SPAIN - London-based real estate investment and management specialist Propinvest has acquired the global headquarters of Spanish banking giant Banco Santander, for €1.9bn - the largest ever European real estate deal.

Fellow European banking groups Royal Bank of Scotland, HSH Nordbank and Bayern LB helped fund the transaction which is described by Propinvest to represent excellent potential for investors as it retained Banco Santander as a tenant under a 40-year triple net lease agreement.

Propinvest added the cash flow from the rent on the lease would increase annually on a compound basis by 175% of the prevailing European consumer price index inflation rate.

This translates as an initial rental income of €83m with anticipated revenues from the 40-year lease, with inflation-linked rent increases taken into account, reaching some €9bn.

The property in Madrid is a complex comprising 175,000 square metres on a site covering 165 hectares, and houses over 9,000 employees.

The bank has grown exponentially is recent years and is now rated as the world's third-largest by profit and fourth-largest by market capitalisation, according to Propinvest.

"This highly complex transaction has been undertaken in extremely challenging financial markets," said a spokesman.

"To fund this transaction in such an environment is a testament to the quality and opportunity of this unique and exceptional investment," he added.