Spain Said to Consider Palace Sales to Raise Cash
The Spanish government is considering a sale of a small, century-old palace in the heart of Madrid’s business district as part of a plan to raise cash from 100 prime properties, a person with knowledge of the matter said.
Castellana 19, built in 1903 and later used to house Spain’s stock-market regulator, would be sold outright rather than leased, said the person, who asked not to be identified as the plan’s details aren’t public. The property was valued at 28.7 million euros ($37 million) in 2010, the year before the agency moved out. The government said last month it had selected 100 buildings that could be privatized by the end of 2016.
The properties, mostly in Madrid, will be sold outright or leased for as long as 30 years, the person said. They won’t be part of sale-and-leaseback deals because that would be too costly for the state in the long term, the person said. Spain is seeking to generate more money from its real estate as it tries to avoid following Greece, Ireland and Portugal by requesting a full bailout.
Another small palace, owned by the Economy and Finance Ministry, may be leased, the person said. The historically protected property on Calle Duque de Medinaceli was designed by Gabriel Abreu and Fernando Garcia Mercadal and built in the 1920s. It was purchased by the state in 1928 and became the Spanish National Research Council’s library in 1952.
Castellana 19 was designed by architects including Miguel de Olabarria, who helped conceive the Almudena Cathedral in Madrid.
A Budget Ministry spokesman in Madrid said officials are still working on the plan and no decision has been made on the assets to be included in the sale process.
Prime Minister Mariano Rajoy is struggling to cut Spain’s budget deficit and reduce borrowing costs as the country copes with its second recession since 2009. In September, he announced a fifth package of budget cuts and tax increases, bringing planned savings to about 150 billion euros, or 15 percent of annual gross domestic product by the end of 2014.
Spain’s budget shortfall will amount to 6.4 percent of gross domestic product in 2014, compared with a target set by the European Union of 2.8 percent. “Fiscal consolidation hardly advanced in the first eight months of 2012,” the EU’s executive arm said yesterday in Brussels.
The state has more than 40,000 properties in the province of Madrid alone, excluding buildings owned by the state, police stations, social security and tax offices and museums belonging to the Culture Ministry, according to a 2010 study by Aguirre Newman.
The state could raise 2.87 billion euros if it renovates the 777,000 spare meters of space it doesn’t need and sells it for office use, according to the Madrid-based real estate consultant. A further study is in progress, the firm said.
Greece last year said it would seek to raise 50 billion euros by 2015, about 70 percent of it from real estate deals, to meet the conditions of its bailout. The country has brought in 1.8 billion euros so far and on Oct. 31 it reduced the revenue target to 11.1 billion euros by 2016.
Italy may generate as much as 5 billion euros from real estate sales in the short term, Radiocor news agency reported, citing Italian Finance Minister Vittorio Grilli.
Public-sector property sales in Europe increased to 2.3 billion euros last year from 1.1 billion in 2010, with Germany, the Netherlands, Sweden, Russia, the U.K. and France accounting for 75 percent of the total, according to CBRE Group Inc.
Madrid’s regional government plans to sell 100 office buildings in the city center over three years to cut its deficit and pay for services. The Catalonia region in January rejected a bid by Och-Ziff Management Europe Ltd. and Moor Park Capital Partners for a batch of 26 buildings including the Barcelona stock market because the offer was too low.
Andalusia hired BNP Paribas SA last year to help raise at least 400 million euros selling 76 properties, including the cultural department in Granada and youth centers in Malaga. It offered to pay about 30 million euros a year to lease the buildings after their sale. No deal was reached.
To contact the reporter on this story: Sharon Smyth in Madrid at firstname.lastname@example.org.