24 October 2017 – Expansión
The vehicle that the US firm Starwood Capital uses to finance real estate operations in Europe expressed its concern to the market on Friday about the situation in Cataluña. Starwood now has a presence in the autonomous region through a €46 million loan that it has granted to a new hotel in Barcelona.
Moreover, the firm has granted €61 million to two real estate projects in other areas of Spain. Starwood European Real Estate Finance, a fund that is listed on the London Stock Exchange, has said that from now on, it is going to “prioritise” its investments in other areas of the continent, keeping its distance from the Catalan crisis. “The political risk, and its potential impact on the real estate market, continues to be one of our areas of scrutiny, alongside, for example, the Brexit process, the elections in Germany and the latest events in Cataluña. The group is monitoring Spain and the situation in Cataluña closely. The tensions regarding Catalan independence are not new, but there has been a significant increase in the uncertainty there following the referendum on 1 October”, says Starwood in a note to update the composition of its investment portfolio.
The fund says that the reaction from the financial markets to these tensions has been relatively moderate and that economists predict a soft impact on economic activity in Cataluña and Spain as a whole. But the managers of this firm are more pessimistic. “Although the market has not reacted to the recent events, the group is more cautious and is only going to give priority to opportunities that are relatively isolated from the current uncertainty”. Starwood does not rule out taking another look at this market if prices adjust to the new reality. “During this time, the group will follow the political developments and also monitor the Spanish market to see whether any other attractive opportunities arise, on the basis of risk”.
Starwood’s message echoes the views of the real estate consultancy firm Colliers, whose managers said last week, in an interview with Expansión, that real estate investments amounting to €175 million have been suspended in Cataluña. Property developers such as Hispania and Merlin have also warned about the effect of uncertainty in the sector. Moreover, several private equity funds expressed their concern last Tuesday at a conference in the City of London.
Starwood European Real Estate, with almost €500 million in assets, is one of the vehicles that Starwood Capital Group uses to channel its investments. With $53,000 million under management in total, the entity holds other real estate positions in Spain through various funds. The California-based fund, founded in 1991 by Barry Sternlicht (pictured above) participated in the foundation of the hotel chain Starwood, which has now merged with Marriott.
Original story: Expansión (by Roberto Casado)
Translation: Carmel Drake