Exclusive: Spain's bad bank close to big land sale as disposals pick up

Fri Oct 4, 2013 2:30pm EDT
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By Sarah White

MADRID (Reuters) - Spain's "bad bank" is about to start its biggest sale so far of land taken over from bailed-out lenders, as property prices in some of the countries worst hit by the euro zone crisis show signs of recovery.

The Sareb agency, set up to cleanse troubled Spanish banks of real estate holdings that went sour in the crisis, is taking advantage of growing interest from professional investors to catch up from a slow first six months of operations.

The government-backed vehicle, known by its Spanish acronym, aims to put a package of about 80 plots of developed land up for auction, according to a source familiar with the matter.

Sareb values the portfolio at around 350 million euros ($477 million), which will be the starting point for price talks, the source said, adding: "It is close to coming onto the market, likely in the coming days."

Sareb declined to comment. But one private equity investor said: "It's got the market excited in that they are going to set the floor on a lot of asset classes."

Investors said Sareb, created as a condition of a 41 billion euro rescue for Spanish banks with European money, was selling off its best assets first and may struggle to get rid of its poorer quality properties ever, especially undeveloped land. Nevertheless, the private equity investor praised its "Herculean effort" following Spain's banking crisis, brought on by a 40 percent dive in property prices from a 2007 peak.

The planned sale includes land ready for construction in the Madrid area as well as in the northeastern region of Catalonia, Galicia in the northwest, and in coastal areas.

In recent weeks Sareb put at least seven portfolios on the market. These contain stakes in tourist resorts and a shopping centre, seven prime office buildings, over 2,000 homes and chunks of syndicated loans to property developers.   Continued...

People walks past the stand of Spain's bad bank Sareb during a real estate fair in Madrid May 30, 2013. REUTERS/Sergio Perez