Benson Elliot buys €75m Spanish residential site

The London-based firm has purchased a holiday home site on Spain’s Costa Dorada just two weeks after shares in Spanish residential firms tumbled on concerns of oversupply.

Benson Elliot Capital Management, the private equity real estate firm founded by Marc Mogull, has teamed up with Catalan residential developer Promobuilding to acquire a prime residential site in Mont Roig del Camp on Spain’s Costa Dorada.

Les Pobles Migdia, as the project has preliminarily been named, will include up to 200 villa-style residences, in a low density landscaped setting.

The total value of the development, which is expected to cater primarily to Spanish first and second home buyers, is estimated at approximately €75 million ($101 million). Construction of Les Pobles Migdia is slated to begin in 2008.

The Mont Roig acquisition is the fourth for Benson Elliot Real Estate Partners II since it began its investment programme in the fourth quarter of last year, and takes the fund’s portfolio to €550 million.

Previous deals include a €120 million investment in Denmark, alongside Danish developer Sjælsø Gruppen; the acquisition of the Deutsch-Japanische Center in Düsseldorf; and, most recently, the €240 million acquisition, in partnerships with Générale Continentale Investissements, of six office properties in Paris.

The maiden Spanish deal comes at a time of uncertainty in the Spanish residential market. Shares in the leading construction companies tumbled dramatically at the end of April, apparently triggered by a fall in the share price of newly floated Astroc Mediterraneo.

Its shares crashed 65 percent as the company revealed projected completions in 2007 would reach 800,000, well above the expected 600,000 new homes.
Marc Mogull, Managing Partner of Benson Elliot, said in a statement: “We’ve monitored the Catalan residential market with Promobuilding for some time, but needed something like the negative news barrage in the Costa del Sol to bring vendor price expectations into line with our own.”

He added: “We are very bullish about the long-term outlook for the Costa Dorada, with its unique ability to attract both primary and second home buyers.  Tarragona, just 20 minutes away, is one of Spain’s fastest growing cities.  Moreover, with Spain’s high speed rail now coming on line, Barcelona will be less than an hour away, Zaragoza almost the same, and Madrid less than three hours.”

Benson Elliot Real Estate Partners II closed in 2006 with equity commitments of more than €335 million.