28 March 2023
Neinor Homes to distribute €600mn in dividends while it plans to invest +€1bn to pursue growth opportunities
§ Neinor approves a shareholder remuneration plan of 600 million euros over the next five years.
§ Targeting capital-efficient growth with a direct investment plus co-investment plan of more than 1 billion euros.
§ Strategy will enable us to optimize the balance sheet through improved shareholder returns and accelerating our growth strategy.
Since 2019 Neinor Homes ('Neinor') has overachieved its targets and delivered 8,671 homes (+11%) and generated 518 million euros in EBITDA (+15%) and 344 million euros in net income (+23%), making it the most profitable Spanish residential developer.
In addition, the company combined excellent operating and financial results with non-financial results and was acknowledged by Sustainalytics as the world's lowest ESG risk developer for two years in a row.
Strong fundamentals provide excellent visibility for the next few years
In 2023, the Spanish residential sector is one of the most attractive markets in the world, benefiting from a very low level of supply, low leverage across the board and house prices that remain below the level at the time of the Global Financial Crisis.
However, capital markets continue to overlook the company's performance and solid market fundamentals. Today, Spanish developers are trading at one of the highest valuation discounts in their history, which limits and undermines the growth potential.
Strong commitment to optimize balance sheet through shareholder remuneration and capital-efficient growth
Neinor has decided to develop a growth strategy based on two pillars. On one hand, a clear commitment to the shareholder, using its privileged cash generation potential to increase dividend payments and implying very attractive yields for investors.
The Board of Neinor Homes unanimously approved a strategic plan that will distribute 600 million euros in the form of dividends, of which 450 million euros will take place in the next three years, effectively accelerating the crystallization process of its land bank and optimizing its balance sheet.
On the other hand, faced with the challenge of continuing its growth trajectory in a capital-efficient manner, Neinor has designed a powerful investment plan of more than 1 billion euros. To this end, in addition to direct investment, Neinor is launching a new co-investment business line for build-to-sell, build-to-rent and senior living that will allow it to grow and continue to optimize its balance sheet while improving returns.
The company is already under discussions with several investors to create different vehicles for BTS, BTR and Senior Living and expects to materialize this process throughout the year.
Borja García-Egotxeaga CEO of Neinor Homes, commented: "We are delighted to announce the launch of our co-investment model. This will enable investors to partner with Neinor, the leading residential provider in Spain, to enhance the Company's growth trajectory in a capital-efficient way and see a significant uplift in our return on equity.
"Spain has one of the lowest ratios of new supply per capita worldwide since the GFC and with mortgage data showing a more sustainable demand environment, Spain today is one of the markets with the best fundamentals worldwide. We intend to leverage this position and drive significantly enhanced returns for investors in our new business model as well as our shareholders."
Jordi Argemí, Deputy CEO and CFO of the Group said, "In the last five years, the company has executed and delivered on its business plan both operationally and financially despite a pandemic, the war in Ukraine, inflation and an unprecedented global rate hike. Additionally, the fundamentals of the Spanish residential sector remain intact. However capital markets have failed to recognize these facts. In this context, Neinor will optimise its balance sheet and increase its shareholder returns".
Powerscourt
Nick Dibden / Victoria Heslop / Oliver Banks
neinorhomes@powerscourt-group.comAbout Neinor Homes
Neinor Homes is the leading residential platform in Spain, with a land bank to develop close to 15,500 homes, and a GAV as of December 2022 of €1.7bn. This land bank is located in the most dynamic regions with the best economic fundamentals in Spain: Madrid, Western and Eastern Andalusia, Levante, Basque Country and Catalonia. Neinor is the only platform with a 360º offer, covering the entire value chain of the development and rental business. In addition, it complements its activity with a services division that has extensive knowledge in urban management, delegated development and construction. In 2022, Neinor was recognized for the second consecutive year as the developer with the lowest ESG risk in the world by Sustainalytics, being the first company out of a total of 284.
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