Housers started its activity in 2015 offering investors equity-type projects framed within what is known as equity crowdfunding.
We are talking about projects in which the initial developer of the opportunity was Housers, and the opportunities consisted of the purchase of properties for refurbishment, rental, and subsequent sale.
Investors in these opportunities entered as partners in a company created specifically for each project (a vehicle) and did so employing a capital increase that was notarized. They, therefore, became co-developers and full partners in the company, with all the rights granted to them by the Spanish Capital Companies Act.
This company was the one that bought the property and operated it. The company generated a profit from the rental of the property. Investors received annual returns via dividend distributions from the company: normally such dividend distributions were distributed monthly on account of the annual dividend when the company’s accounts allowed.
Among the different tasks that Housers carried out in each project was the marketing of the property to rent it, the tasks related to the tenants (contracts, deposits, repairs, administration, taxes,) as well as those related to the marketing for the sale of the property. To carry out these tasks Housers was appointed in each project as the sole administrator of the project.
One of the main advantages of the equity projects was the security given to investors by the fact that the sale of the property, being considered an essential asset of the company, must always be approved by the shareholders’ meeting: without this approval, it is impossible to sell the property. Neither the Administrator nor any of the partners of the company can sell the property without the authorization of the partners.
When a purchase offer was received, it was assessed and presented to the members for approval at the AGM. If approved, the property was sold. After the sale, a dissolution and liquidation meeting was called with the relevant balances. Once the dissolution and liquidation of the company had been approved by the shareholders at this meeting, the profit resulting from the sale was distributed among the shareholders, as well as the capital contributed on joining the company.
At the same meeting, a professional liquidator was appointed who was subsequently responsible for winding up the company. It should be borne in mind that this is a lengthy process and is not carried out in one year, as it is obligatory to present accounts with years without activity, settle all the company’s debts, sign the liquidation before a notary and present it to the commercial register.
Housers successfully launched 59 equity-type projects between 2015 and 2017, of which 26 have already closed with an average IRR of 7.84%.
We will now try to answer some concrete questions about these projects.
Why did Housers stop doing this type of project? Because the law regulating crowdfunding platforms arrived and this law prevents the platform from being the administrator of projects in the volumes that Housers was managing.
Does this mean that these projects are against the law? No, far from it. What it means is that they predate regulation. Once Housers became regulated it had to comply with the regulation and to comply with the regulation it could not launch new equity projects in which Housers was the administrator. And so, it did.
So Housers can no longer launch equity projects? Yes, Housers is licensed to offer its investors both equity and lending projects. But the projects that Housers launches being Housers the administrator are limited according to the investment captured the previous year by the platform as dictated by law.
So why did Housers stop being the administrator of all these projects? By its own decision, it has not been. To obtain the license as a participatory financing platform, the CNMV made it a condition for Housers to stop being the administrator of the equity companies. Moreover, we had to do it in a very short period.
It was initially understood that to comply with this requirement Housers could continue to be a legal person administrator but appointing a natural person representative outside Housers who is the one who operates as administrator. However, after several years of operating in this way, the CNMV required us to cease to be a legal person administrator.
We, therefore, began the process of ceasing to be directors of all the companies by electing a professional director to replace us in all the companies. And as required, the appointment was presented to each company’s General Meeting, as well as the modification of the bylaws so that these directors would be remunerated.
This change has meant that Housers no longer manages these projects, and we only participate as partners in the partnerships: just like any other partner.
So, are projects that have not yet been closed at risk? Not. The projects that are still active own their properties (as they are essential assets) and continue with their normal rental operations and the search for offers for their sale thanks to the new administrator.
Can I then contact this new professional administrator? Because as a member you are fully entitled to have any questions you may have answered by the administrator. Contact our customer service department and they will send you the contact information.
And the big question: when will the money I invested in the project be returned to me? Quite simply when the property is sold. In a similar way to what happens with start-up equity investments where you get your money back with the exit, in real estate equity projects you get your investment back when the property is sold. And the property is sold depending on the real estate market in the city where it is located, the sale price, demand, and the economy in general. This past year 2020 has not been the best year for real estate transactions for obvious reasons. Despite this, several properties have been sold and several equity projects such as Santa Eulalia or Donoso Cortés have been closed. Everything points to the market recovering in 2021 and especially in 2022.
I hope you found this video about equity projects useful. Find more information on the Housers website.
