Baraka seeks financing to complete purchase of Edifício Espanha

Baraka seeks financing to complete purchase of Edifício Espanha

This information is advanced by the Spanish daily Expansión, which explains how the business model initially defined by the Baraka Group for this transaction – to buy the building through a credit syndicate with the asset as guarantee  - is not possible. Thus, they have now one month left to find alternatives, which they may pass, or to find a partner investor, or, alternatively, bring in their own funds to conclude the purchase.

It can be recalled that the Trinitario Casanova Group closed the purchase agreement, for 272 million euros, for the Edifício Espanha in July 2016. Up to now, only an initial amount of about 20 million euros has been paid, leaving the settlement of the remainder of the capital until the end of the period of time agreed for completion for the new owner which ends this month.

Initially, the group negotiated with various interested banks, among them the Banco Sabadell and Bankia, for a secured credit facility for 300 million euros. This value will be applied not only on the financing for the asset purchase, but also to invest in the refurbishment project for the opening of a hotel, luxury apartments for rent and a retail area with high class restaurants and, eventually, a casino.


Agreement for 100 million with RIU Hotels invalidates the mortgage

Meanwhile, this option became inviable when the Baraka Group completed an agreement with the Spanish hotel group RIU which meant important changes in the real estate project initially planned for the building.

Under this agreement, the RU group made a commitment to invest 100 million euros on the renovations, with the area planned for the hotel now covering a total of 22 floors, abandoning the creation of the residential component and instead build a large four star hotel, under the aegis RIU Plaza in the heart of Madrid.

Meanwhile, Expansión further adds, the agreed contract between the Baraka and RIU groups strictly prohibits Edifício Espanha from being mortgaged to finance a purchase, rendering inviable the granting of a credit agreement. As such, the banks interested in financing this deal will ask Baraka Group to supply other guarantees as an alternative.

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