We have completed the repayment of the Cunit III project, a real estate debt project developed alongside the developer Construverty, with whom we had previously collaborated on Cunit and Cunit II, both with results in line with the initial forecasts.
In this third project, the final outcome was better than expected, both in terms of profitability and annualized return for investors, with only a very limited deviation in the timeline.
In total, investors recovered 122.94% of the capital invested, which is equivalent to a total return of 22.94% and a final IRR of 10.20%, slightly above the initial estimate.
What did the Cunit III project involve?
Cunit III was structured as a debt project, through the granting of a loan to the developer to finance the construction of a multi-family building of 18 homes in the town of Cunit (Tarragona), on the coastal strip located between southern Barcelona and the northern part of the province of Tarragona.
The development included homes with large terraces, a communal swimming pool, and landscaped gardens, in a location very close to the beach and with consolidated residential demand for both primary and secondary residences.
When the project opened for investment on Urbanitae, it featured several elements that helped reduce the typical risks in this kind of development:
- It was the third project financed with Construverty in the same area.
- The Cunit and Cunit II projects had progressed as expected.
- The project already had a building permit.
- 50% of the homes were sold from the outset.
This starting point made it possible to narrow down the main risks of a new-build development: planning, execution, and sales.
Initial loan terms
The loan was granted under the following conditions:
- Estimated term: 24 months
- Interest rate: 10% per year
- Estimated total return: 20%
As is typical in debt projects, the agreement included the possibility of extending the term if necessary, applying the contractually agreed default interest in that case, in order to protect investors against potential delays.
Repayment in 25 months
Ultimately, the project was repaid in a 25-month term, only one month longer than initially expected. This slight extension was linked to the final handover and conveyancing process for the homes, which took longer than anticipated.
As we informed investors in last November’s newsletter, although most of the units had already been delivered, there were still a few pending completion. For this reason, the loan repayment was postponed until the full delivery of the development was completed, expected throughout December.
During that additional period, the loan continued to accrue the default interest established in the agreement, which explains why the final return was higher than initially estimated.
Final results: 22.9% return
The final outcome of the project was as follows:
- Estimated term: 24 months
- Final term: 25 months
- Estimated CoC: 20.00%
- Final CoC: 22.94%
- Estimated IRR: 10.00%
- Final IRR: 10.20%
The deviation in the timeline was minimal and translated into a better outcome for investors, both in total return and annualized profitability.
Consistent track record
The repayment of Cunit III strengthens the relationship between Urbanitae and Construverty, a developer with proven experience in the area and with whom the Cunit and Cunit II projects had already shown execution in line with expectations.
This third project confirms that, when a clearly defined debt structure, a developer with local market knowledge, and a development with commercial traction from the outset come together, reasonable timeline deviations can be managed appropriately and, in some cases, can even improve the final outcome for investors.
We continue to back a financing model based on rigorous project selection, continuous monitoring, and maximum transparency, including at the key moment of repayment.
