Interview to Joaquín Castellví, Head of Spanish Operations of

JOAQUIN CASTELLVI,

HEAD OF SPANISH OPERATIONS DE STONEWEG SPAIN

STONEWEG SPAIN

This year you have opened a new branch in Madrid, which adds to the one you already had in Barcelona. What are the next steps that Stoneweg will carry out to continue consolidating itself as one of the leading real estate platforms in Spain?

Spain is a strong and growing economy, with very attractive financing conditions for this type of assets. The opening of both branches has been due to the large number of projects we have in the national territory: more than 30 developments totaling more than 1,300 homes, more than 200,000 m², as well as 3 office buildings of more than 33,000 m². All of them are investments with scheduled delivery dates between 2017 and 2020. We expect to close 2017 with 50 portfolio projects totaling 2,000 homes for sale.

We have noticed during mostly the last year, you have been acquiring land and rebuilding in fairly mature areas of Madrid and Barcelona, as well as in coastal destinations that are not typical. What is this strategy due to?

We put great emphasis on strategies that ensure a sale or lease of the finished property in a maximum period of 2/3 years, creating a leverage over the local network to seek attractive opportunities out of the market and negotiating frameworks with the owners. For this, we develop our activity together with specialized partners in each of the local markets, detecting in them the best business opportunities. That is why we invest in urban areas that, due to their maturity, lack space for new buildings, but they do have an objective clientele and constitute an unexplored market, such as the Madrid neighborhood of Moncloa or L’Eixample in Barcelona. Similarly, we consider that the entire Spanish coast is attractive to the potential buyer and that, more and more, people are looking for less crowded and quieter destinations, which means that there is a very prominent market niche to which we can turn.

We have just witnessed how Amazon has recently rented one of its properties managed jointly with Grupo Castellví in the 22 @ district of Barcelona which has been a milestone because of the scale of the operation. Is the office sector your new “workhorse”?

This strategy responds to the diversification of Stoneweg’s portfolio of real estate assets, capturing solar and different office buildings in geographical areas with great business development such as the 22 @ district of Barcelona. In this specific place we work side by side with Grupo Castellví to capture different promotional opportunities. In fact, we manage 3 properties of more than 33,000

m² that house companies as well known as Amazon. Of course, we do not leave aside the residential sector, managed through the firm Stoneweg Living. It is just another way to diversify our offer in Spain.

Why do you prefer to launch several developments of a rather small size instead of the prevailing trend of acquiring large plots for shopping centers, industrial assets, large urbanizations?

In the residential sector we also have large volume promotions, but it is true that in this way we differentiate ourselves from other international real estate conglomerates that, for the most part, manage this type of more commercial and industrialized promotions. By investing in projects of smaller size, we diversify our portfolio more, our clients, we specialize more in specific geographical areas and we find less competition in a niche business in which we have to differentiate ourselves to keep growing.

You are present in other countries such as Italy, Switzerland or the United States. Which country is easier at a legal level? What about business opportunities?

We carry out different strategies in each country depending on their momentum in the economic cycle and particularly in their real estate cycle, clearly in Spain we have opted for a promotion strategy.

Each market has its singularities, its advantages and its disadvantages. Spain, by focusing on one of the markets in which we are present, suffered an acute crisis from which it is recovering in a very pronounced way and with a high unsatisfied demand. In addition, access to local active agents such as banks, private owners and developers is fast and transparent, and mortgages for real estate assets are increasing again, which will make the Spanish market the ideal fabric for sale and rental of real estate in an approximate term of 5 years. In fact, between 2006 and 2013, mortgages fell by 85%. Starting in 2014, they started to recover by 1.6% and, since 2015, this variable is growing at a rate of 20%, with 93% of them being Variable Interest.

One of your preferred investment destinations is the Costa Brava, where you are one of the few companies that has carried out new constructions in locations such as Palamós or Platja D’Aro. What have you seen in this area that others lack?

To give an example, in Palamós recently we have started to develop together with Vincke, the development of Les Terrasses de Palamós, with an investment of 15.2 million euros, which consists of 80 homes in height of which we have already sold almost all of them. The problem of the coast in Spain is that it is overcrowded, with very mature destinations in which it is difficult to build on our side, and live quietly on the part of our future buyers. Therefore, they begin to go to other destinations that are also well known, but they are not so exploited. Stoneweg hopes to contribute to the recovery of the urban development of these localities and to activate the real estate dynamics through projects with a great economic impact in the different regions.

Today it seems that any development aimed to a highpurchasing power type of public is the one that is most easily sold. Is this really so?

The luxury housing sector always has a way out, due to the geographical diversification of the buyers and, of course, at the right price, although many unsold residential properties have remained since the crisis period, as the housing bubble affected to all social classes to a greater or lesser extent. But we do not think it’s easier to sell. In fact, Stoneweg advocates more for the democratization of well-made real estate, with high qualities and with competitive prices without having, therefore, to pay exorbitant amounts. In portfolio we have assets in exclusive areas of Madrid and Barcelona such as Puerta de Hierro, El Viso, Almagro, Les Corts, Sant Gervasi ... but also in outskirts of both cities such as Móstoles, Alcalá de Henares, Premià de Dalt ... Our objective it is not a specific public, but a concrete standard in all our promotions.

What does Stoneweg offer to its customers that sets it apart from the competition?

I mean the buyer of the street, the one who wants to find the house of his dreams to the best conditions. The first thing to talk about is the professionalization of the sector in this new stage, since there are very few participants, but there are very professional ones. We develop our activity together with partners specialized in each of the local markets, detecting in them the best business opportunities and the best ways of financing. We invest in mature urban areas that other competitors do not work, such as the Madrid neighborhood of Moncloa or L’Eixample in Barcelona. If you are a company, the platform has more than 33,000 m2 of offices in the new business heart of Barcelona. We collaborate with renowned architects and studios such as Enric Batlle, Joan Pascual, Ramon Ausió, Olalquiaga Estudio, Touza, Hans Abaton or Arnaiz, among others. We are pioneers in the development of the new extension of La Sagrera (Barcelona), thanks to a project that has more than 100 houses, one of the largest in the city. We are the first investment fund active promoter in the Costa Brava, with more than 18,000 m2 in 5 promotions that contemplate more than 150 homes ....