Wanda on track with €272m sale of Madrid landmark building
Chairman Wang Jianlin foreshadowed exit from Spanish market in a May interview, saying long battle with local authorities to renovate Edificio Espana was a learning experience
Dalian Wanda Group’s Europe unit signed a preliminary agreement to sell the Edificio Espana building in Madrid to Spanish investment group Baraka, in a move that will see the Chinese company exit the Spanish real estate market after feuding with city authorities for two years over plans to renovate the landmark.
Baraka Global Invest made a €272 million offer for the 63-year-old building, said Wanda Hotel Development, a subsidiary of Wanda, in a statement on Friday, noting that the final agreement would not be signed until due diligence was completed by mid-October at the latest.
In 2014, Wanda paid €265 million for the 25-storey building, a landmark skyscraper in the centre of Madrid that was embroiled in financial trouble. The group planned to renovate it into a luxury hotel and shopping complex that targeted mainland Chinese travellers.
The deal marked the developer’s first real estate project in Spain and was aimed at strengthening the conglomerate’s brand.
However, the ambitious plan became mired in controversy when Wanda proposed tearing down the structure for safety reasons instead of maintaining the original facade. The new mayor of Madrid refused the proposal.
In an interview on China Central Television in May, Wanda said it was still negotiating with local Spanish officials.
“If it fails, we would sell the building and never invest again,” Wang said during the interview.
He added that it was a “lesson” for Wanda and other Chinese enterprises that aspired to overseas markets and that planning permission should be obtained for every investment in advance.
The group has now shifted its investment focus to France.
In February, Wanda teamed up with French retail giant Auchan Group and planned to jointly invest more than €3 billion in EuropaCity, a retail and leisure project to be built on the outskirts of Paris by 2024.
The 760,000-square-metre project would be the largest single investment project in Europe to date, featuring an indoor and outdoor theme park, a large stage show, hotels, a business centre and a conference centre.
“For us, it is the most important project outside China,” Wang said in an earlier statement.
Wanda has been on a high-profile global buying spree in recent years, including the US$3.5 billion acquisition of Hollywood studio Legendary Entertainment in January.
In the first half, its overseas revenue accounted for 14.8 per cent of the total, which the group expects to rise to 30 per cent by 2020.
In its latest move, the company said on Wednesday that it was transitioning from a real estate company to a “global sports, entertainment and tourism giant”.
By 2018, Wanda targets two-thirds of its sales to come from consumer services, up from about 40 per cent last year.