Lar Espana Real Estate Socimi SA, a company that plans to buy distressed property in Spain (SPNPTHQ), rose on the first day of trading in Madrid on expectations it will benefit from a recovery in the country’s real estate market.
Lar Espana, which raised 400 million euros ($549 million) in a share placement last week and counts Pacific Investment Management Co. among its investors, rose as much as 10 percent. The shares traded at 10.25 euros at 12:20 p.m. in Madrid, compared with the 10 euro price set for the share sale.
Overseas investors are entering Spain’s property market after home prices fell by more than 40 percent. Paulson & Co., the hedge-fund firm founded by billionaire John Paulson, plans to invest in Hispania Activos Inmobiliarios, another Spanish real estate company that’s due to sell shares to the public for the first time this month. Other investors include Quantum Strategic Partners LP.
Lar Espana is a Socimi, which is similar to a real estate investment trust. It will focus on buying undervalued offices in Madrid and Barcelona as well as retail parks and warehouses throughout Spain, the company said in the Feb. 13 offering documents. Lar Espana is targeting a total shareholder return rate of more than 12 percent a year when all net proceeds have been fully invested, according to the documents.
Investment in Spain by funds, private-equity firms and financial-services companies totaled 13.9 billion euros in 2013, according to Madrid-based debt-restructuring firm Irea. About 37 percent of the money was spent on real estate assets and that figure is expected to increase this year as special emphasis is put on the property market, according to Irea Chief Executive Officer Mikel Echavarren.
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