See you soon, a hug.