UK pension fund manager Pearl Group is set to complete the biggest European real estate deal of the year with the E2bn (£1.4bn) purchase of more than a thousand properties owned by Spanish bank Santander.

Pearl, led by entrepreneur Hugh Osmond has entered into an exclusivity period to buy Lot 5 – a portfolio of 1,173 properties, consisting predominantly of high-street banks.

The portfolio generates a yearly rental income of approximately E101m (£72m), reflecting a yield of about 5%.


Osmond and Pearl are also poised to purchase its rival in insurance, Resolution, for £4.98bn, following the collapse of a bid by Standard Life.

The portfolio forms the largest of five property packages placed on the market by the bank in the summer to help fund its joint bid with Bank of Scotland and Fortis for Dutch bank ABN Amro.

The total value placed on all-five lots was E4bn (£2.87bn).

The lots initially received numerous bids over the course of the sale process, including bids for the entire portfolio, however the credit crunch reduced bidding numbers considerably and by October those bidding on all the properties either reduced their bids or joined forces opting to cherry-pick preferred assets.

Warmly received

The sale will be warmly received by a European investment market that has seen little in the way of large transactions, particularly since the liquidity crisis.

A sale means that Santander will be left with Lot 1 - the bank’s headquarter scheme on the outskirts of Madrid – left to sell.

Last month, Zara-owner Pontegadea agreed to pay E500m (£359m) for Lots 2-4 which consists of 11 large commercial properties across nine cities.

The deal is said to have reflected a yield of less than 5%.

None of the parties involved in sale would comment.