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Baraka Wants To Double Edificio España’s Value In 3 Years

19 December 2016 – El País

The Murcian group Baraka, led by the businessman Trinitario Casanova, has completed its purchase of Edificio España from the Chinese group Wanda. The historical property, located in Plaza de España in Madrid, will be sold for €272 million, which is €7 million more than the Asian firm paid Banco Santander for the property back in 2014. Nevertheless, following the renovation work, the building is expected to be worth €532 million, according to a report by JLL filed with the Hong Kong stock exchange.

The owner of Baraka, Trinitario Casanova, will hand over a cheque amounting to €272 million, within the next three months (before 31 March) for the building, which the Chinese group Wanda is selling for almost the same price at which it purchased it from Banco Santander (€265 million). (…).

The President of the Chinese group, Wang Jianlin, who is the richest man in China, decided to sell the building to Baraka because the Murcian holding company promised that it would make a fast and secure payment to ensure the quick sale of the building, according to several sources.

Under the terms of the operation, Baraka has now paid Wanda €6 million by way of deposit and has made the commitment to pay another €14 million by way of guarantee when the public deed is signed before the notary. It will then pay the remaining €252 million.

Meanwhile, the consultancy firm Jones Lang Lasalle (JLL), which led the negotiations between the two companies, submitted a technical report to Wanda, which the Chinese Group has sent to the Hong Kong stock exchange. The report explains that, following the renovation work, the building will be worth €532.5 million. If this is the case, Baraka will earn almost twice as much as it spent to acquire the building in just three years, which will represent a profit of almost 100% of the capital employed for the purchase.

The Murcian businessman Casanova, who has been investigated for an alleged fraud of €6 million against the Tax Authorities and who was sentenced to one year in prison in 2008 for altering the value of shares in Banco Popular, is keen to renovate both the outside and inside of the building. Its architects have been working on the plans for months and the construction work will begin at the beginning of January, said Casanova in October.

The façades of Edificio España will remain in tact, as required by the Town Hall of Madrid, whilst the changes to the interior will serve to accommodate a large luxury hotel from 2019 onwards (probably operated by the Hard Rock Café chain). This hotel will have 600 rooms and a lease contract of 30 years. Those are Baraka’s intentions at least.

The first three floors and the basement (a space measuring up to 15,000 m2, of the building’s total surface area of 71,000 m2) will be let to retail groups.

Few changes

“The building will remain practically the same as it used to be. It will be cleaner, more beautiful and restored, but aesthetically it will be the same”, said the businessman in his most recent official appearance before the press. (…).

Original story: El País (by Luca Constantini)

Translation: Carmel Drake