The Company is of the opinion that this change in strategies, which involves giving up the tax benefits of a REIT, will be offset by the profits that result from its freedom to choose and diversify its investments.
Moreover, its presence in BME Growth will allow the Company to increase its ability to attract resources to finance its future growth, and provide more liquidity to minority shareholders. It will also make the company better known and more transparent vis-à-vis third parties, and reinforce its brand image. Listing on BME Growth also provides an objective mechanism for enhancing its share price.
New business model
Compared to the previous model, in which build-ready plots were purchased to develop residential rental buildings, the new business model expands the spectrum of activity of Domo Activos.
The Company’s business model relies on purchasing all types of real estate holdings, either as they are, or after they are modified, adapted or developed to construct residential buildings, hotels, student residences, tourism apartments, with or without retail or office space. These properties are then sold, rented or otherwise managed in order to maximize the return on investment for the company’s shareholders.
As a result, Domo Activos seeks to create value by making it possible for investors to take part in and benefit from the profits of the entire real estate cycle, whether through land purchases, construction, rental or sale.
The preferred locations for the holdings will be the Community of Madrid, Catalonia, the Basque Country, Malaga, Seville, Granada, Cordoba, the Valencian Community, the Balearic Islands and the Canary Islands, without ruling out other locations, depending on the expected returns. Assets may also be sold without undergoing any type of transformation.
A profitable year for the Company
2020 has been a crucial year in the history of Domo Activos. In February, it purchased a build-ready plot in Malaga for 3.63 million euros to develop a residential high-rise building with 37 homes in the center of the city. In April, the 80-unit building developed by the Company in the Ensanche de Vallecas in Madrid was sold to Catella for 25.5 million euros. Then, in October, it signed a private contract to sell the Metro de Madrid headquarters building, located on Cavanilles street, in the Retiro District, for 17 million euros.
The Company closed out the first half of the year with a profit of 6.4 million euros, according to the interim Financial Statements audited by PwC.