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Bankia Finalises Sale of its Largest Toxic Asset Portfolio to Lone Star

14 December 2018 – El Confidencial

Bankia is finalising the sale of the largest portfolio of problem assets in its history. The nationalised entity is holding exclusive negotiations with the US fund Lone Star for the sale of projects Earth and October, according to financial sources consulted by El Confidencial. Sources at Bankia have confirmed those conversations through a relevant event submitted to Spain’s National Securities and Market Commission (CNMV) and have said that “once the negotiations have been concluded, the market will be informed about them in detail”.

This macro-sale includes unpaid mortgage loans and properties worth around €3 billion. The negotiations are in a very advanced stage and the operation could be signed before the end of the year. The price could reach €1 billion, according to the average prices being paid in the market at the moment.

The group chaired by José Ignacio Goirigolzarri has sold these macro-portfolios taking advantage of the surplus liquidity in the market and the appetite from large funds for buying Spanish property. With this sale, the nationalised group will end 2018 with problem assets sold worth more than €5.5 billion – by September, it had sold €2.4 billion – almost doubling the annual divestment objective of €2.9 billion.

Lone Star has competed in this process head to head against Blackstone, which in recent weeks has lost the battle for the two portfolios to its US rival. The fund has redoubled its commitment to Spain after the changes that it underwent at the beginning of the year, with the departure of Juan Pepa and Felipe Morenés. These two executives led Lone Star during its purchase of Neinor and of the portfolio of large loans from Eurohypo in Spain.

Following those divestments and the raising of new funds, the fund is now betting on Spanish property again through its team in London. Bankia’s portfolio will be the second major operation after its purchase of a large proportion of CaixaBank’s assets and that entity’s platform Servihabitat.

Original story: El Confidencial (by Jorge Zuloaga)

Translation: Carmel Drake