Rafael Aguirre and Julio R. Saavedra, from TPS by Auxadi, analyzed the latest institutional oversight trends in the real estate sector during a presentation attended by numerous financial directors. The webinar 'Debt in Real Estate' focused the discussion on the different factors and financial variables that directly affect today's Real Estate market.
Interest rates and key indicators
Julio R. Saavedra began by sharing that "the most common mistake is reducing the analysis to the interest rate". He also stated the following: "In Spain, the tax authorities have intensified the review of these transactions and it is no longer enough to justify the interest rate".
Therefore, Rafael Aguirre highlighted several relevant factors for a fund's debt: the borrower's debt capacity; cash flow generation prospects; and the industry's risk profile.
Preparing transfer pricing policies for an investment fund is complex because they are often subject to different regulations, greater scrutiny, and full transparency requirements.
Anticipation and organization
Later, Julio R. Saavedra, Manager at TPS by Auxadi, explained: "We must seek transactions and financing between third parties under comparable conditions in terms of duration, grade ratings, and guarantees".
On the other hand, Rafael Aguirre detailed each important ratio within the Real Estate sector. First, he referred to the debt-to-equity ratio as a way to measure "the entity's structural leverage". He then specified three additional variables: the Debt Service Coverage Ratio (DSCR); the loan-to-value ratio, which "measures debt coverage against the value of the asset"; and finally, the loan-to-cost ratio, used to assess "financing in relation to the total cost of the project".
The speaker highlighted that a range between one and three "is the most common range among REITs and SOCIMIs".
Finally, Julio R. Saavedra emphasized that "residential and logistics properties are generally lower-risk assets and therefore allow for a higher loan-to-value ratio than others". In addition, for Real Estate projects, it is often advisable to conduct both quantitative and qualitative analyses.
A review of policies
The Managers delivered a comprehensive presentation on 'Debt in Real Estate', during which they also shared real-life case studies.
TPS by Auxadi's division strengthens the transfer pricing policies of numerous multinational companies. Its objective is to optimize processes in this area, which is increasingly subject to scrutiny by public institutions.
Investment funds form part of Auxadi's client portfolio, and the firm supports their internationalization through the management of their assets: Legal Set-Up, accounting, tax, payroll, transfer pricing, Global Mobility, and CoSec services.
If you are interested in managing your fund correctly, consult our experts.
TPS by Auxadi is the expert transfer pricing department of Auxadi. Operating in over 50 countries, we support our clients in preparing and updating transfer pricing policies to properly comply with national and international regulations. This unit has been recognized for five consecutive years in Tier 1 for transfer pricing by International Tax Review (ITR World Tax).
Do you need help preparing your transfer pricing policies? Consult our experts below via the contact form.
Author:
Auxadi Corporate
Can Auxadi help?
Auxadi can become your ideal partner. We offer a one stop shop value added outsourcing services in the areas of accounting and reporting, tax compliance, payroll management and representation services, among others.
Local Knowledge – International Coverage
Founded in 1979, Auxadi is a family-owned business working for multinational corporations, private equity funds and real estate funds. It’s the leading firm in international accounting, tax compliance, payroll, transfer pricing, and corporate legal services management connecting Europe and the Americas with the rest of the world, offering services in 50 countries. Its client list includes many of the top 100 PERE companies. Headquartered in Madrid, with offices in US and further 26 international subsidiaries, Auxadi serves 1,500+ SPVs across 50 jurisdictions.
All information contained in this publication is up to date on 2026. This content has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this chart without obtaining specific professional advice.No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this content, and, to the extent permitted by law, AUXADI does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this chart or for any decision based on it.