— Billy Gridley FR’75, Trustee
Chair, Finance Committee
Member, SYA Spain Ad Hoc Real Estate Working Group
“Although owning our own space in Zaragoza has long been a key goal, two factors kept us from making any headway: the difficulty of finding the right space in the right location, and the high price of real estate in Spain. Nevertheless, early in 2009, anticipating a Board of Trustees meeting in Zaragoza in March of 2009, the Board formed a facilities committee to begin anew and in earnest the search for a suitable property.
“Of the several properties that were identified in this search, Paseo de Pamplona kept returning to the top of the list. The size—425 square meters—was made to order; the location was perfect; and the building itself had the emblematic character we were looking for. But the price—€1,800,000—was an obstacle. So our facilities committee kept up the search, but mostly kept an eye on the Paseo de Pamplona property. “In June of last year, BBVA, the major bank which owns the property and had, in the past, used it for office space, included it in a nationwide auction of bank-owned real estate, and invited SYA to bid. Reviewing the auction procedures and uncovering a reserve price of €1,600,000, we quietly demurred. After the property failed to sell at the auction, we reiterated our interest in purchasing the property—but only at the right price—and a protracted negotiation began. Meanwhile, our committee undertook to sort out the legal and practical issues involved in the potential purchase. By late 2009, SYA had a green light on all the legal issues, and in late February 2010, a deal was struck with the owner at €1,250,000.
“Two other factors have worked in our favor: first, the euro/dollar exchange rate began moving our way early this year and second, our legal research indicated that SYA’s registered nonprofit entity in Spain would not be required to pay the standard 7% property transfer tax. As a result, the estimated total cost of the purchase plus renovation of the space now stands at $1,950,000; very close to the lowest all-in price we thought possible just several months ago.
“What this means is that SYA is getting very good value for its money today, and very good value for the future. Owning our school will reduce the annual operating costs in Spain by $100,000, and ensure low and predictable operating costs in Spain for the foreseeable future. On top of that, SYA will be holding an asset that is not only a testament to its commitment to Spain, to Zaragoza and to providing the best possible facilities for our students, but also one that will also be a cornerstone of SYA’s financial solidity.”