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Spain Orders Large Landowners to Cut, Restructure Rents

To keep its economy from derailing, Spanish government directed large landlords to cut rents for their pandemic-impacted tenants.

(Bloomberg)—Spain banned rental evictions for six months and ordered large landlords to cut rents for tenants impacted by the coronavirus outbreak, in the latest measure to keep the European Union’s fourth biggest economy from derailing due to the pandemic.

The cabinet decreed that large landowners should seek to reduce rents by 50% or agree to restructure payments over three years, in order to help people whose finances have been affected by the virus outbreak, Deputy Prime Minister Pablo Iglesias said in a press conference Tuesday. Small landlords will be guaranteed their rental income.

Deaths from the novel virus quickly soared in Spain over the past week, and the nation now lags only Italy for fatalities worldwide. The mortality rate, which has been rising as the number of patients outweighs the available beds and as hospitals struggle to provide enough respirators, has jolted the government to announce a barrage of measures to shield the services-heavy economy from further damage.

Blackstone Group Inc. and Cerberus Capital Management LP are among the biggest institutional investors in the Spanish residential market. These types of investors have long been criticized by Iglesias and other members of his party, Unidas Podemos. Blackstone has invested about 20 billion euros ($22 billion) in Spain starting in 2013. About a third of that figure is residential rent or residential mortgage investments.

Cerberus invested 10 billion euros in 2018 alone after acquiring a portfolio of soured real estate loans from Banco Bilbao Vizcaya Argentaria SA. The fund hasn’t disclosed the total investment it has made in Spain.

“It’s clear to all the world that that a small property owner isn’t the same as a vulture fund or a large landlord,” Iglesias said. “The decree guarantees that small property owners will receive all of the rent on their properties while large landlords and the investment funds will assume, as is normal, part of the impact of the measure by implementing reductions or restructurings for their tenants.”

The government has already announced a plan to allow homeowners whose personal finances have been affected by the measures taken to contain the Covid-19 virus to defer their mortgage payments.

To contact the reporter on this story: Charlie Devereux in Madrid at [email protected].

To contact the editors responsible for this story: Dale Crofts at [email protected]

Todd White, Rodrigo Orihuela

© 2020 Bloomberg L.P.

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