Telefonica SA, Europe’s most indebted telephone company, is reviving a plan to sell its Madrid headquarters five years after failing to find a buyer for the buildings, according to five people familiar with the matter.

The complex, known as Distrito Telefonica and opened at the height of Spain’s property boom in 2008, is valued at about 1 billion euros ($1.3 billion), said one of the people, asking not to be identified because the deliberations are private. Telefonica may lease back as much as 90 percent of the project’s space, including its iconic glass towers, another person said.

Finding a buyer this time won’t be easier after investment in Spain’s commercial property market dried up because of the credit crisis. Distrito Telefonica was valued at almost 2 billion euros in 2008 at the peak of Spain’s decade-long property rally, one of the people said. Since then, the country’s real estate industry has collapsed, contributing to an economic slump that’s caused unemployment to breach 27 percent.

“As property prices kept climbing, the real value of those assets was higher than the actual value in their books, which helped companies borrow more and at cheaper rates,” said Antonio Diaz, director of the Nebrija Business School in Madrid. “Since the bubble burst, those assets have turned into a serious threat to those companies’ financial accounts.”

A Telefonica representative declined to comment on any potential sale of the company’s real estate.

Nursery, Gym

About 12,000 people work at Telefonica’s headquarters in Las Tablas on the outskirts of Madrid, which was opened by the King and Queen of Spain in October 2008.

The complex, comprising 16 buildings with about 400,000 square meters (4.3 million square feet) of combined space, was designed by local architect Rafael de La-Hoz. The structures resemble a group of ice blocks because of glass panels that have a total surface area of 60,000 square meters, according to Arup, an engineering company that advised on the property’s construction.

Distrito Telefonica has 6,000 parking spots, restaurants, a gym, a nursery and its own subway station, according to the architect’s website.

Telefonica and Banco Santander SA, the country’s biggest bank, moved their headquarters to Madrid’s outskirts from the city center during the property boom as prices for offices in prime locations surged. At the same time, companies were able to move employees scattered around the city to one complex.

As the country grapples with record unemployment, spending on real estate has slumped. Investment in Spanish commercial property dropped 45 percent to 1.81 billion euros in 2012, according to a January report by Deloitte LLP.

Nokia’s Sale

Telefonica isn’t alone in trying to recoup some of its property investments. Nokia Oyj, once the world’s largest manufacturer of mobile phones, in December sold its headquarters — a 48,000 square-meter glass building overlooking a lake in Espoo, Finland — for 170 million euros to Exilion Capital and started a long-term lease.

Telefonica Chief Executive Officer Cesar Alierta last year sold assets including its call-center business Atento and holdings in Germany and China, reversing a decade-long strategy based on acquisitions. The phone company, whose net debt reached 51.3 billion euros at the end of 2012, sold a 40 percent stake in its Central American assets last month. It has a target to cut 4.3 billion euros in net debt this year.

Telefonica plans to sell shares of its Colombian division as early as this year, people familiar with the matter said last month. Other assets on a list of potential businesses for sale include the company’s Irish and Czech divisions, as well as a minority stake in China Unicom (Hong Kong) Ltd., people familiar with the matter have said.

(Source: Bloomberg)