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npl-reo Market News: Spanish Real Estate Intelligence

Lone Star & Cerberus Increase their Commitment to Spanish Property

21 February 2019 - Expansión

The need for the banks to reduce their exposure to property and the funds’ appetite for the Spanish real estate sector have converged in recent years leading to the transfer of portfolios of debt and foreclosed assets worth millions of euros. Blackstone, Cerberus, Lone Star, the Canadian pension fund (CPPIB), Bain, Axactor and Lindorff are the funds that have been behind most of the major transactions involving portfolios of bank debt secured by real estate collateral during that period.

Emilio Portes, Director of Quantitative & Risk Management at JLL for Southern Europe, said that, following a frantic 2017 when more than €55 billion was transacted, last year saw portfolios sold with a gross value of more than €45 billion (…).

In 2018, the indisputable star was Lone Star, which took control of a portfolio worth around €12.8 billion from CaixaBank. Specifically, CaixaBank sold that portfolio along with Servihabitat to a company called Coral Homes in which Lone Star owns an 80% stake. Cerberus was also active last year with the purchase of several portfolios from Sabadell, Santander and CaixaBank with a total gross value of €12.5 billion. Behind it, came CPPIB, Axactor, D.E. Shaw and Lindorff, according to data provided by JLL.

“The sum of the transactions recorded over the last two years exceeds €100 billion, which places Spain as one of the countries with the largest transaction volume in Europe and the most liquid in terms of real transactions”, says Portes. In those portfolios, there are various types of assets, mainly residential, but also land, offices, premises and hotels.

The year ahead

During 2019, the banks will continue to divest assets, although with smaller portfolio sales. “In 2019, we expect a transaction volume of €20 billion, in addition to whatever Sareb ends up doing”, revealed Portes. He explains that most of the large Spanish banks have now reduced their NPA (non-performing asset) ratios to below 5%.

Following the activity undertaken by the large banks, all eyes are now focused on the medium and small-sized entities, particularly those with the greatest property exposure and therefore most pressure, as well as on Sareb, which has assets worth more than €35 billion still left to sell (…).

The heirs of the banks’ property, having purchased at significant discounts, have an average investment horizon of five years before they undo their positions (…)

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

 
Cerberus Starts to Value the 160,000 Assets it has Acquired in Spain Ahead of their Sale

19 February 2019 - Voz Pópuli

Last year, the giant Cerberus strengthened its team with the appointment of the former JLL director Maurice Kelly as its Vice-president of Real Estate in Spain. The professional has become a key person for the fund, given that he is now responsible for meeting with the real estate consultancies regarding the valuation of the 160,000 assets that the investment giant has acquired in recent years in Spain, according to financial sources consulted by Vozpópuli.

Its haul also includes assets acquired in the Apple Portfolio from Santander, a sale that was negotiated in 2018 and which is expected to close between February and March. Moreover, that figure could increase during the coming months due to the great activity that there is in the market at the moment.

The fund wants to generate value from everything that it has purchased from the banks through large portfolios and has now spotted a window to put its acquisitions on the market from April onwards and over the next two or three years. Similarly, the fund is constantly rotating the assets that it acquires and assessing everything that it purchases for its subsequent placement on the market.

New portfolios

The first sale strategy involves the placement of new portfolios, of medium sizes, ranging between €100 million and €200 million, and will be distributed amongst medium-sized funds, above all those from the UK, Ireland and the Netherlands (…).

Another way to sell is through operations involving “unique assets”. In other words, buildings that have added valued and that may be of interest to a private investor or family office. The price of those would be over €50 million.

Finally, the most typical approach will see it sell portfolios of homes, in groups of more or less 500 units, for between €10 million and €20 million apiece.

The valuation of those 160,000 assets is included within the Cerberus European Servicing division and the placement of them is not going to be easy, given that “the fund has purchased a lot” and has “things” that even it does not know about. “It has picked up a lot of parking spaces and assets of that kind that are going to be very difficult for it to place”, warned the sources.

A taste for Spain

Cerberus has invested more than €10 billion in Spain in total and now wants to operate new lines of business such as rental and logistics. It is also planning to multiply its property development activity three-fold by purchasing more land and following its acquisition of Inmoglaciar (…).

Cerberus entered the Spanish market at the height of the financial crisis (between 2010 and 2012) with the aim of taking over banks and real estate firms, like it did in other countries. The former did not work out well following several attempts with former savings banks. But its conquest of property has proved a lot more successful.

Its next acquisition could be the property developer Solvia Desarrollo Inmobiliario (SDIN) from Banco Sabadell, which has put land worth more than €1 billion up for sale. The bid for those assets has already started and financial sources say that the fund has expressed interest in them.

Original story: Voz Pópuli (by David Cabrera)

Translation: Carmel Drake

 
Haya to Sell €188M in Secured Loans from Sareb

19 February 2019 - Expansión

Yesterday, Haya Real Estate put up for sale a package of non-performing loans (NPLs) with real estate guarantees, owned by Sareb, worth €188 million. The portfolio, baptised Project Marconi, comprises loans with an average value of €5.7 million, which are backed by around 1,445 properties.

Original story: Expansión

Translation: Carmel Drake