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Goldman, Blackstone Said to Abandon Madrid Home Auction

Nov. 26 (Bloomberg) -- Bidders including Blackstone Group LP and Goldman Sachs Group Inc. dropped out of an auction of 1,458 rental homes in Spain, leaving the properties unsold, two people with knowledge of the matter said.

Madrid’s regional government received no binding offers for the portfolio comprising 22 developments in and around the Spanish capital by the Nov. 22 deadline, according to the people, who asked not to be named because the information is private. At least seven companies expressed an interest in buying the properties, one of the people said.

Three years of government austerity, unemployment at 26 percent and subdued mortgage lending are forcing more Spaniards to consider renting rather than buying homes. It’s also prompting foreign funds to invest in the country’s unsold residential properties, which may total 1.3 million units, according to Idealista.com, Spain’s largest real estate website.

A spokesman for the regional government of Madrid wasn’t immediately available for comment. Sophie Bullock, a spokeswoman for Goldman Sachs in London, and Andrew Dowler, a spokesman for Blackstone, declined to comment.

Asking Price

The minimum asking price for the homes, which are 94 percent occupied with a delinquency rate of 21 percent, was 67.2 million euros ($91 million), the people said.

Home prices have fallen by an average of 40 percent since the market’s peak in 2007, according to Fotocasa.es and the IESE business school. Rents in Madrid have fallen 19 percent since June 2008. In Barcelona, Spain’s second-largest city, they’ve dropped 24 percent, according to data compiled by Idealista.com.

Blackstone, the world’s largest private-equity firm, which has spent $7.5 billion buying 40,000 homes in the U.S., agreed in July to purchase 18 apartment blocks from the city of Madrid for 125.5 million euros.

Goldman Sachs and Azora Capital SL, a Madrid-based private-equity firm with 2.3 billion euros of assets under management, agreed in August to pay almost 20 percent more than the minimum asking price for 32 social-housing developments sold by the capital’s regional government.

Spain’s bad bank, known as Sareb, failed to attract high enough bids in its first sale of commercial real estate and will cut the size of the portfolio offered to make it easier to sell, three people familiar with the matter said last month.

To contact the reporters on this story: Sharon Smyth in Madrid at ssmyth2@bloomberg.net; Neil Callanan in London at ncallanan@bloomberg.net

To contact the editor responsible for this story: Andrew Blackman at ablackman@bloomberg.net

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