While the majority of international real estate investors continue to reject the Spanish property market after its dramatic implosion, some at least have been attracted by a steady stream of sale-andleaseback offerings – work that many RE lawyers admit to being grateful for in an otherwise dead market.
One of the biggest European real estate deals this year involved Spain’s number two bank, BBVA, which sold a portfolio of 948 bank branches and landmark buildings throughout Spain to a consortium formed by Banco March and international private equity funds RREEF Alternative Investments, Area Property Partners and Europa Capital, for €1.2bn. BBVA was advised by Clifford Chance, the buyers by Freshfields and the banks syndicating the buyers’ loan by Linklaters and Uría Menéndez. BBVA is expected to release the remaining 20% of its property assets shortly.
On a smaller scale, Uría Menéndez advised Caixa Galicia on the sale and lease-back of 41 properties. The purchasers were advised by Baker & McKenzie.
Encouraged by this and other deals, Spain’s secondranked savings bank, Caja Madrid, issued a 25-year sale-and-leaseback prospectus for an initial lot of 58 branches. If the operation reaches its target price of €70m Caja Madrid will release more of its 2,183- branch network. Banco Sabadell and Banesto, which had originally planned to release their entire portfolios in one operation, will also now drip feed the market.
These deals, and last year’s equally epic €4bn sale of virtually all of Santander’s property portfolio, have persuaded Spanish corporates that they too can realise locked-up value by following the same process. A Jones Lang Lasalle study reveals that 32% by volume of real estate investment deals made in Barcelona this year have been related to sale-andleaseback deals.
Uría Menéndez advised travel specialist Grupo Marsans in the sale and lease of its Campo de las Naciones (Madrid) headquarters. The purchaser, German investment fund URE, was advised by Gómez-Acebo & Pombo. Utilities, transport and infrastructures company Acciona has now put up for sale-and-leaseback two of its Alcobendas, Madrid headquarter buildings, hoping to book €60m to its accounts. Swiss insurance giant Zurich has put its Barcelona headquarters on the block with the expectation of receiving at least €50m. Construction and infrastructure powerhouse Ferrovial is looking for a similar deal for its Madrid headquarters. It may earn €40m for the only building it owns, the rest that it uses are leased.
This move by the corporates will please the smaller law firms, which do not have big teams capable of handling hundreds of property deals simultaneously. In addition, there is less financial risk if the operation does not prosper with success fees now the order of the day.
RE lawyers are also however expecting a boost from the enactment of the new legal framework for investment companies to set up Real Estate Investment Trusts (REITs – SOCIMIs in Spanish), which details the compliance requirements to benefit from the beneficial corporate tax regime (18% instead of 30%) as well as exemption from taxation on dividend distributions.
The investment companies must have a minimum share capital of €15m, follow specific criteria on profit distribution and have an asset portfolio made up of at least 80% of real estate investments that can be rented or acquired with full legal title or through participation in companies. SOCIMIs, the Government hopes, will help stabilise the real estate market, bring new investment, and encourage housing rentals over the coming years.
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