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Cerberus Looking to Top Blackstone as the Largest US Investor in Spanish Real Estate

7 February 2019

Cerberus has a plan for Spain: the fund is looking for continued growth in the country. So, the US fund is putting together one of the most powerful teams in the Spanish real estate industry. Its goal in the medium term is to triple its investments in residential development, continue to grow its logistics business and start a new front in the rental business.

Cerberus has already invested more than 10 billion euros in Spain and now wants to exploit new lines of business such as rentals and logistics. The fund also has plans to leverage its development operations through the acquisition of more land and after buying Inmoglaciar. Blackstone, in total, has already invested more than 26 billion euros in Spain since 2014.

The American fund has generally avoided the limelight. In Spain, the fund has maintained a fairly low media profile, but that now seems about to change, as Gonzalo Gallego, who was responsible for the fund’s real estate investments in Spain, commented on Wednesday.

“We do not usually hold public events, and I think it’s a good time for a change. Cerberus has come to stay in Spain, we are 22 people dedicated to it, and it is already the second most important office in the world,” the representative said.

A look towards rentals

The change is also linked to the fund’s interest in expanding its investments in rentals. Mr Gallego stated that the sector is one of the pillars of the fund’s new strategy. Therefore, they have begun assembling a team dedicated exclusively to the sector.

Cerberus stated that the team consists of local experts who are seeking to “develop strategies that add value to their acquisitions.” The business will not be based solely on buying NPLs, though Mr Gallego stressed that the Spanish market has many such opportunities. “We invest in an asset by asset basis,” he said.

Another business the fund has experienced success with is REOs. Mr Gallego thinks that “they are wonderful.” “We know how to reposition and sell them to our investors; we work with almost 400 funds actively in the sale of these portfolios, it’s not a coincidence, it’s a strategy,” he explained.

Cerberus Real Estate believes that Spain still has enormous potential, although the current macro situation is forcing them to be more careful with their investments. “We are very optimistic regarding Spain, but some cold winds could freeze up some types of investments,” Mr Gallego said.

Opportunities and mergers

In the end, Cerberus believes that it has a ‘pipeline’ full of opportunities and that is why the fund is predicting an excellent year ahead, especially since there will be a “consolidation of the market” with “very important” corporate operations.

The North American fund came to Spain in the middle of the financial crisis (between 2010 and 2012) with the objective of taking over banks and real estate companies, as it did in other countries. The first did not go well after some attempts with the older banks (cajas). However, the fund’s luck with real estate has been better. Cerberus already controls more than €50 billion in assets, from Bankia, Sareb, Cajamar, Liberbank and BBVA.

Its next acquisition could be the developer Solvia Desarrollo Inmobiliario (SDIN) of Banco Sabadell, which is selling land worth more than 1 billion euros. The bid for these assets has already begun, and financial sources claim that the fund has shown interest in them.

Original Story: Vox Populi

Translation: Richard Turner