China's Dalian Wanda has reportedly finalized a deal to sell a Madrid property it had intended to convert into a luxury hotel, citing uncertainties over Spain's market and the local political environment.
The hotel was sold to Spanish property developer Baraka Global Invest in a deal valued at €272 million euros or $283.15 million.
News of the sale stretches back to July, when it was first reported that Wanda would be selling the property to Baraka. The reason for the eventual sale has more to do with Madrid's local government than the asset itself, it is believed.
Wanda acquired the the Edificio Espana from Grupo Santander in 2014 for a reported $358.6 million, but by January 2016, Wanda's relationship with the government had soured. Here's the crux, as written by Daily Mail at the time:
"Madrid's new anti-austerity mayor Manuela Carmena has put investors on edge by vowing to sternly scrutinize big building projects approved by the former conservative council.
According to Spanish reports, city authorities are refusing to let Wanda demolish the building's facade before reconstructing it.
Citing Spanish media, the state-run Global Times newspaper, said Wanda has started dismissing employees in its Madrid office after talks with the city government failed.
"I have never been so badly treated in my life," Wang was quoted as saying by Spanish news website Periodista Digital. "I've been treated like a dog."
Wanda now says it will use the funds from the sale to repay loans and finance other projects. It said it had not yet identified any specific potential targets for investment.
Parent group Dalian Wanda owns more than 200 plazas and hotels across China, and has in recent years gone on an overseas acquisition spree which also includes a stake in Spanish football club Atletico Madrid and hotels and land in the U.S. and Australia, among other destinations.