Hines & Emperador Bid For Edificio España

2 March 2016 – El Confidencial

Two of the largest real estate investors in the world want to buy Edificio España. The US giant Hines and the Philippine group Emperador, which has just acquired Torre Espacio, have already taken up their positions in the sales process launched by the Wanda Group for the skyscraper, according to several sources close to the operation.

The Chinese group has engaged the consultancy firm JLL to find a new owner for the property, which it has decided to sell after failing to reach an agreement with the Town Hall of Madrid regarding the handling of the renovation.

Not even the meeting held yesterday between Manuela Carmena and Laurent Fischler, Wanda’s Global Head of Real Estate, managed to put a stop to JLL’s sales mandate, although the consultancy firm declined to make any comment. This meeting was held at the request of the mayoress, anxious about the earthquake unleashed by the Asian group’s decision to leave Madrid. But the only thing she managed to agree with Wang Jianlin’s envoy was the firm’s willingness to remain in the capital, provided the town hall gives something in return.

Nevertheless, there are only a handful of investors with the capacity to undertake the purchase, which could range between €250 million and €300 million (Wanda paid €265 million two years ago), a quantity to which another €100 million should be added for the subsequent construction work to renovate the property.

And that figure is mounting, because the final cost of the renovation will depend heavily on the agreement that the Town Hall of Madrid approves, and the survival of Norman Foster’s project, who has threatened to take Wanda to court if it breaks the agreement signed to develop the architecture project.

The reality is that Wanda inherited this contract from Banco Santander and in theory, the buyer would also be subrogated to it, according to real estate sources. But that honour has discouraged some of the large international funds from bidding for Edificio España, as they prefer to avoid large firms because they make the construction work more expensive.

Giants in the market

By contrast, the profile of Hines and Emperador fit well, given that their investments typically focus on iconic buildings, located on the main thoroughfares of large capital cities and, in many cases, linked to unique architectural projects. Ingredients which, if the negotiations with the town hall are unblocked, are present in abundance in the case of Edificio España.

The US firm Hines is an expert in this kind of development and is currently involved in a growth plan in Spain, which has led to the signing of two operations – for the Desigual store next to Portal del Ángel in Barcelona and number 44, on Madrid’s Gran Vía – in less than two months, for a combined total of €78 million.

And its future plans are even more ambitious, as shown by the fact that it is actively seeking out large transactions in both Madrid and Barcelona. With $87,000 million (€80,000 million) in assets under management, Hines is the fourth largest real estate investment management company in the world.

Meanwhile, Grupo Emperador is one of many companies that comprise the business empire of the Philippine-born Andrew Tan, one of the richest people in the world according to Forbes. (…).

Despite all of these possessions, Tan was virtually unknown in our country until last November when he acquired Torre Espacio with a bid for €558 million, an amount that he largely financed in cash and with a syndicated loan for €280 million from ING Wholesale Banking.

This operation is just the tip of the iceberg of the group’s plans. Emperador has also set itself the objective of multiplying its investments in Spain, both in the real estate sector, as well as in those markets linked to the world of spirits, where it has worked in conjunction with González-Byass for many years.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

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