(Repeats story first published Feb. 13, text unchanged)
* Spanish real estate investment trusts taking off
* Azora to raise up to 500 mln euro in REIT - sources
* Grupo Lar also launching fundraising - prospectus
By Sarah White and Jose Elías Rodríguez
MADRID, Feb 13 Two Spanish firms are approaching investors to raise up to 900 million euros ($1.2 billion) for listed property funds, a type of vehicle that is taking off as more foreign investors pile into the country in search of real estate bargains.
Six years into a property market slump, buyers are starting to clinch more deals for distressed assets as banks clean up their books and prices come closer to bottoming out after falling around 40 percent from their peak.
That is encouraging funds to try out investment paths that have been rare in Spain until now, including through real estate investment trusts or REITS - listed vehicles that typically invest in income-producing assets, such as rental properties.
Private investment firm Azora is close to launching a fundraising drive for a vehicle of this type and aims to bring in up to 500 million euros ($683.3 million) from investors, two sources with knowledge of the plans said.
It has hired Goldman Sachs and UBS to market the listed fund, which will be known as Hispania, the sources said.
Azora declined to comment.
It will follow a similar move by family-owned real estate company Grupo Lar, which on Thursday published a prospectus for a listed property vehicle of up to 400 million euros, which will be placed among investors by JPMorgan.
The deals mark the biggest fundraising push of its kind to date, as Spain only has a handful of smaller REITs - or SOCIMIs in Spanish - which are not listed on the main stock exchange.
An overhaul of Spain's rigid rental laws last year has partly opened the door to these vehicles, officially introduced five years ago. The government made rental contracts shorter and made it easier for landlords to evict non-paying tenants, making the market more attractive for investors.
At present only about 17 percent of Spaniards live in rental homes, much lower than the European average of 30 percent.
REITS have taken off recently in other European countries such as Ireland, which also suffered a property market collapse and is seeking to attract foreign investors back to the country. The vehicles carry tax advantages and attractive returns.
"We've looked at these kind of things in Ireland before," said a London-based investor who had been approached for the Grupo Lar and Azora vehicles and said his fund would likely participate in the fundraisings.
"These types of listed real estate cash boxes usually give returns of around 10 percent," he said, adding they could be used in Spain to invest in everything from hotels to commercial properties and real estate being sold by Sareb - a government-backed 'bad bank' set up to house 51 billion euros of soured property assets taken off bailed-out banks.
Foreign investors, including many U.S. funds specialised in distressed real estate, have started to notch up acquisitions in Spain in recent months. These were elusive in the early years of the property slump as buyers struggled to agree on prices with banks selling their foreclosed assets and wary of making losses.
Spain's government forced banks to take hefty provisions against such losses in 2012, helping to ease deals, while Sareb last year began to offload portfolios of properties or debt to investors such as private equity group H.I.G Capital and U.S. investment firm Fortress.
Grupo Lar has also bought properties off Sareb, while Azora teamed up with Goldman Sachs last year to buy a package of 3,000 Spanish residential flats from the regional government of Madrid, for about 200 million euros.
Foreign banks are also making a push to sell soured Spanish property. Germany's Commerzbank has hired Lazard to sell a portfolio of around 4.3 billion euros in performing and non-performing real estate loans, one of the biggest of its kind on the market so far.
($1 = 0.7317 euros) (Additional reporting by Robert Hetz; Editing by Gareth Jones)