“An investment option like ADVERO, where inflation, wages and rents are closely linked, offers an interesting natural hedge in the future”

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The data for the first half of 2020 showed an impact on ADVERO Properties SOCIMI’s accounts due to its IPO in November 2019. How has the financial close of the year been?

2020 was a positively intense year for ADVERO Pties, despite the pandemic: we completed a capital increase in June for 7 million euros, we began our geographical diversification with the incorporation of three properties in Madrid (at the end of 2019 we were focused on the Barcelona metropolitan area), we kept our occupancy levels at maximums and we were not affected by situations of non-payment by our residents. The income statement at the end of 2020 includes an increase of 25% in the turnover, due to the growth of the asset portfolio, although at the net income level we closed with a negative amount of 0.11 million euros because the new acquisitions (3 new buildings not commercialized to date) were incorporated between the months of July and October, so that the income from their commercialization on a rental basis was only incorporated into the results for a small part of the year.

Likewise, 2020 was a year of increased corporate expenses, due to the necessary structure as listed, but this is an effect that is diluted as the company grows in size. It should also be taken into account that our operating account changes significantly depending on the regulations of the Spanish General Accounting Plan (negative net result in 2020 of € 0.11 M) or international accounting standards (profit of € 0.825 M) , due to the effect that the incorporation of the revaluation of the assets acquired in the second case has.

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Despite the crisis caused by the pandemic, ADVERO Properties SOCIMI’s business model has proven highly defensive to date …

ADVERO focuses its strategy on quality affordable rental housing: our properties have a maximum age of 10 years, with quality finishes and an average rent of 650 euros. We seek to invest mainly in municipalities around the large cities of Spain, or in middle-income neighborhoods of those cities. With a pandemic where housing has been the main center of our life for more than a year, our asset typology, together with a professionalized management attentive to the needs of our residents, has been key. This is also what our shareholders have understood, who in the middle of the crisis supported a capital increase of 7 million euros and saw their shares revalue by 9.5% in 2020, and 35% since the IPO in November 2019 .

Its portfolio of residential assets includes 8 properties with a total of 126 homes. Do you plan to expand it in 2021?

It is our total will. We still have resources from this capital increase and we have access to bank debt. The company’s net debt at the end of 2020 represented only 3% of the value of our assets, still far from the 30% that the board of directors has set as a ceiling. We are working hard to expand our portfolio and continue to help balance the supply and demand for residential rentals in Spain.

The future Housing Law proposes to limit rents in the most stressed areas. What are the consequences of going ahead with this law?

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The basic problem in Spain is the lack of a rental housing stock, mainly due to our culture of ownership. Rent has traditionally been seen as an option for those who do not have the resources to buy, when in many other countries it is seen as an option that provides flexibility. This lack of supply in Spain has also been adversely affected by somewhat lax policies regarding illegal occupations, which has meant that, with the rental housing sector still an activity mainly in the hands of individuals fearful of defenselessness that the system has generated on many occasions, this has limited the supply even more if possible. The only way to have sustainable prices is by balancing supply and demand, as in any segment of the economy. Attack the base of the problem with policies that encourage investment in the supply of rental housing. Any intervention at the tip of the iceberg has already proven highly counterproductive in other countries, since it ends up limiting investment, aging the housing stock and increasing the underlying problem.

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