Banco Santander, the world’s ninth largest bank by revenue, wants to repurchase its headquarters in what seems to be a cost reducing measure as the cost of buying the property would be less than the sum of rents agreed with the current owner until 2048. The current rent is in the region of €120 million per annum updated annually. The acquisition could also grant the Spanish multinational added flexibility when it comes to managing the location of its employees as well as protection from potential disagreements with a future landlord.
Santander has a right of first refusal granting it preferential acquisition rights, but instead of waiting to know the outcome of the bidding process, the company has opted to make a bid and avoid future legal uncertainties.
In 2008, Santander sold its global HQ for 1.9 billion euros to Marme Inversiones 2007 SAL, a special purpose vehicle incorporated by investors Glenn Maud and Derek Quinlan. These financiers, who had also acquired Citi’s headquarters in London, financed the purchase with a syndicated loan – the main lender being RBS.
In the midst of the great recession, on the expiration of the loans in September 2013, Marme defaulted on their repayments and entered liquidation two years later. The financiers, including RBS, Caixabank, ING, Nordbank and BayernLB, expect to recover their money with interest thanks to the sale.
The property is being sold through an auction organized by a Madrid court and so far it has received two non binding offers from AGC Equity Partners, a London-based Kuwaiti fund and Sorlinda Investments which is backed by Reuben Brothers.
US funds Blackstone and Centerbridge, which are also creditors and discussed making a joint offer, have not come to the auction. Their strategy could be to wait for the current bidding process to not be inconclusive and enter at a later stage with a potential chip in price.