Story of the HSBC Tower and a Spanish developer
Wednesday, September 3, 2008 @ 5:52 PM
Story of the HSBC Tower and a Spanish developer
Many of you know or have seen the large HSBC Tower HQ in Canary Wharf, London. Well, what many of you might not know is that the building was bought last year by one of the large Spanish Property giants - Metrovacesa. The price they paid then was about 1.1bn (Pounds Sterling). Obviously, at the time it was heralded as a fantastic opportunity with the Spanish company buying one of London's landmark buildings. Analysts alike all seemed to agree that while it was a high price to pay, it was still a deal worth doing! Large companies were buying landmark buildings left-right and centre!
Well, recent reports from analysts seem to retract those statements. The deal was a purchase and leaseback to HSBC and only gave Metrovacesa an annual return of between 3.5% to 4%!! Not brilliant if you ask me (especially when spending that kind of money)! What;s more is that HSBC loaned them a large part of the funds (800m ish) to purchase the property! So well done HSBC!
Metrovacesa now is not having the best of times and is trying to restructure some of its finances to make the payments. The building they bought for 1.1bn Pounds last year, could possibly worth 20% less today (according to some analysts), so given the tough market in Spain (and the UK), they may need a helping hand.
All in all, it just goes to show, that whether you're large developer with billions to spend, or an individual buyer with 100000 Euros to spend, always do your homework, and prepare for the worst case scenario (even if those around you are painting a rosy picture). Also, with each real estate investment you make determine whether you are in it for the long haul or short term, and ensure you can meet your mortgage/loan repayments. Only then can you satisfy yourself that is a worthwhile / comfortable investment.
YOUR 'STRIPPED-DOWN' GUIDE TO BUYING A PROPERTY & GETTING A MORTGAGE IN SPAIN