What does it mean when Wall Street mega-landlords that bought the impaired assets after the last crash are trying to unload during the worst economic crisis on record?
With Spain in the grip of its deepest recession on record, house prices have begun to fall for the first time since 2015 on a year-over-year basis. In a bid to buck this trend, Aliseda and Anticipa, two real-estate firms that private-equity giant Blackstone acquired in 2017 from Banco Santander, have pledged to reimburse investors up to one tenth of the sale price if the value of the properties they buy drops by more than a tenth in the three months after a deal is sealed.
Many of the 8,400 properties on offer have been sitting on the market since 2018, without finding a buyer. The total portfolio is valued at €1.04 billion. Now, Blackstone is trying everything it can to offload the properties, including offering investors the sweetener of a little extra security.
Blackstone is the biggest private landlord in Spain, with some 100,000 real estate assets in the country, including a huge portfolio of impaired assets, such as defaulted mortgages and the homes that back them, and real estate-owned assets (REOs), that are controlled via dozens of companies. It is heavily exposed to any downturn and has an obvious interest in keeping Spain’s ultra-fragile housing recovery going. That could be why it’s offering such enticing inducements to attract buyers.
“We detected the current context was generating uncertainty for buyers, and wanted to provide them with security and send a message of confidence in the Spanish real estate market,” said Aliseda communications director Jaime Navarro.
The initiative could be a sly marketing ruse, says Spanish financial daily El Confidencial. Aliseda already reduced its offer prices before the Covid-19 outbreak, after surmising at the beginning of this year that Spain’s roughly five-year housing boom was running out of steam. After the lockdown, it undertook another price review and reductions, to where its asking prices could be reasonably well adjusted to the new reality.
But the offer could also send the opposite of its intended message, giving investors the impression that some of the biggest sellers are so worried about the prospect of cascading prices in a market that was already running out of steam before Covid arrived that they’re willing to do just about anything to attract prospective buyers. And that might be enough to convince those prospective buyers to sit on their hands a little while longer, putting further downward pressure on prices.
Eduard Mendiluce, chief executive of Aliseda and Anticipa, insists that the prices of the properties are “highly competitive and that now is a good time to buy a home.”
Spain has so far suffered the biggest post-Covid economic contraction of any EU Member State, including Italy, Greece and Portugal. It has also seen the sharpest rise in unemployment.
Memories are still fresh of the last housing crisis, which was triggered by the collapse of a ten-year housing bubble, during which prices almost tripled, and culminated in a seven-and-a-half year long housing bust. Since then, in many places, prices have not come close to recovering their former boom-era levels. And now, the lukewarm recovery that began in 2015 may be in the process of unraveling.
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Nick Corbishley 