The town hall of Madrid has just opened the real estate market that the international investors desire. Last week, the managing board of the Municipal Company for Housing and Land (MCHL) awarded a lot of 1800 homes to the investment fund Blackstone, which paid nearly 120 million Euros in order to get the subsidized homes managed by the municipal organism, according to sources within the sector.
Although it is still not official, the sale has been finalized. Nearly nine months after the beginning of the process, the mayor Ana Botella has finished the sale of a lot of real estate assets in the hands of the MCHL, in need of cash in order to be able to guarantee its viability, as a recent audit carried out by PWC stressed that the municipal company was unable to honor its payments and that suffered an unsustainable level of debt.
After a first try that failed, at the end of February the town hall presided over by Ana Botella received the first signs of interest to buy the 1800 homes. The process has been carried out without a public tender as these were not patrimonial assets and although the operation is over 100 million Euros, the funds will only pay between 30-40 million Euros, as the rest of the amount belongs to the replacement of the financial burden on the homes.
In the beginning, the MCHL negotiated individually with the fund Lone Star, which carried out a process of due diligence and valuation of the assets in order to present an offer. With this price reference, the Town Hall of Madrid started a process of competitive sale, hoping to obtain a higher amount, which is when the real estate funds managed by Morgan Stanley or Blackstone made their binding offers.
However those interested in acquiring the lot of 1800 subsidized homes had a second chance last Friday the 14th June, after the tender was modified and an extension was awarded. The reason for this extraordinary measure was the suspicion of possible irregularities.
The revision of the tender took place even after Cerberus, one of the interested investors, backed off the process. (…)
The MCHL is the organism that has been in charge of developing the access to subsidized housing for more than 30 years, as well as for granting aids for the refurbishment and favoring rehousing. At the end of 2012, the town hall had managed 17000 rental homes with an average price of 685 Euros. According to the conditions of the agreement, before formalizing the transaction, the tenants could exercise a preferential right to buy the home.(…)
Source: El Confidencial