2023-05-14 10:18:32
Kategora began its operations before the bubble burst, accompanying real estate investors to buy in Europe and, after the tsunami, picked up those who still needed management. Inigo Basurtodirector of investment and strategy of the company, attends to THE SPANISH NEWSPAPERfrom the Prensa Ibérica group, to explain the past, present and future of the company.
ASK. What is Category?
ANSWER. Kategora began as a real estate asset manager in 2006, just before the crisis, taking Spanish real estate investors to Central European countries, particularly Poland and Hungary. Here the real estate market was already very overheated and there were many people who had the feeling that investing in the Spanish real estate market was investing in something that had very little potential, some were already talking about a crisis. Finally, that crisis arrived and the company, which had taken certain investors there, detected that the market was devastated. What did that mean? That many investors who had gone there lost their manager and were with investments 4,000 kilometers away and without having the possibility of managing them, of generating income with them. At that time, our founder, Kepa Apraiz, developed an application that allowed us to see what was happening in real time: rents, invoices, property operating accounts and all tax or administrative declarations. That was in the year 2006-2007 and, with this application, Kategora was collecting properties under management and, in a very short time, was made with a portfolio of 800-1,000 fragmented assets. For example, a footballer who had bought ten properties in a building in Warsaw.
Q. All these assets in Poland?
A. Yes, in Central Europe, especially in Hungary and Poland. They were atomized assets, which, with this application, the information was gathered and delivered to investors in real time. The fundamental objective was not to make a great profit, but to save the furniture and for the investor to feel calm. Meanwhile, Kategora was building a relationship with the guests, who at first were simply long-stay guests and, later, she converted some of her properties to tourist apartments, in order to give her an outlet in summer. Several years went by and while the returns were rising, investors were gaining peace of mind. From there, they started asking us to step up and start promoting our own assets in a single building and we started with a student residence in Hungary.
Q. Did you buy the land, design the project and build?
R. First we sold the fragmented real estate assets of the investors to later invest in a more homogenized product, with economies of scale. This was greatly improving profitability and especially the relationship with guests. At first, the student residences were intended for medium or long stays, but we soon began to realize that, if they did not live in summer, we could put tourists there who had a cohabitation with people who were on longer stays. What I am talking about was during 2013, 2014 or 2015. The returns began to improve a lot and investors began to ask us for developments in Spain.
Q. Were all the investors Spanish or were they foreigners?
R. There was everything, but mainly they were Spanish, who were orphans of a manager.
Q. Spaniards who had capital, invested from abroad and, now, they asked you to return.
Q. Yes. First they started with a loose apartment, then Kategora promoted and offered them an apartment in a horizontal division that they owned in that building. And that is the germ of our business model: having direct ownership of the property, but not worrying about the management, so that you receive a fixed income of approximately 3.5% per month and a variable that is settled at the end of anus. With this learning, in 2017, we landed in Spain, with the purchase of land in Tenerife from BBVA, to develop a complex in which all those ideas that had been collected would come together. Nivaria Beach is the first of the complexes, where guests are for short and medium stays. With this, I want to emphasize that our mentality is not to reach the sites to harm them. Guests are offered an integration model, both in the location and in the complex, aware of sustainability and the impact it generates.
Q. How many apartments are there? All sold?
R. Nivarian sold very well and very quickly in 2018. There are 122 apartments, which were sold between 130,000 and 170,000 euros. It is currently generating a return of 3.5% fixed and the rest is variable. It is generating approximately between 7% and 8%.
Q. What were the next steps?
A. After that model, others are being generated, such as Nivaria Golf & Marina, which are 86 apartments and is very close. We also have the Gigantes de Tenerife project, where we are also developing around 100 apartments, as well as another one in Lanzarote.
Q. Are you developing these last 100 now?
A. Yes, those are going to start the works shortly. Nivarian Golf & Marina will finish the works next year. It is practically all sold and it is a very big qualitative leap. Here the prices start from 180,000 euros to 280,000.
Q. What have you developed on the Peninsula?
R. Katégora has three business lines: vacation, apartments boutique in the center of cities and coliving, the latter aimed at young students and professionals. In the Peninsula we have opted for coliving, where the investor does not buy an apartment, but develops it for later sale to an institutional investor.
Q. How many assets do you have under management?
A. In Europe, we have two urban apartment complexes in operation in Budapest, a coliving in Vitoria and the one mentioned above in Tenerife, which is for vacation. In development we have a coliving in Pamplona with 140 units, another in Valencia with 350, the two on vacation in Tenerife and, in Andorra, an apartment project.
Q. What is the market value of all this?
A. Between 300 and 400 million euros.
Q. What new operations will come in the future?
R. We are closing operations in Estepona, Alicante, Seville and Barcelona.
Q. What is the coliving model like?
A. The property coliving model is a club of developers that develops it in strategic and peripheral areas of cities, but very well connected to universities, transport nodes or technology centers. The key is to create large common areas for people there to meet because it’s about attracting talent. You have some basic services that are associated with your apartment and then a lot of additional services.
Q. What is the profile of the investors behind coliving?
R. They are always national investors, almost in 90% of the cases, and they are industrial or patrimonial families. They are people who, above all, seek productive investments, in activities with personnel, that allow them to have tax savings in wealth tax and deductions when it comes to raising the dividends that are generated. After six or seven years, those investments are sold to an institutional investor, they liquidate the company and move on to another project.
Q. How do you want to grow?
R. We are going to develop four projects per year in the future. Two of them are going to be in horizontal division, which are projects that are promoted and liquidated in three years, and that is where a club of investors comes in, who leave when the apartments are sold to other investors, in which we as managers guarantee a fixed rent.
Q. In management they work like a hotel chain.
R. Kategora has a subsidiary called Kora Rentals, which is in charge of generating the lodging, the operational activity in the complexes, and paying the insured rents to the owners. Investors are being given their fixed income and at the same time they are being reported on the activity that is taking place, with hair and marks, in the apartments.
Q. Who is your model aimed at?
R. It is designed for the middle class because you don’t have to be rich to buy an apartment. In addition, there is the possibility of financing 50% of the cost, with which profitability also improves and you have a property that will not give you problems from the point of view of the tenant. For example, our properties escape the Housing Law because they are always on hotel land. In addition, there is a manager who is taking care of maintenance, which will always be in perfect condition whenever you go.
Q. Is it always tertiary-hotel land?
R. There are some complexes that are only residential, but they are the exception.
Q. How many investors do you have?
R. Around 800, more or less, each one with their apartment. On the one hand, when they understand what Kategora is and are receiving their income, they are offered to make the leap to promoters, which are tickets between 500,000 and one million euros.
Q. What profitability is offered to those who enter the promotion?
A. It is usually between 15% and 22%, approximately, depending on the investment round. If you enter a very initial phase, it is higher than 20%, and, if you enter the phase with the product sold, it is 15% or 16%. We only our most qualified investors or with a broad level of diversification and with a certain economic capacity, because we invite them to enter this more and more professional model.
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