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Spain’s biggest bank, Banco Santander, will enact a sale and lease deal on all of its real estate, with the sole exception of its corporate headquarters in Santander.
The bank hopes to make around 1.5 billion euros in net profit, money that will be used to help finance the planned purchase of the Dutch bank ABN Amro. This purchase, if successful, will be enacted by the consortium formed between Santander, Royal Bank of Scotland and Fortis Bank.
44 Buildings and 1,200 branch offices will be sold in what is easily the largest real estate transaction in Spain’s business sector. The buyers will include real estate investment firms, insurance companies and other businesses in the industry in search of a stable investment and who’ve already demonstrated their interest to the bank.
Although news of the sale was released jointly with Santander’s plans to purchase ABN Amro, the bank’s spokespeople have stated that the transaction will be carried out even if ABN ends up in different hands (an ABN-Barclay’s merger is also possible).
The sale has raised much speculation, as it comes at a time when the Spanish real estate market is undergoing a slowdown after a strong 10 year boom. Analysts believe that events such as Santander’s move are signals that the market has reached its peak and investors are beginning to pull out while things are still good.
Taking a larger perspective, however, one also finds that large companies worldwide have been selling their main properties, turning around and leasing them in order to continue occupying their space. Such has been the case in the last few months with Merrill Lynch, Bank of America and JPMorgan.
Furthermore, indications within Spain derail the argument that large investors are getting nervous and backing out of the market.
Spain’s second-largest bank, for example, has sold a few of its buildings with an entirely different motivation: to help finance the building of a large corporate center in Madrid. This and similar ventures show that important money movers are willing to invest in Spain’s real estate (in the business sector, property prices have risen by 20% in the last year and a half).
