€1.8M Finance for a Spanish Villa Acquired Through a Company Share Purchase

A Middle East-based senior executive approached Enness Global seeking approximately €1.8m in finance to acquire a luxury villa on Spain's Costa del Sol. The client had agreed terms on a refurbished property intended for use as a second home. However, rather than purchasing the villa directly, the client planned to acquire the Spanish company that owned it.

This presented a more complicated financing requirement than a conventional overseas property purchase. Most Spanish mortgage lenders are accustomed to lending against properties purchased directly by individuals. In this case, the property would remain registered to the existing Spanish company, while the client would acquire ownership through a share purchase.

The distinction matters because financing the acquisition of shares in a property-owning company is not the same as arranging a mortgage to purchase the underlying property. There were two additional complications. The villa had undergone substantial refurbishment and extension works, but the Spanish Land Registry still reflected the property's original, smaller configuration. The company also had an existing mortgage that would need to be addressed as part of the acquisition.

The challenge was not simply finding a lender prepared to advance €1.8m. It was identifying a financing structure that could accommodate the share purchase, the existing company debt and the property's registration position.

Rather than approaching conventional Spanish mortgage lenders, we focused on private banks with the capacity to assess more complex international borrowing arrangements.

The client's financial circumstances were an important part of this approach. As a senior international executive, the client's income was derived from several sources, including employment income and rental income from overseas property. Their wider assets included investments and residential property across multiple jurisdictions. This provided a broader financial picture than the Spanish villa alone.

Private banks can sometimes consider a client's overall wealth, income and existing assets when assessing lending proposals, rather than relying exclusively on the property being acquired. Enness Global explores these types of requirements through its private bank mortgage relationships and wider international finance network.

However, the client's financial strength did not remove the legal and structural challenges associated with the transaction. Before seeking indicative terms, we concentrated on three areas:

• Legal and security structure: Independent Spanish legal counsel was engaged to establish how a proposed financing arrangement could be structured and what security, if any, could lawfully be granted in connection with the share acquisition.
• Property registration: We requested that the seller address the discrepancy between the villa's current configuration and its Land Registry description before completion.
• Existing company borrowing: We sought full details of the company's outstanding mortgage to understand how that debt would need to be treated within the proposed transaction.

We also considered the currency exposure from the outset. The client's income was denominated in a different currency from the proposed euro borrowing, creating potential exchange rate risk. If exchange rates move unfavourably, the cost of repayments in the client's income currency could increase.

With these considerations identified, we began exploring indicative financing terms with a shortlist of private banks. The objective was to establish whether a lender could accommodate a company share purchase involving a Spanish residential property, at approximately 65% loan-to-value, and what legal, security and financial conditions would need to be satisfied.

The transaction remains live, with indicative terms being explored through selected private banking lenders. No financing offer, completion or final lending outcome is being claimed at this stage.

The work undertaken has focused on presenting the transaction in a form that prospective lenders can assess, with the client's financial profile, proposed acquisition structure, property registration position and existing company borrowing clearly identified.

This case illustrates why financing a company-owned property in Spain can require a different approach from a standard overseas mortgage. Where the acquisition involves shares rather than a direct property transfer, the legal structure and available security can be just as important as the borrower's financial position.

As Toby Johncox, Group Managing Director at Enness Global, explains, the first consideration in a transaction of this nature is whether a lender can support the proposed acquisition structure, rather than simply how much the client may be able to borrow.

Financing may be available for the acquisition of shares in a Spanish company that owns residential property, although this is generally more complex than obtaining a conventional Spanish mortgage. Lenders will typically need to understand the company's ownership structure, existing liabilities, the underlying property's legal position and the security available for the proposed borrowing.

For internationally based, high-net-worth borrowers, private banking may provide an alternative route worth exploring, depending on the client's financial circumstances and the lender's appetite for the transaction.

Enness Global works with international clients seeking finance for complex overseas property acquisitions, including transactions involving corporate ownership structures and multiple sources of income. You can learn more about our international mortgage and finance solutions or explore our experience with company-owned property finance.

Speak to our international mortgage specialists to discuss the financing options that may be available for your circumstances.