A lot of money is at stake.
Wall Street mega-landlord Blackstone is once again making its presence felt in Spain, which represents about one-fifth of its global property empire. During the Q&A session of a recent breakfast meeting organized by the American Chamber of Commerce, the senior advisor of the group’s Spanish subsidiary, Claudio Boada, confronted Spain’s Minister of Economy and Business, Nadia Calviño, on the government’s plans to reform Spain’s renting laws in an attempt to slow down the pace of rising rents.
Of particular concern to the private equity colossus is the government’s stated goal of extending the minimum duration of rental contracts from three to five years for private individuals and from three to seven years for businesses, in the hope of tempering the rate at which rents are rising in the country. But it will also hamper the ability of private-equity landlords like Blackstone to turf out the existing tenants of newly acquired properties as quickly as possible in order to jack up rental prices for new ones.
“We think that the measures being discussed could end up increasing the price of rents price and reducing investment,” said Boada. Translation: if the government proceeds with its misguided plan to make life a little easier for the legions of struggling tenants, private equity landlords like Blackstone might be tempted to reduce its investment in Spanish real estate.
Given that private equity firms are one of the biggest sources of demand for real estate in Spain as well as the main buyer of impaired real estate assets from Spanish banks and Spain’s bad bank, Sareb, it’s a pretty big threat — and one the government will no doubt take very seriously…