Spanish real estate fell by nearly a third in value after the financial crisis, according to the ECB. But unofficially, the losses ran much higher, and worse, the market was basically frozen over because buyers were hard to find even at rock bottom valuations.
In a turnaround of sorts last year, Axa Real Estate Investment Managers, the number one property fund manager in Europe, snapped up commercial office space placed on the block by the Catalan government for 172 million euros (about $224 million). This deal was a kind of ice-breaker for the market, say Spanish real estate insiders.
Soros and Paulson buy chunks of a Spanish REIT
According to the Financial Times, George Soros and John Paulson have each taken up a €92M stake in Hispania Activos Inmobiliarios, a soon to be listed Spanish real estate investment trust (REIT). Hispania is expected to launch a public offer soon, and has already mobilized the major portion of its €500M fund mobilization target.
Hispania plans to invest in real estate properties that offer value and are located in major Spanish cities. The trust will be managed by independent asset manager Azora that has an AUM of €2.8B.
The investment in Hispania by these hedge fund heavyweights underlines their growing conviction in the legitimacy of the European recovery.
Bill Gates and Soros bought stakes in construction company FCC
The prospect of a turnaround in Spain’s economy, and its salutary effect on real estate, infrastructure and construction sectors led Bill Gates and George Soros to buy stakes of 3% and 6% respectively in Spanish construction group Fomento de Construcciones y Contratas SA (MCE:FCC) from its founding family.
Seth Klarman also signals ‘risk-on’ in Spain
Last month Klarman’s Baupost Group participated in a consortium purchase of Spanish shopping centers and a retail park from European retail property fund Vastned. New-York-based GreenOak Real Estate and Spanish property manager Grupo Lar were the other partners in the €160M transaction.
Grupo Lar was in the news in December for its purchase of over 1,000 homes from Spanish bad bank Sareb for €146M. Fortress Investment Group LLC (NYSE:FIG) partnered Grupo Lar in the deal.
Further evidence that Spanish RE is heating up
According to a Bloomberg report last week, a shopping mall and office complex in Madrid’s business district attracted competing bids from names such as Pacific Investment Management Co, Perella Weinberg Partners LP and a third, unnamed bidder. Sources said bids could be in the range of €140M.