The manager of this operation is FREO Group, an international manager specializing in investment, promotion and management of real estate assets. Founded in 1996 and present in Spain since 2015, it offers comprehensive asset management services throughout the entire life cycle of buildings. FREO Spain invests in assets with high potential for value generation through active management, which includes leasing at market prices, increasing occupancy through intense marketing, renegotiating contracts or executing efficient Capex actions. It also maintains close relationships with the main intermediaries and market players, which allows it to identify opportunities and manage assets in an agile and efficient manner.  

The current tenant, who has a contract until June 2027, is one of the main global operators of collaborative workspaces (Co-working), which redefines the traditional office through a focus on creativity and community. It has a presence in more than 450 locations globally, in more than 3,500 centers. In Spain, it has more than 70 centers spread over more than 25,000 m², with a special focus on Madrid and Barcelona.

The project consists of the acquisition of the company owning an office building located in the historic center of Madrid, on Mazarredo Street 7, Arganzuela. The asset is currently occupied by a tenant who has been in the building since 2017, with a rent that has not been updated and is below market. The project's strategy consists of renegotiating the rent with the current tenant or, failing that, formalizing a new lease with a new tenant at market prices. Additionally, it is planned to carry out certain CapEx actions and improvements in the building to optimize its positioning. Once the asset is stabilized with a market rent, the goal will be to proceed with its sale to an institutional investor.

The project has a capital gain strategy, which consists of the alliance with the manager for the development of the project and sale of the asset once stabilized to an institutional investor. The contributions of Urbanitae investors will be made through a capital increase in the vehicle company that will group the investment of the platform's investors in the project: EMERITA OPPORTUNITIES 6, S.L. This company, in turn, will carry out a capital increase in the project's promoting company, EMERITA OPPORTUNITIES 5, S.L.

From a commercial point of view, the sale of the asset is expected once a new lease has been formalized and the property has been stabilized.

In the scenario of renegotiation with the current tenant, an approximate period of five months is estimated between the end of the current contract and the start of the new contract. During this period, certain maintenance actions will be carried out on the asset, as well as obtaining an ESG certification, with the aim of positioning the property in the best conditions for its marketing and leasing.

With the start of the new contract, certain usual incentives in this type of operations are contemplated, such as a grace period of approximately four months, as well as other economic incentives typical of the market. The estimated exit yield is 5.25%, a figure that has been corroborated by an independent third party in the context of the commercial due diligence carried out for the project.

STRUCTURE

The operation will be structured via a capital increase, where both the manager and Urbanitae investors and co-investors will make a capital contribution to the operation's promoting company of €9,100,000, of which Urbanitae will participate with €3,000,000, expandable by an additional €2,000,000, if the manager requests it. This promoting company plans to resort to bank financing for the acquisition of the company, which has already obtained indicative terms to grant the mortgage loan.

The manager will be dedicated to the comprehensive management of the project and the promoting company and will contribute 10% of the total capital of the investment.

WHY INVEST?

There are several reasons to invest in this project:

• Strategic location in Madrid: investment in an office asset located in the center of Madrid, within the M-30, one of the areas with the most dynamism and liquidity in the Spanish real estate market.

• Competitive acquisition price: the asset is acquired at a value per m² significantly lower than the current market references in the area, which offers an attractive entry point for the investor.

• Potential for asset appreciation: there is room to increase the current rent, currently below market, by renegotiating the current contract or formalizing a new lease under market conditions.

• Solid fundamentals of the office market: the supply of offices within the M-30 is limited, while demand for well-located spaces remains high, especially in consolidated markets like Madrid.

• Scarcity of comparable assets: due to its size, typology and location, there are very few assets that can compete with this property, which enhances its appeal to a wide spectrum of potential tenants.

ECONOMIC SCENARIOS

According to the criteria of the CNMV, in addition to the base (favorable) scenario proposed by the manager and which we contrast from Urbanitae, in Equity projects 2 additional scenarios must be published that show potential variations in the business plan.

1. FAVORABLE

The base, or favorable, scenario includes the revenue and expense estimates proposed by the manager, verified by Urbanitae, and contrasted by the commercial due diligence report carried out for the project. In this project, the total revenue forecast amounts to € 22,040,053, while the estimate of the total costs for the execution of the investment corresponds to € 18,072,889.

2. MODERATE

The moderate scenario contemplates a downward deviation in the estimated sale price of the company and a reduction in the initial rent estimated for the new lease to be formalized. In this project, a reduction in the estimated sale price of about 13% (which implies an increase in the exit yield to 5.75%) and a reduction in the initial rent estimated for the new lease to € 22/m2 has been considered, which decreases the amount of total income to € 19,368,710 (costs are reduced compared to the favorable scenario due to the reduction in corporate tax).

3. UNFAVORABLE

The moderate scenario contemplates a downward deviation in the estimated sale price of the asset and a reduction in the initial rent estimated for the new lease to be formalized, wide enough to obtain a negative result, with partial loss of the contributed capital. In this project, a reduction in the estimated sale price of about 27% (which implies an increase in the exit yield to 6.25%) and a reduction in the initial rent estimated for the new lease to € 20/m2 has been considered, which decreases the amount of total income to € 16,339,281 (costs are reduced compared to the favorable scenario due to the reduction in corporate tax and marketing fees).

According to the supervisor's criteria, crowdfunding platforms should not communicate the estimated profitability in an Equity project. The total profitability of a project is the REVENUE FORECAST minus the COST ESTIMATE, divided by the TOTAL EQUITY. For example, in the FAVORABLE scenario, the calculation would be REVENUE FORECAST (€ 20,040,053) minus EXPENSE FORECAST (€ 18,072,889) divided by the total Equity (€ 9,100,000). The result of this quotient multiplied by 100 will be the percentage of profitability on the capital contributed in this scenario.

The forecasts are mere estimates, and are subject to variations that could arise from the economic, social or other situation throughout the duration of the project.

MARKET

A market study has been carried out to determine whether the rent estimated for the new lease to be formalized and the sale price proposed by the manager are reasonable, in addition to a commercial Due Diligence carried out by a top-level entity where sale transactions and rent levels in the market are analyzed, as well as a study of potential demand from customers/tenants for the asset. 

WHEN WILL I RECOVER THE INVESTED MONEY?

The estimated term of this project is 22-26 months.

• April 2026 – closing of the operation and purchase of the company.

• January 2027 – notice to the current tenant of the intention to terminate the contract under the current conditions, and start of the renegotiation of it or search for a new tenant. 

• June 2027 – termination of the current tenant's lease.  

• July 2027 – start of maintenance actions and obtaining of ESG certification to be carried out on the asset and start of the assumed vacancy period. 

• Fourth quarter 2027 – formalization of a new lease contract and start of marketing for the exit of investors.

• Second quarter 2028 – sale of the owning company, liquidation of the promoting company and distribution of profits to investors.

It is important to bear in mind that in all real estate investments, deadlines can vary both upwards and downwards. 

RISKS

All investments carry a risk. We detail the clearest risks we have identified for this project: 

• Delay in the formalization of a new lease contract and/or the need to lower the estimated rental price to attract a tenant.

• Delay in the sale and/or the need to lower its price to attract final buyers.

• Possibility of change of the agreed conditions. This risk includes potential substantial changes that take place from the start of the financing campaign until the formalization of the capital increase, in which case the project would be cancelled and the capital contributed by the investors would be returned.

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Warnings and Risks

Urbanitae Real Estate Platform (Urbanitae) does not hold the status of an investment services company, nor of a credit institution and is not attached to any investment guarantee fund or deposit guarantee fund. The information published by Urbanitae Real Estate Platform on its Website is for informational purposes only and can in no case be considered as recommendations to investors.

The crowdfunding projects published by Urbanitae on its Website are not subject to authorization or supervision by the National Securities Market Commission or the Bank of Spain, therefore, all the information provided by the promoter in relation to the projects has not been reviewed by them.

Urbanitae expressly informs that, in case of non-compliance with the total volume of investment of the project, the deadline for fundraising may be exceeded by up to 25%, maintaining the same investment conditions. Likewise, the project may be financed by Urbanitae when at least 90 percent of the financing objective has been reached, once the participation in the project that the platform itself may have is discounted. All this according to the provisions of Article 69 of Law 5/2015 on Business Financing Promotion.

Investing in the projects published on this Website may entail certain risks, such as, the risk of total or partial loss of the invested capital, of not obtaining the expected monetary return or of lack of liquidity. Therefore, we warn investors to only invest an amount they are willing to lose and we suggest they diversify their investments to minimize and mitigate potential risks. In the event that the promoter is unable to return or remunerate the funds received, Urbanitae will not return the investors their investment made.

This project will be open to any investor registered in Urbanitae, and any of the following registered persons may invest in it:

• Urbanitae partners who own at least 20% of the share capital or voting rights;

• Directors or employees of Urbanitae;

• Individuals or legal entities linked to these partners, directors or employees by control.

In this sense, Urbanitae guarantees that the investments of any of these people will be made through the platform, on the same terms and conditions as any other investor, without receiving any preferential treatment, nor privileged access to information compared to the rest of the investors registered in Urbanitae. In accordance with Urbanitae's Internal Code of Conduct, these investors are obliged to internally communicate these operations.

Once the investment in the project is closed, Urbanitae will provide information in the project investment area about the amount invested by these investors, the type of investor who has made the investment, and the percentage it represents with respect to the total financed, always complying with the data protection policy.