10 September 2018 – El Confidencial
Santander’s Ciudad Financiera, the operating headquarters of the bank chaired by Ana Botín in Boadilla del Monte (Madrid), is being put up for auction five years after its owner, the company Marme Inversiones 2007, owned by several investment funds, filed for bankruptcy. After an arduous legal process whereby the bankruptcy administrator and the court managing the liquidation has released the asset, the central offices of Spain’s largest financial institution have been put on the market in search of a buyer.
According to financial sources close to the process, one of the most interested parties is Blackstone, the US hedge fund that has become Santander’s largest real estate partner after it purchased half of its portfolio of toxic assets last year. The US fund is negotiating the finishing touches for the presentation of its offer for the building where the bank employs almost 7,000 employees, including the office of the President, Ana Botín. According to the same sources, Blackstone is debating whether to participate in the auction by itself or to team up with the other creditors that supported the purchase of the Ciudad Financiera in 2008.
Of those, the presence of ING, HSH Nordbank, CaixaBank and Bayeriche Landesbank stand out, which 10 years ago granted a €1.575 billion loan to Propinvest to acquire Santander’s largest real estate asset on a “leaseback” basis. Other entities also participated in that loan including Deutsche Postbank, Royal Bank of Scotland and Raffeisen Zentralbank, which in 2011 started to sell its stake in the loan to vulture funds at significant discounts on the nominal value, when the owner started to realise that it could not afford to pay the debt.
One of the players that purchased that debt was Blackstone, together with other similar funds, such as Centerbridge and Avenue Capital. According to other sources, those investors are seriously considering submitting a joint offer on 17 September, the date on which the interested parties have to appear before the judge. That date is the one that has been set for the binding offers for all of the assets to be processed. If none are received, which is unlikely, then the Ciudad Financiera will have to be split up and sold off piecemeal.
According to these sources, Blackstone is now the main candidate, after two Arab groups placed tentative offers on the table that never proved successful due to legal wrangling and the lawsuits filed by some of the creditors, such as the Iranian Robert Tchenguiz. The investor, who owns several properties in London and is known for his idle lifestyle, was another person to take advantage of Propinvest’s bankruptcy to acquire debt at low prices and whereby become a significant creditor. Nevertheless, his problems with the Law – he ended up being arrested – have ruled him out of the process to take ownership of all of the Ciudad Financiera.
The player that came very close to acquiring Santander’s headquarters was AGC Equity Partners, a Kuwaiti fund with €3 billion under management, which received approval from Mercantile Court number 9, which was leading the bankruptcy of Marme. But its bid, which amounted to €2.5 billion, now needs to be updated, given that, according to various sources, the debt alone of the special purpose vehicle reached €2.8 billion, including senior and mezzanine. Therefore, the offers must exceed at least €3 billion, which means that this auction is going to turn into one of the largest real estate operations of the year.
The attempt by AEG, which was suspended when Ana Botín exercised the right of first refusal over Ciudad Financiera, came at the same time as the bid from Aabar, a company from Abu Dhabi, owned by IPIC, the owner of Cepsa, now renamed Mubadala. According to those sources, that fund is no longer interested in the auction and Santander has no intention of exercising its preferential right, as acknowledged by official sources at the Spanish entity.
The main attraction of Ciudad Financiera is that Santander, which financed the first operation with a loan amounting to €304.6 million to pay the VAT on the purchase, has committed to remain as the tenant of the property for the next 40 years, which means that the rental income is guaranteed.
Original story: El Confidencial (by Agustín Marco)
Translation: Carmel Drake