Morgan Stanley gets rid of its shopping malls.

The market starts to brighten up. Last week, Morgan Stanley closed the sale of its three shopping malls in Spain, christened in the market as the good, the ugly and the bad. The operation, which had been looking for a buyer for a long time, has ended in the hands of Incus Capital, a newly created investment fund that has taken the opportunity of acquiring the first portfolio of assets in the Spanish market, as confirmed by official sources.

The decision taken by Morgan Stanley Real Estate Investment (MSREI) of liquidating its European real estate fund has favored the sale of El Mirador de Cuenca (Cuenca), Los Alcores (Alcalá de Guadaira-Sevilla) and Alzamora (Alcoy-Alicante) for nearly 30 million Euros. This price represents a discount of 75% on the 116 million Euros paid by Morgan Stanley and Grupo Lar in May 2007, just before the real estate bubble burst, in order to acquire the malls owned by the German fund SEB Immobilien Investment.

That operation was part of the investing alliance agreed by Grupo Lar and Morgan Stanley to position themselves in the booming sector of shopping malls, where one of the parts acted as a developer and the other one as a financer. The union of interests went even further, as the investment bank, through its funds, acquired 16,8% of the real estate company for 124 million Euros, as also done with Fadesa, expecting to participate in its initial public offering.

Before the collapse of the market, Grupo Lar had 15 medium-sized (with a maximum 20.000 square meters) shopping malls, most of them located in secondary cities and most of them in a joint investment with the funds of Morgan Stanley (Puente Genil-Córdoba, Navalmoral de la Mata-Cáceres, Puertollano-Ciudad Real, Los Palacios-Cádiz and Arcos de la Frontera-Cádiz). The commercialization of these assets is managed by Gentalia, the consulting and patrimony management firm developed as a line of business by Grupo Lar.

In order to carry out the sale of these three shopping malls, Morgan Stanley has carried out a restricted process, with the participation of funds such as Drago Capital or Baupost, investors with an opportunistic profile attracted by the existing price discount. According to sources in the market, the transaction was finished last week and the final buyer has been the unknown firm Incus Capital Advisors.

In spite of its recent constitution, there are veterans in the financial sector behind Incus Capital, specialists in managing credit and real estate investment portfolios. The drivers of this vehicle are Andrew Newton (ex Lehman Brothers) and Alejandro Moya (ex Morgan Stanley), who have developed the fund as a project parallel to Hipoges, a independent platform for the management and recovery of complicated credits with presence in Spain, Portugal and Brasil.

Source: El Confidencial