Sunday, November 29, 2015

Hanging out in Madrid: the broker-sales-pitch-slide-deck from hell

I am hanging out with friends in Madrid and they are telling stories of the bust. These are the sort of guy who try to understand bank balance sheets.

The best story though is Ciudad Real Airport - a true financial disaster south of Madrid - an international airport that never took an international flight and for which there was no obvious use.

A while back the BBC reported the airport sold at auction for 10,000 Euro - less than 0.001% of the construction cost.

And maybe that was true.

But I am in possession of a pitch deck for the airport from the days brokers thought they might recover some of the costs. It is perhaps the funniest artefact I know of the bubble.

So here is your "Strategic Airport Opportunity".

It is an "Unprecedented Opportunity to Secure Aviation Asset for US in Europe".

After all it has a power station, fire station and fuel depot and is larger than any US base in Europe.

There was "tacit government approval for a US presence" which made you wonder why a two-bit broker was selling this fine asset.

And the location was truly strategic:

It appears to be a two hour flight from lots of important places.

We are told there is Arabic interest as a royal family safe haven. It might also be a good site for potential transoceanic abort landings for the space shuttle.

Just to make this seem real Transoceanic Abort Landings has an acronym: TAL.

And just to gee-up interest we are told of other interest.

The US military was reportedly interested.

Lehman Brothers was going to buy it for $2.8 billion. Now the price is halved.

And the Arabic Royal Family will likely buy it if the US does not show interest.

It seems that Spanish Airports are like regional Chinese apartment buildings - where capital goes to die.



GB said...

Also a good place to open another VRX pharmacy!

Spaniard follower said...

Ciudad Real is not in Madrid. Ciudad Real is in Castilla la Mancha a really poor area in the middle-south of Spain. Ciudad Real knew by one refinery (Puertollano) who the owner is Repsol and it was known by cinnabar mines

Anonymous said...

Reminds me of Mirabel International Airport, which was built an hour north of Montreal (no mass transit because it is in the boondocks), with the intention to make YUL (Trudeau International in Montreal) secondary for most travellers. Huge investment and major expropriation of farmlands; beautiful, spacious, modern terminal, and totally inconvenient. It is essentially moth-balled today and the expensive terminal is to be razed (maybe it has already been). What a waste.

Unknown said...

Seems like these kind of "investments" only make sense when there is rapid growth that goes on for a long time, the old rising tide lifting all boats proverb.

But then the tide goes out and you're stuck. As bad as the NYC area airports are they've never made Stewart in Dutchess County work and it's a comparable layup!

Guess we can all be thankful that we don't have capital tied up in this. (Although I think I would pay 10,000 for it just to say I have my own private commercial scale airport in Europe.) Probably a good location for a big self-storage facility... ;-)

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