5/12/2014 – Expansion
In spite of the challenges the financial and economic crisis keeps putting in front of Spain, the country is a tidbit from the investment point of view and world’s biggest fortunes took it at the aim.
In order to streamline the increasing interest, above all in the Spanish real estate, Citi and its local partner Mazabi decided to create an investment club for the grand property managers.
Fernando Lopez Muñoz, the General Director and the Head of Citi Private Bank for Spain, Italy, Portugal and Latin-America inside the EMEA (Europe, Middle East and Africa), explained that ‘the club foresees spending a minimum of €200 million in the country, an amount which, if leveraged, could rise to €400 million‘.
The investee ‘will comprise equity of 15-20 families owning a minimum of €100 million worth of property each. They will declare a soft commitment, meaning an input of €10 million for opportunities proposed by Mazabi‘, the executive pointed out.
‘Great majority of groups belonging to the club – which is still being constituted – proceed from Southern America (mainly from Mexico and Chile) and the Middle East, but also U.S. investors are among its members. From Europe, some interest was shown in the United Kingdom and in Spain itself’.
‘The vehicle should disburse the equity within a three years’ term which is extendable to five years. In any case, we believe the core of the investment will be sealed in 2015 and in the first quarter of 2016′, Mr Lopez said.
Bearing in mind the current point in the cycle and the experience from other investment clubs enhanced by Citi Private Bank, the director estimates that the Internal Rate of Return (IRR) may post 15% annually.
A Value-Adding Partnership
Mazabi, specialized in detecting opportunities on the Spanish territory, has intially pointed at assets located mainly in Madrid and Barcelona, and also in Bilbao, Valencia, Seville and other provincial main cities. The properties are of residential, tertiary, industrial and hotel types.
Lopez underlined that ‘Mazabi is not a mere intermediary broker but a partner who adds a huge value to the partnership‘. In fact, Mazabi has been providing real estate advisory services to Citi since 2010.
Citi Private Bank, having USD 310 billion under management, employs 24 private bankers in Spain. Each of them works with 20 clients and it is predicted that next year, two to four more experts will join the team.
‘One of the main indicators of this business is soaring up in the country: the potential of property management services, cooperating together with private banking and equity markets’, Lopez remarked.
Original story: Expansión (by Ana Antón)
Translation: AURA REE