Sunday 18 August 2019

Quinlan's prized Santander HQ on brink of €2.8bn sale

Banco Santander HQ in Madrid
Banco Santander HQ in Madrid

Ronald Quinlan, Commercial Property Editor

The headquarters of Banco Santander in Madrid is reported by Private Equity Real Estate (PERE) to be on the verge of yet another record-breaking sale for up to €2.8bn. The potential acquisition of the 4.3 million square-foot campus by Kuwaiti-backed AGC Equity Partners comes almost a decade on from its October 2008 sale to financier Derek Quinlan and British property tycoon Glenn Maud for €1.9bn.

While the onset of the global financial crisis saw the value of the Ciudad Financiera scheme suffer almost immediately after Quinlan Private and Mr Maud's Propinvest Group acquired it, the sale-and leaseback deal with Santander involved the bank agreeing to pay €83m per year as part of a 40-year index-linked rent agreement.

As attractive as that was however, the purchase was highly-leveraged with the pair providing just €25m in equity, implying a 98pc loan-to-value ratio. The lion's share of the financing came from a consortium of senior lenders which provided €1.6bn, while €200m of junior debt was sourced from Royal Bank of Scotland, along with a €75m equity loan.

With the world's economy in freefall, both Mr Quinlan's and Mr Maud's financial fortunes took a battering. While Mr Quinlan became a major debtor in Nama and switched his focus to the repayment of billions of euro to the agency and his other creditor banks, Mr Maud's Propinvest went bankrupt in 2011.

Notwithstanding the pair's difficulties, Ciudad Financiera remained a target for potential buyers throughout the crisis, with British property investor Robert Tchenguiz leading the charge in this regard.

In 2015, the property's special purpose vehicle went into bankruptcy protection. The amount now owing on the property has increased to €2.7bn following the addition of loan interest.

AGC's reported offer of between €2.7bn and €2.8bn for the property faces competition both from Mr Tchenguiz, and from a consortium of US private equity giant firm Madison International Realty, Global Asset Capital and Glenn Maud. A decision in relation to a purchaser is expected from the Madrid civil court this summer.

Irish Independent

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