Aus der Financial Times:
Real estate group is first Spanish victim
By Leslie Crawford and Mark Mulligan in Madrid
Published: September 21 2007 03:00 | Last updated: September 21 2007 03:00
The international credit squeeze claimed its first victim in Spain yesterday as Llanera, a Valencian real estate group, admitted it was in emergency talks with its creditor banks in an attempt to stave off bankruptcy.
A spokesman for the company told the Financial Times it was seeking to renegotiate €300m ($419bn, £209bn) in debt owed to suppliers and local savings banks in Valencia - a popular holiday destination for north Europeans.
"We have a liquidity crisis and we are talking to our banks in order to avoid filing for protection from creditors," Llanera said yesterday. The company blamed a slowdown in the Spanish property market for its predicament. Banks are under increasing pressure to tighten controls on lending to property developers and home owners because of the market turmoil.
Yet only a few months ago Llanera was being fêted as an innovative and ambitious real estate group with a bright future. The company, which reported sales of €418m last year, spent millions of euros in international marketing campaigns for its holiday homes. It was a sponsor of Charlton Athletic football club in the UK. It had offices in London, Seville and Valencia and employed more than 500 -people.
Before the property market turned sour, Llanera was considering a listing on the Madrid stock exchange.
Although the company is small, analysts said they expected more Spanish property developers to hit difficulties as the credit squeeze started to pinch and home sales slumped.
The problems of the real estate sector could have knock-on effects for small regional savings banks such as Bancaja and CAM, which have bankrolled the 10-year-old property boom in Spain. Analysts said if more property developers experienced difficulties, Spanish banks could end up with a lot of unsold land and property on their balance sheets, in lieu of payments.
"A few more cases like this and the banks will feel it," said one Valencian businessman.
More than half of the loan portfolio of Spanish banks is tied up with mortgages and loans to property developers.
Llanera said yesterday it was trying to persuade Bancaja and other creditors to accept some of its land as payment for its debts. "We are still in negotiations," the company said. Bancaja said it did not comment on negotiations with its clients.
Real estate agents report that sales of holiday homes on Spain's overpriced and overbuilt Mediterranean coast have slumped. Many agents are going out of business. Manuel Romera, a professor at the Instituto de Empresa business school in Madrid, estimates that more than 60 per cent of agents had closed down around Alicante, another popular holiday destination.
Copyright The Financial Times Limited 2007
