Värde closes in on Spanish retail portfolio deal at hefty discount

Värde Partners is poised to close the purchase of a retail portfolio across Spain at a massive discount, PropertyEU has learnt.

The Minneapolis-based opportunistic investor is making its first move into the Spanish market with the acquisition of four assets in Madrid, Mallorca and Pamplona from APN European Retail Property Group, which is managed by Australia's APN Funds Management Limited, and its lender on the asset, Royal Bank of Scotland.

Värde is believed to be paying as little as EUR 70 mln in cash for the properties, which is less than the value of one of the assets in the portfolio - the 32,400 m² Festival Park factory outlet centre in Mallorca. It is understood that APN paid EUR 200 mln for the assets back in 2005, including around EUR 120 mln of debt provided by RBS.

'I believe Värde - a newcomer to the Spanish market - is not a retail investor. But they have seen an opportunity and decided to seize it,' a well-informed market source told PropertyEU. It is understood that Spanish broker Aguirre Newman is advising the buyer.

Värde, APN and Aguirre Newman were not available for comment on Tuesday.

The portfolio also includes La Vega mall in Madrid; three retail warehouses in Pamplona, Navarra; and the 31,000-m² Cuadernillos Retail & Leisure Park in Alcana de Henares, Madrid. The deal is part of a sales programme agreed by the APN fund with its main lender, RBS, in order to receive a long-awaited debt restructuring package. Proceeds will be used to repay debt.

APN and RBS put the assets on the market in May this year. Indicative offers were submitted by June, with three parties selected to make binding bids by end-July. However, due to growing financial market volatility and tighter financing, the vendors decided in September to re-open the bidding process to new buyers, including Värde, which just recently emerged as the preferred party.

RBS has been trying to exit the Spanish market for months. In March, it sold a portfolio of Spanish mortgage loans with a face value of EUR 290 mln to US private equity firm Perella Weinberg at a discount of 45%.

This week the UK bank also divested a 50% stake in three office buildings in Madrid and Barcelona, valued at over EUR 300 mln three years ago, for what is believed to have been another hefty discount to Spanish private investor Drago Capital in conjunction with an unnamed Canadian institutional investor. According to well-informed sources, the cash-laden Canadian investor traditionally invests indirectly in real estate but was attracted as a new entrant to the Spanish market by the investment's high return.