Spain’s Santander tries to block redemptions for 2 years

Spanish bank Santander has asked Spain’s financial regulator for permission to halt redemptions at its Santander Banif Inmobiliario FII fund. Investors have been rushing to exit ahead of the publication of a revaluation of assets as Spain plunges into recession.

Banco Santander, the acquisitive Spanish bank, has asked financial regulators if it can halt redemptions in an open-ended real estate fund.

The bank said in a company filing that it was seeking to suspend redemptions from Santander Banif Inmobiliario FII fund until February 2011 following attempts by investors to withdraw 80 percent of funds ahead of a revaluation of the real estate.

Santander, Spain’s largest bank which owns Abbey in the UK, announced in December that it would revalue the portfolio contained in the fund this month to be in line with “market reality”.

The value of assets in the vehicle has been written down by 18 percent to €3.41 billion in the three months through December.

Santander said it would allow investors until February 27 to apply to make withdrawals from Banif Inmobiliario, waiving redemption fees up until that date. The fund will then sell off assets over two years and make payouts to investors every time it raises funds equivalent to 10 percent of managed assets after paying off debt, according to reports. 

The fund has made some very large purchases approaching the peak of the market. In 2005 for example, it paid €138 million for a 50 percent stake in Edificio Espana in Madrid from Metrovacesa, which also came with a commitment to buy the other half at a later date. Between 2001 and 2004 the fund acquired €1.3 billion.