The regional government of Madrid has sold a portfolio of residential flats to Goldman Sachs private equity and Azora, the investment group, for €201m.
The sale is the latest in a spate of foreign private equity investors buying into Spanish real estate, the highest level of activity since the collapse of the country’s decade-long property bubble forced large swaths of its banking sector into being nationalised.
The deal will see Goldman Sachs and Azora buy a package of 3,000 flats, principally in Madrid city but also in other parts of the region, that are part of a scheme known as the “Young Plan” to provide housing to people under 35 with below-average income, who later can have a right to buy the flats. The region did not reveal how the two investors split the equity investment for the deal.
The Madrid regional government, which has one of the largest budget deficits out of Spain’s 17 so-called autonomous communities, said it would use the proceeds from the sale for public spending in the region.
The sale came soon after a package of 1,860 rent-controlled properties was sold by the Madrid city government to Blackstone for €125.5m at the end of last month, and the first sale by Sareb, Spain’s state organised “bad bank”, of a package of assets valued at €100m to HIG Capital.
Private equity groups have become more interested in Spanish real estate since the creation of Sareb late last year, which then took over about €50bn of assets from Spain’s nationalised lenders.
Sareb has since sold stakes in packages of assets to foreign investors in special low-tax investment vehicles, while still holding on to a large portion of the equity in those packages. Its management believes this enables it to benefit in the event of an upturn in Spanish real estate valuations.
Madrid said there would be no changes to the conditions of the scheme after the sale, and that the deal would generate about 170 direct and indirect jobs in property management, concierge and maintenance.
Azora is a Spanish investment group whose chairman is Juan del Rivero, a former partner at Goldman Sachs who headed its Iberian business.
Further deals in Spain are expected this year as the regional governments of Catalonia and Valencia continue to sell public buildings, and Sareb pushes ahead with a plan to offload 42,500 housing units, or about half its portfolio, in the next five years.
Source: Financial Times