International casino and resort king Sheldon Adelson may have abandoned plans to invest billions in Spain, at least for the moment, but other top US investors have quietly begun to take the view it may be the place to be to put some serious long term money again.
In October of last year, Bill Gates bought a 6% stake in the ailing Spanish engineering and construction company giant, Fomento de Construcciones y Contratas (FCC) for short, by way of purchase of new treasury shares. In late December George Soros also bought a 3% position in FCC, this time in the marketplace.
Now it is reported that George Soros, who is Chairman of Soros Fund Management, is looking at another strategic investment in Spain, this time in real estate. The Spanish real estate sector suffered a complete collapse in that after massive over-building based on cheap credit, in the years leading up to the financial crisis that burst upon us in 2008.
This time Soros and private equity king John Paulson, who heads up Paulson & co, are each investing US$128 million (Euros 92 million) in a new Spanish real estate investment vehicle named Hispania, according to a report in London’s Financial Times.
The local sponsor of Hispania is the Spanish private equity firm Azora, which specializes in real estate, who announced last week they hope to list the new vehicle on the Spanish stock exchange, and raise about US$690 million (euros 500 million) from well-heeled private investors. Azora is led by Ms. Concha Osácar who co-founded the firm in 2003 and formerly was head of real estate at the Santander Bank.
Essentially the Hispania project falls into the definition of a REIT, or a SOCIMI as real estate investment trusts are known in Spain (and by the way it stands for: sociedades cotizadas de inversión en el mercado inmobiliario, just in case you were asking).
Last summer, in August, 2013 Azora picked up a package of 3, 200 apartments in Spain, mainly in and around the capital city of Madrid, from the Madrid regional government, for about US$277, million (Euros 201 million). This was entirely a private equity transaction however, as was a smaller purchase just before it occurred, of 1, 860 properties sold by the Madrid city government to the Blackstone Group for about US$173 million (Euros 126 million).
Now if Hispania gets off the ground, Soros, Paulson and indeed others may be joining in at the ground floor of a fairly substantial publicly listed entity to pick up some real estate bargains in Spain now, just as the economy there may be starting to recover.
Neither George Soros nor John Paulson has cared to comment officially on these plans, which it is possible may have been quietly leaked by Azora in order to gain some buzz ahead of their capital raise.