Riu Rules Out Buying 25% Of Edificio España

3 April 2017 – ABC

Edificio España’s foundations are starting to wobble again. The project backed by the Murcian group Baraka, which announced its plan to buy the skyscraper in July last year, has been hit by two serious setbacks in the last few days.

The first, a problem with Wanda’s documentation, put the brakes on the completion of the sale of the building to the company chaired by Trinitario Casanova. Initially, the two parties had agreed to meet at a notary’s office in Madrid to close the operation, after months of comings and goings, but the Chinese group went to the meeting without the deeds or the annual accounts for the financial year 2016, and so the SPA could not be signed.

According to Baraka, that setback will lead to a delay of three months – at least – in the start of the construction work (which is how long it will take the Chinese group to prepare all the necessary paperwork). Nevertheless, the Murcian company has now suffered an even more important setback. According to sources in the financial and real estate sectors, the hotel chain Riu has decided against investing in the project. The Mallorca-based company was going to acquire a 25% stake in the skyscraper, for which Baraka has agreed to pay Wanda €272 million in total.

700-room hotel

In return, Riu was going to manage the five-star hotel, which would occupy the vast majority of the property. The building was going to have 700 rooms, two swimming pools (one outdoor pool on the roof and another indoor pool on the 16th floor), independent conference rooms and themed restaurants. The rest of the building – four floors – was going to be allocated to retail space and according to Casanova, firms such as El Corte Inglés, the French companies Galerías Lafayette and Printemps, amongst other international brands, had already expressed interest in occupying the space.

However, the whole project is now up in the air following the Riu chain’s decision to not contribute the €68 million that it had committed. The decision will force Baraka to look for a new partner if it is to go ahead with its plans. (…).

Sources in the real estate sector do not rule out the possibility that the “failure to sign” last week was a manoeuvre by the Chinese group to try to thwart Baraka’s purchase of Edificio España and win more time to continuing benefitting from the appreciation in value of the skyscraper. (…).

Meanwhile, the questions surrounding the operation and the project itself are the main reasons that led Riu to decide against acquiring 25% of the complex. However, the Mallorca-based company, which does not have any financing problems, has not ruled out continuing as the tenant of the building and paying a rent in exchange for managing the hotel. (…).

Original story: ABC (by Miguel Oliver and Marta R. Domingo)

Translation: Carmel Drake

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