Dear friends of AEDAS Homes:
In FY 2022-23, we attained new milestones on our path to achieving our vision of being the benchmark in Spain’s residential development sector by generating value for our shareholders and all our other stakeholders. Over the course of the year, we confirmed our ability to deliver strong results in times of economic uncertainty, and we demonstrated that environmental and social responsibility pays off.
In a year in which demand for housing normalised after the extraordinary boom experienced in the months after the pandemic, AEDAS Homes delivered 3,544 homes to private customers and institutional clients. This outstanding operating performance allowed us to generate revenues of €920 million and net profit of €105 million, with a gross development margin of 26.2% and adjusted EBITDA of €164 million.
Having fulfilled our annual strategic goals, at the upcoming Annual General Meeting in July the company will propose shareholder remuneration via dividends in line with last year’s distribution; this remuneration will represent one of the highest yields on the Spanish stock market.
The company continues to enjoy a very solid financial position, with net financial debt of €297 million, implying a net debt-to-EBITDA ratio of 1.9 times and an LTV ratio of 14.2%. The current valuation of our landbank confirms the resilience of the land we have acquired in the past few years, standing at €2,088 million. In FY 2022-23, we continued to take a highly selective approach to investment, finalising investments totalling €140 million to acquire to develop an additional 1,428 homes and ensuring coverage of our delivery targets five years out.
The Company’s financial statements reveal a Return on equity (ROE) of 10.8% and earnings per share (EPS) of €2.42, confirming the strength and reliability of our business model built on these pillars: sustainable homes designed for the way people live, selective investments in quality land, a decentralised and scalable structure, and innovation in construction processes and materials. This model has allowed us to grow in a sustained, structured way since 2016 and has given us the ability to navigate successive episodes of economic uncertainty caused, first, by the pandemic, and now by the war in Ukraine and rising construction costs and interest rates.
We've confirmed our ability to deliver strong results in times of economic uncertainty, and we've demonstrated that environmental and social responsibility pays off
In FY 2022-23, we maintained our focus on the mid-to-high segment of the market for our Build-to-Sell (BTS) business (sale to individuals), while we continued to expand our portfolio of Build-to-Rent (BTR) projects (sale to institutional investors for rent).
At the same time, our asset-light Real Estate Services division continued to gather momentum, participating in public-private partnership projects and providing high value-added development services to funds, institutional investors and family offices, so that they can invest in residential development projects and leverage our platform’s experience, market knowledge and execution capabilities.
As a result of our decision to diversify our business, our FY 2022-23 performance marks a true milestone in the residential development market in Spain in the current real estate cycle: delivery of 3,544 homes and total revenue of €920 million.
By lines of activity, we delivered 2,120 BTS units, at an ASP of €364k (up 8% over last year), generating BTS revenue of €772 million at a gross margin of 28%, and 610 BTS units (5 developments), at an ASP of €184k, generating €112 million in BTR revenue. Through our Real Estate Services division, we delivered a further 814 units which were developed as part of joint ventures or directly for third parties, generating income of €5 million from fees from services and a margin of €3 million (59%). This asset-light division continues to grow and explore new business opportunities in niche markets such as senior housing or co-living.
At the end of March 2023, we had a total of 8,623 units on the market, 3,703 units forward sold in our orderbook, 5,740 units under construction, and 901 units completed. Our very high delivery coverage ratios of 75% for FY 2023-24 and 32% for FY 2024-25, resilient demand in the mid-high segment and the second home market, steady progress on construction work and a disciplined, highly selective investment policy give us full confidence in our ability to continue fulfilling our mid and long-term goals.
As Peter Drucker once wisely said, “the best way to predict the future is to create it”, and that is precisely what we did in FY 2022-23: lay the foundations for a sustainable future, in line with the United Nations 2030 Agenda and with the goals set out in our ambitious ESG Strategic Plan 2021-2023.
Let me take the opportunity to summarise our key advances in environmental, social and good governance matters.
At AEDAS Homes we have pioneered the use of Modern Methods of Construction (MMC) in large-scale developments in Spain. We believe that building offsite is the clear way forward if we want to build faster and build better. We must create a modern, efficient, competitive and sustainable construction industry which can reduce delivery times, costs and environmental impact while increasing safety. That’s why by FY 2023, one quarter of the homes we deliver will be either fully or partially built offsite. Furthermore, last year, for the first time, we started building with cross-laminated timber at our Fioresta project, which will be the first of many.
We believe that building offsite is the clear way forward if we want to build faster and build better. That's why 25% of the homes we deliver by FY 2023-24 will be built fully or partially offsite
Implementing MMC implies a sea change in the underlying construction model and contributes to our decarbonisation strategy, with which we intend to reduce emissions by 50% by 2030. Step by step, we are meeting and exceeding the environmental challenges that we have set out for ourselves. For example, this past year we carried out a Life Cycle Analysis (LCA) on 100% of our developments; 100% of the developments we finalised have their own Ecoliving® seal or other accredited international seal; and 59% of the developments finalised this past year achieved an AA energy rating. We are convinced of the importance of alliances to deliver our objectives, and therefore we are working to reach agreements with different suppliers so that we can build homes with materials that have a low environmental impact, such as low-carbon concrete, 100% recycled aluminium and mass timber.
Innovation is the only way to lead the development sector towards sustainability. For this reason, we foster a culture of innovation among our 302 employees and collaboration with our stakeholders, without whom we would not be able to spearhead the sector’s transformation. I’d like to take this opportunity to congratulate all the members of the AEDAS Homes team across Spain for contributing their ideas, talent and dedication to tackling this challenge.
An example of our employee-driven transformation culture is our innovative Developer Operating System, which will connect with the application programming interfaces (APIs) of our technical teams to integrate all the suppliers that participate in the development process. This innovative system, which covers all phases of the process, from the identification of a plot to the delivery of post-sales services, will allow us to automate and synchronise critical business data and processes in real time, forever changing the way of working in the real estate sector and maximising the efficient use of our resources.
Other successful initiatives stemming from our culture of innovation include the creation of a personalisation team, which allows us to adapt each home to an individual customer’s life goals; the inauguration of our flagship showroom in Madrid, where customers can enjoy an immersive experience and choose the materials and finishes of their new home; and the launch of a pilot project to sell developments 100% online. These are just some examples of the top-notch work done by our team to improve our customers’ journey.
The involvement of the people who make up AEDAS Homes is also decisive in our positive impact on society. In addition to contributing to progress by generating in the neighbourhood of 9,000 jobs indirectly, purchasing €431 million from suppliers and collecting €113 million in taxes, at AEDAS Homes we support initiatives for access to housing. An example of this commitment is our active participation in the Community of Madrid’s Plan VIVE initiative, where we are managing the development of 3,600 affordable rental homes through a public-private partnership.
Likewise, our social efforts are also focused on the communities in Spain where we operate. In the past year, we once again demonstrated our support by sponsoring 18 local sports teams, participating in seven social action initiatives, and through our innovative ConLasArtes by AEDAS Homes programme.
Finally, I would like to highlight the strength of our corporate governance system, which is now backed by the UNE 19601 Management System for Criminal Compliance.
I invite you to continue reading and learning more about how the AEDAS Homes team has contributed to innovation, collaboration and shared value over the last 12 months.
Thank you for putting your trust in us,
David Martínez
