Metrovacesa eyes London, German expansion

By Elena Moya and William Kemble-Diaz

LONDON (Reuters) - Spanish property firm Metrovacesa (MVC.MC: Quote, Profile, Research, Stock Buzz) said on Monday it planned to accumulate assets in London and Germany as it sought to become a pan-European company and to diversify away from its domestic market.

"Our objective is to be one of the leading property companies in Europe," Jesus Garcia de Ponga, Metrovacesa's deputy chairman, said at the Reuters Real Estate summit via a conference call from Madrid. "If you want to be a big company, Spain isn't big enough anymore."

Metrovacesa is due to host a meeting on Thursday at which shareholders are expected to approve the company's split into two separate, largely Spanish or French entities after a long-running spat between leading shareholder groups.

Garcia said Metrovacesa, which bought HSBC's (HSBA.L: Quote, Profile, Research, Stock Buzz) London headquarters in Canary Wharf in a record 1.1 billion pound ($2.20 billion) sale-and-leaseback in April, said it was one of several bidders for a major office development in the City of London -- a deal which could be announced before year-end.

"We are studying the development of offices in the UK," Garcia said, adding the development was unlikely to be on the same scale as the HSBC deal, which had enabled it to establish a beachhead in Britain.

"That operation helped us to enter the UK market -- it allowed us to get to know the market and to show our commitment," he added. "We now have a position."

The City of London project, which may include an underground shopping centre, would be developed with a partner, if it won, Garcia said, declining to give more details.

The Spanish company, which also has assets in France, was confident the buoyant London economy would continue growing on the back of its position as a global financial centre and with an extra lift from the 2012 Olympic Games, Garcia said.

"London still offers value," he said. "Yes, it's expensive, but there are great expectations."

Metrovacesa was also planning to expand in Germany. "A European company has to be present in Germany," he said.

Garcia said Metrovacesa wanted to diversify its real estate holdings to lower its risk profile but said it was not motivated by widely aired concerns about the fragile state of the Spanish real estate market -- especially housing.

"I do not think there will be a crisis but a certain cooling down of demand like we are seeing," he said. "Some micromarkets which do not offer quality will suffer and things which are well done will continue normally or well and are still selling."