Neinor Homes (HOME) M&A Announcement summary

Deal rationale and strategic fit

• Voluntary takeover and acquisition of a €2bn premium portfolio at a 30% NAV discount, consolidating leadership and creating Spain's largest, most diversified residential platform with over 43,000 units, focusing on Madrid and other key regions.

• Strategic move leverages strong demographic and economic fundamentals, addresses Spain's housing deficit, and aligns with national priorities for affordable and social housing.

• Positions the combined entity as the go-to platform for institutional capital, enhancing access to public and private investment.

• Maintains control under a Spanish listed company, supporting long-term, sustainable, and community-focused development.

• Accelerates execution beyond current strategic plan targets, capitalizing on market growth and housing shortages.

Financial terms and conditions

• Acquisition price is €1,070 million, or €24.485 per share, adjusted to €21.335 per share after a €136 million dividend, representing a 30% discount to NAV.

• Funded by €750 million in senior secured notes (EURIBOR + 525bps, 4-year maturity, 25% annual amortization) and €500 million in equity, including a €225 million capital raise.

• Castlelake, holding 79% of AEDAS, has irrevocably agreed to tender its full stake, ensuring execution certainty.

• Payback period for the €500 million equity investment is less than 3 years, driven by active land bank developments.

• Neinor's liability is limited to committed capital, maintaining a conservative loan-to-value ratio of 20–30%.

Synergies and expected cost savings

• Operational synergies expected from combining platforms, scaling deliveries, and efficiency gains, with no synergies assumed in underwriting.

• Transaction is highly accretive, boosting profits, dividends, and shareholder returns in the short, medium, and long term.

• ROE and ROTE targets increased to 15–20% and 20–25% by 2027.

• Shareholder return target increased to €850 million by 2027, a 44% rise, with DPS up by ~30%.

• EPS projected to grow by 25% through 2027, with net income target revised up by 40%.