Andalusian Regional Government Completes €300m Property Sale

The Ministry of Tax and Public Administration (Consejería de Hacienda y Administración Pública) has completed the sale of the largest property portfolio ever brought to market by a regional government in Spain. CBRE advised the Andalusian Government on the sale.

The transaction comprised a 20 year sale and leaseback of a portfolio of 70 properties owned by the Andalusian Regional Government. The price was €300 million, which is slightly higher than the €292 million expected proceeds. The portfolio was awarded to the global REIT fund W.P. Carey Inc. via its Spanish subsidiary Inversiones Holmes, which has now deposited the €15 million down payment.

The sale and leaseback will allow the regional government, which will pay an annual rent of €23.6 million, to obtain liquidity, without relinquishing the administrative use of the properties.

The properties sold are located across the eight provinces of Andalusia. 25 properties are located in Seville, another nine in Huelva, eight in Cadiz and Cordoba respectively, seven in Jaen, five in Almeria and Malaga and three in Granada.

W.P. Carey is a real estate investment trust specialising in corporate finance via sale & leaseback transactions. It is the leading company in income-producing property acquisitions with one sole tenant, and to date has invested more than $18 billion. At September 30, 2014, the company had an enterprise value of approximately $9.8 billion. In addition to its owned portfolio of diversified global real estate, W.P. Carey manages a series of non-traded REITs with assets under management of approximately $8.3 billion. Its corporate finance-focused credit and its extensive knowledge of the real estate market, has allowed it to successfully invest across a wide variety of industries and property types. Its portfolio of long-term leases with creditworthy tenants has an established history of generating stable cash flows, enabling it to have delivered consistent dividend income to its investors for over four decades.

Since 2010, Andalusia’s regional government has been committed to the “sale and leaseback” format as an additional form of financing, which would allow it to maintain its budgetary strength in providing essential public services, guaranteeing their provision in an environment of heightened restriction to taking on debt, which was imposed in order to comply with the deficit target. The Ministry for Tax and Public Administration hopes that the success of this transaction will be an additional boost in order to restore confidence in the community and ensure the stability of public accounts, with the aim of breathing new life in to the business sector, driving job creation and bolstering public services.