Madrid to Auction 11 Buildings in Plan to Cut DeficitSharon Smyth
Madrid’s regional government will try to sell 11 buildings in an auction today, according to a document obtained by Bloomberg News, part of a plan to sell 100 properties over three years to cut its deficit.
The buildings have combined space of 17,500 square meters (188,000 square feet) and are valued at 32.5 million euros ($43 million), the document shows. If no bids are made, a second auction will be held in two months at which the properties will be offered at a 15 percent discount. If that fails to attract buyers, the price is again cut by that amount in a final auction. Most of the properties are office buildings.
“It’s normal for investors not to bid in the first round as they want to take advantage of discounts in the second and maybe third rounds,” Jose Luis Moreno Casas, the government official who is overseeing the disposals.
Spanish regional governments control more than a third of public spending and play a key role in cutting the national deficit, part of the national government’s vow to meet the conditions of a rescue package of as much as 100 billion euros for the country’s banks.
Madrid is one of seven Spanish regions on track to reduce their budget deficits to 1.5 percent of gross domestic product in 2012. The second-biggest economy after Catalonia, contributing almost a fifth of output and growing faster than the country as a whole in 2011, had debt equal to 9.5 percent of GDP in the third quarter, compared with 15.9 percent for all of Spain’s regions.
Proceeds of the sales will be used to provide for residents and trim the Madrid region’s budget shortfall, which reached 2.2 percent of regional GDP in 2011.
The more valuable properties earmarked for today’s sale include a 2,524 square-meter office building in Calle Jose Abascal in Madrid’s upscale Chamberi district valued at about 10 million euros and a 2,250 square-meter office building in San Martin Square, next to a 16th century convent, worth about 5.6 million euros, according to the document.