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Bain buys 1.1 bln euro Spanish property and loan portfolio: Reuters

Private equity firm Bain Capital said on Thursday it had bought loan and real estate portfolios worth 1.1 billion euros ($1.23 billion) from three Spanish banks, more evidence of how Spain’s recovering property sector is attracting foreign investors.

The U.S fund did not disclose how much it had paid for the troubled loans and repossessed properties, which are often offloaded at a discount.

Bain said its credit division had bought bad loans worth 926 million euros at face value from mid-sized Banco Sabadell and small lender Cajamar. These were mainly loans to Spanish property firms in various stages of bankruptcy and backed by real estate assets, Bain said in a statement.

It said it had also bought 220 million euros of residential and commercial property from a large Spanish bank which it did not name.

Private equity funds looking to boost returns when interest rates are at historically low levels have flocked to Spain as its banks still look to reduce their exposure to the country’s troubled property sector.

The real estate market collapsed in 2008, sending prices down some 40 percent from their peak and triggering a double-dip recession.

With Spain now in its third year of economic recovery, rental yields have increased to 6.1 percent in the second quarter, five times the return on a 10-year government bond, according to real estate portal Idealista.

“We see potential to make new investments in the Iberian peninsular, especially in the real estate and non-performing loan markets,” Fabio Longo, a managing director for Bain Capital Credit, said.