US Investment Fund Grabs €1.1 Billion Spanish Property Portfolio

 US Investment Fund Grabs €1.1 Billion Spanish Property Portfolio

The love of investing in Spanish property shows no signs of slowing down. Just recently the US private equity firm Bain Capital purchased a loan and real estate portfolio from three Spanish banks for the sum of €1.1 billion.

Spain looks an amazing investment hub for the next 7 or 8 years

Spanish banks stepped forward during the years following the recession and claimed ownership of thousands of distressed properties. Most of these banks have since gone on to try and sell the properties, even offering them at discounted prices to private investors who want to grab a bargain.

Bain Capital’s decision to purchase this portfolio show just how attractive Spanish real estate is to foreign investors. It’s impossible to know the exact details of the purchase but Reuters are reporting that around €220 of the €1.1 billion of the residential and commercial property all came from one Spanish bank.

The rest of the money went towards purchasing bad loans at face value from Spanish banks Sabadell and Cajamar. It’s believed that most of these loans were offered by the banks to small property firms that were going through bankruptcy. Bain said that these firms are backed by real estate assets and they outlined their belief that these property assets would be enough to recoup their money thanks to the rising property prices in Spain.

As Spain is currently experiencing historically low interest rates there’s never been a better time for this kind of investment from a firm that has the power to carry the burdens. After the recession of 2008 prices in the real estate market slumped by as much as 40%. While property prices are on the increase many properties are still severely undervalued and present a great investment.

The rental yields from commercial and residential property rose to 6.1% in the second quarter of 2016 in Spain, which works out at about five times the return on a 10-year, government backed bond. As such owning property in Spain has become quite the attractive bet across the entire spectrum of investment.

One of the managing directors for Bain Capital Credit, Fabio Longo, said that they see the potential of investing in the Iberian Peninsula, especially in real estate and non-performing loans.