Allowing the developer Habitat to emerge from administration with hundreds of millions of Euros of debt was wishful thinking by all parties. The game will soon be up, and liquidation is looming, according to press reports.
Habitat was one of the biggest developers to go into court administration when boom turned to bust. But, incredibly, it was allowed to emerge four years ago from administration after some debt restructuring and a new business plan that assumed a recovery that never happened.
Habitat was not alone in being allowed to continue in business with an entirely hopeless business outlook. Many Spanish developers still operating today are zombies.
Now, according to press reports, most of Habitat’s banking creditors have finally decided to pull the plug, much as they did with the developer Llanera earlier this year.
Only the Sareb – Spain’s so-called bad bank – with 150 million Euros loaned, and the Official Credit Institute, are still undecided. Once they agree, Habitat will be liquidated, it’s debts written off, and it’s assets divided up between creditors, claim Spanish press reports.
The bulk of Habitat’s assets are building plots in good areas of the Canaries and the Costa del Sol, say press reports. The land market is currently broken, but prime land is a good asset that will attract buyers when the crisis ends (which it will). Some of these plots will undoubtedly be a good long-term investment.
The Dutch bank Rabobank has already written off its loans to Habitat in return for land in Girona province (Catalonia).
I can think of quite a few Spanish developers that have been allowed to emerge from administration against all business sense. Many will be liquidated in the end. Allowing them to continue in business just makes the final bill bigger.