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Castlelake Buys More Land From Sareb

23 February 2015 – Expansión

Transaction / The North American firm acquires several plots of land in Madrid for €13 million and strengthens its commitment to this type of product.

Sareb has generated more cash from its portfolio of real estate assets. The Asset Management Company for Bank Restructurings (la sociedad de activos procedentes de la reestructuración bancaria) has sold a batch of four residential plots, located in the town of Boadilla del Monte, Madrid.

For the sale, the company chaired by Jaime Echegoyen organised an exclusive sales process and invited five international funds to participate, in partnership with Spanish construction and real estate groups. Then, a sealed bid auction was held and the assets were awarded to the North American fund Castlelake (formerly known as TPG Credit Management).

According to sources close to the transaction, Castlelake paid €13 million for the plots (the minimum price was €11 million). The North American fund, which is operating with a Spanish partner, plans to construct uni-familiar homes worth €44 million on this land, which has a total surface area of 76,000 square metres.

Following its successful bid, Castlelake shall bear not only the costs of construction, but also the cost of the investment required to develop the area, explain real estate sources.

Other transactions

This is not the first time that Castlelake has purchased assets from Sareb. Last year, the North American fund acquired another batch of 17 plots included in the Crossover portfolio, worth €80 million. In the end, the transaction was closed for €55 million. These plots have been placed in a Banking Activity Fund (Fondo de Actividad Bancario or FAB), a vehicle that has significant tax advantages, in which Castlelake holds a 95% stake, whilst Sareb retains a 5% stake.

Castlelake’s new transaction exemplifies the interest that has been awakened once more in the residential market. “Just as 2014 was an extraordinary year for investment in tertiary real estate, 2015 will be a key year for the recovery of the residential market”, says Patricio Paloma, Director of Alternative Investment at CBRE España.

In recent months, several residential plots have been sold. For example, Sareb sold a plot measuring 3,328 square metres close to Plaza de Castilla, in the north of the capital, to Mario Losantos, through his investment vehicle Allegra Hólding. Through this transaction, the former owner of Riofisa returned to the Spanish real estate sector to construct a development for 120 homes, together with ACR.

Months later, the cooperative manager Domo paid €136 million to acquire a plot next to the Paseo de la Castellana in Madrid to construct 355 homes.

“Land is now starting to generate a lot of interest and, in addition to the transactions that Sareb will close, we expect that some of the banks will begin to put some of the land on their balance sheets up for sale, whereby generating liquidity for them that they will use to finance new projects”, says Palomar.

More sales of large plots in Madrid are expected to take place over the next few months. For example, the Ministry of Foreign Affairs is preparing the sale of land it owns on Calle Padre Damián, measuring 15,092 square metres and with capacity for up to 250 homes.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake