Soros and Paulson each take €92m bet on Spanish real estate

George Soros and John Paulson are taking major stakes in the flotation of a Spanish property group, reflecting an increasing confidence among investors in the eurozone periphery's economic recovery.

The two hedge fund managers - who were ranked first and fourth in the world for their total earnings in 2013 - have both taken €92m stakes in Hispania Activos Inmobiliarios, said people with knowledge of the deal.

Last week, Hispania announced plans for an initial public offering of remaining shares - having already raised a substantial part of its €500m target from early-stage investors. Its prospectus is awaiting approval from Spain's regulators.

Hispania is seeking to list on the Madrid Stock Exchange as a real estate investment trust, focusing on property with scope for value growth, primarily in key cities. It is targeting a double-digit annual total return over a six-year period, people familiar with the plans said. The Reit will be managed by Azora, an independent asset manager founded in 2003 that has accumulated €2.8bn of assets across Europe. Azora refused to comment.

Mr Paulson told the FT: "We are impressed with the Azora management and think they are well positioned to capitalise on the opportunities that are likely to arise in the Spanish real estate market." Mr Soros declined to comment.

If it succeeds with its IPO plan, Hispania will become the second Spanish real estate company to float since the financial crisis, after property investment company Lar Espana announced its intention to raise €400m two weeks ago.

Real estate assets in Spain - which tumbled more than a third between 2007 and 2013, according to figures from the European Central Bank - have become increasingly popular among investors in recent months, as properties in the UK and Irish markets have become more expensive in the wake of international demand.

Investment into Spanish real estate more than doubled year-on-year in 2013, to €2.7bn, according to data from Cushman & Wakefield - the highest level since the Eurozone economic crisis in 2010.

Although there have been few European real estate IPOs in recent years, the market is beginning to stir and investors expect more in the coming months.

Anne Breen, head of real estate research and strategy at Standard Life Investments, said: "We expect the size of the listed real estate market in Europe to increase significantly in the years ahead. One word of caution would be that investors should be prudent over less experienced managers in some of the smaller IPOs."

News of the hedge fund managers' investment in Hispania comes as an increasing number of hedge funds are betting on an economic recovery in Southern Europe. Mr Soros and Mr Paulson have already taken stakes in distressed companies in Spain and Greece. Funds connected to Mr Soros bought into the heavily indebted Spanish builder FCC last month, while Paulson attracted attention for investing in Greece/s banks last autumn.

Financial institutions in the Eurozone periphery are also securing new funding at the highest rate since the economic crisis, according figures released this week. A third of Eurozone bank debt issuance has come from institutions in peripheral countries so far this year.

© The Financial Times Limited 2014. All rights reserved.
FT and Financial Times are trademarks of the Financial Times Ltd.
Not to be redistributed, copied or modified in any way.
Euro2day.gr is solely responsible for providing this translation and the Financial Times Limited does not accept any liability for the accuracy or quality of the translation