Global private equity firm, The Carlyle Group has bought the Telefonica headquarters in Barcelona for €220m (£149m) in a sale and leaseback deal.

The building called Edificio Estel is located in the centre of the Eixample district and is within walking distance to Sants, the high speed train station that will link Barcelona to Madrid. Telefonica will lease the building for the next three years after which it will be redeveloped into a 38,000 sq m residential building.The redevelopment will also include 350 new apartments, 4,000 sq m of commercial space and underground car parking.

It the Carlyle Group’s latest investment in Barcelona following it purchase of a plot of land in the 22@District. Rachel Lupiani, associate director at The Carlyle Group, said: ‘We believe the residential market to be very strong in Barcelona and the location is ideal.’

Carlyle is investing in this project through its second €760m European real estate fund, Carlyle Europe Real Estate Partners II. The fund closed in September 2005 and is 97% invested and committed