“Buy it, fix it and sell it”. This is how the opportunistic of the global capitalism work, who have found in Spain a place to expand at ease, as shown by the last operations of the bad bank, the Forb and the Town Council of Madrid. “The awarded properties at the side of the ocean are promising”, Joan Solotar, managing director at Blackstone, declared in an interview to the television channel CNBC.
Blackstone is the biggest investment fund in the world, and only in the real estate market it manages 64.000 million dollars in assets. As stressed by one of its executives, “the real estate sector in Spain is, absolutely, one of the areas we are focusing on. You only need to see “which banks have the assets and what they need to sell” and that the market is “on a downward path”.
The fund has landed in Europe to buy all kind of assets: hotels, offices, portfolios of homes, blocks of apartments… “The prices are far lower and if we look at a scenario in four or five years and these assets can be improved – with the model buy, fix and sell – Spain is interesting, this executive in Manhattan points out, as “everything is based on the offer and the demand and the real estate assets “can be maintained” while the latter recovers.
Two months ago, Blackstone paid 128,5 million Euros to the Municipal Company of Housing and Land in Madrid for 1860 apartments built with public funds and on a rental basis. An average 69.000 Euros per home. “Look at the prices of the assets – she adds- the great discounts and the price of building a similar property right now”.
In Spain there is the need to sell cheap what was built at very high prices and the vulture funds are ready to buy. Two days ago, CatalunyaCaixa sold its real estate company to a Swedish and a US investment fund. Twenty candidates had attended the auction.
But not only banks need to sell. The State and other public institutions are speeding up sale processes of public patrimony. This would be the case of the Postal Service (Correos), the train network (Renfe), the National Heritage, the regional governments – such as Madrid – and the town halls, which will lose weight in the next few months at very low prices.
Slowly, the foreign capital is taking hold of the presumed real estate bargains. These are presumed, because no one apart from its managers knows what is being sold, at what price and with what margin. The opacity is complete, in spite of the sellers being institutions such as Frob or the bad bank, owned by the State of with a high public participation, a formula which prevents any regular citizen from having access to them.
And a margin that depends on when the valuations were made, many of them already obsolete. The interesting point right now is to see that the investment funds are rubbing their hands with the Spanish market. “Banks are starting to sell and while the merger and acquisition markets are very slow, the real estate market is behaving differently”, Solotar declares.
The dates chosen to close these deals, the last weeks of July and the first ones in August, are also a proof of the semi-darkness they are moving in.
Blackstone is the biggest of all venture capital funds in the world and this year it has just reinforced its position in Spain. Iñaki Echave joined the firm in February as managing director with responsibilities over Spain and Portugal.
The executive joins a team presided over by the investment banker Claudio Boada, president of the Group of Businessmen between 2004 and 2012 and consultant of the bank HSBC. Previously, he had been president of Lehman Brothers in Spain, where he worked for 16 years,.
Blackstone has a strong real estate division in the States, a market where prices have awoken again.