26 May 2016 – Cinco Días
The Chinese group Dalian Wanda is pushing ahead with the sale of Edificio España, and at the same time it is continuing its negotiations with the Town Hall of Madrid to refurbish the building. The process to complete the transaction is progressing quickly. In fact, the company owned by the magnate Wang Jianlin expects to close the deal before the summer holidays, according to sources close to the talks.
Over the next two weeks, the Chinese group will receive the first non-binding offers from parties interested in buying the building, where Wanda plans to open a hotel and luxury homes, as well as a shopping arcade. These bids will be analysed and a due diligence process will begin. Wanda expects to have closed the sale before August.
For this process, the Chinese investor has engaged the real estate consultancy JLL to act as intermediary, which is pushing ahead with the transaction. Both Wanda and JLL are conducting the transaction with the utmost confidentiality. (…).
The sources consulted understand that Wanda has lost interest in this Madrid mega-project, as it has been unable to carry out its refurbishment plans, which included demolishing the property to reconstruct it from scratch in a similar form to the original. In the face of the rejection from the Town Hall, the Group has decided to forego the complicated refurbishment.
Nevertheless, Wanda is continuing its negotiations with the municipal technicians to find a solution for tackling its future renovation and whereby obtain the necessary construction permits. Market sources insist that it would be positive for the Chinese Group to have these permits, because they will add value to the property for the potential buyers, as would resolve the problems with the Town Hall of Madrid regarding the renovation.
Companies reported to be evaluating the purchase come from Asia, Europe and USA. In some cases, these companies and funds are looking to form alliances with Spanish partners or with firms that have knowledge of the local market, so as to entrust the refurbishment work to them. The figure being talked about in the sector for the sale amounts to just under €300 million.
Wanda paid Santander €265 million in 2014 for the skyscraper, constructed in the 1950s, which is currently unoccupied. It planned to undertake an ambitious renovation, which included reconstructing the building from scratch, but it met with refusal from the Local Heritage Committee, in which the Town Hall (Ahora Madrid) and regional Government (PP) participate, due to the protection afforded to the façades. However, differences of opinion started to emerge last year. The Asian conglomerate decided to put the building up for sale in February. In recent weeks, however, it has resumed talks with the Town Hall.
Nevertheless, there was a new twist in the tale on Monday. The President of the Asian conglomerate broke his silence to confirm that he is still waiting for official confirmation from the Town Hall that his company will be allowed to demolish the property and rebuild it from scratch. “The Town Hall is holding talks with us again saying that we can demolish it. We are waiting for a written document to confirm this, rather than their verbal promise”, said the Chinese magnate to CCTV, the state television channel in his country.
In this way, he contradicted the team led by Manuela Carmena, which has stressed to date that it will not allow the demolition. Sources close to the project say that they do not know why the Chinese officials in Spain agreed to not demolish the building after months rejecting the municipal proposal and they consider that they have gone to the limit to obtain the upper hand in the negotiations.
Original story: Cinco Días (by Alfonso Simón Ruiz)
Translation: Carmel Drake