Contact Us

Reuben Brothers Close In On Western World’s Most Expensive Building

Simon and David Reuben

The Reuben brothers are poised to buy the second most expensive building ever sold, and the most expensive outside of Asia.

The London-based brothers have been named as the highest bidders in the bankruptcy proceedings for the Madrid HQ of Spanish bank Santander. They have offered €3B ($3.4B, £2.7B) for the building.

The second highest bidder was Santander itself, which offered about €50M less. A bankruptcy court declared the Reubens the winner of the auction in January, and last month the court turned down an appeal from Santander about the decision, according to Publico. Santander has been claiming it should have had a right of first refusal to buy the asset. It is weighing whether to make a final appeal.

The decision by the court means that an incredible saga surrounding the ownership of the 4.3M SF building is drawing to a close. Ciudad Santander, as it is known, is spread over 340 acres and includes a grove of 1,000-year-old olive trees, a championship golf course and a nursery that can accommodate 550 children.

UK investor Glenn Maud and his then-joint venture partner, Irish entrepreneur Derek Quinlan, bought the building for €1.9B in 2008, with the deal completing the day after Lehman Brothers collapsed.

The pair bought the building using just €25M of equity, court documents showed, a 98% loan-to-value ratio. A consortium of senior lenders provided €1.6B, and Royal Bank of Scotland provided €200M of junior debt plus a €75M equity loan. Given the timing of the deal, that meant it fell into negative equity almost immediately.

Robert Tchenguiz, backed by Abu Dhabi fund Aabar, bought the junior debt and Quinlan’s equity in 2010 to try to take control of the property, and the pair have been locked in a legal battle with Maud for control since 2011.

In 2015 the SPV went into bankruptcy protection. The amount repayable has racked up as a result of interest on the loans, and now stands at about €2.7B.

In spite of this complexity, the building has one extremely valuable facet — the lease to occupier Santander. It ran to 40 years at the time of the deal, with annual rental uplifts of at least 2.2% or the rate of inflation, whichever is higher. In the first year Santander paid rent of €83M. It will pay at least €2.65B over the life of the lease.

The Reuben Brothers appointed JP Morgan to raise debt to finance the acquisition, most likely through some sort of bond issuance. The brothers have a net worth of around £19B ($24B) according to the Sunday Times, and this would be by far their largest property acquisition. They originally made their money in the aluminium business.

The largest price paid for a single building was in Hong Kong in 2018. A group of Hong Kong and Chinese investors bought a stake in The Centre in Hong Kong in a deal that valued the 73-storey skyscraper at $5.1B.