npl-reo Market News: Spanish Real Estate Intelligence

Liberbank & Bain Negotiate Finishing Touches To Portfolio Sale

19 October 2017 - Expansión

Liberbank is hoping to complete the sale of its portfolio of foreclosed assets to the fund Bain Capital within the next few days. The two entities are continuing their exclusive negotiations to put the finishing touches to the operation, which is due to be signed before the bank begins its €500 million capital increase.

Financial sources explain that the parties are finalising the terms relating to the perimeter of the portfolio. The CEO of Liberbank, Manuel Menéndez, speaking a few days ago, said that the entity will sell a maximum of €600 million in foreclosed assets to the fund.

These operations with funds tend to require significant discounts. The same sources indicate that the entity will have to recognise losses amounting to more than €100 million as a result of the sale of this portfolio, which means that the discount will exceed 55% if the perimeter is not expanded above €600 million.

Other sources familiar with the deal are not ruling out the possibility that Liberbank will start negotiating with other funds again if the conversations with Bain do not end up proving fruitful.

Original story: Expansión

Translation: Carmel Drake

Blackstone To Merge Popular & Sabadell's Hotels To Create Tourism Giant

18 October 2017 - El Confidencial

Blackstone has surprised the market once again with the purchase of the hotel company HI Partners from Banco Sabadell for €630.7 million; the operation will turn the fund into one of the major players in the Spanish tourism sector overnight. Nevertheless, this acquisition is actually just the tip of the iceberg of a much larger objective, which is directly linked to the largest real estate operation seen in Europe in recent times: the €30,000 million in toxic assets that Blackstone acquired from Santander-Popular in the summer.

That huge portfolio, comprising foreclosed properties and non-performing loans, contained €800 million linked to hotel assets, some of which Blackstone wants to use to fatten up HI Partners' portfolio, according to sources in the know. Those same sources define that move as a medium-term strategy, which will allow it to create a hotel giant, capable of competing with other large platforms such as Hispania, before debuting it on the stock market in a few years time.

Although the fund analysed its purchase of Sabadell hotels as a stand-alone operation, Blackstone’s roadmap forecasts the possible generation of synergies with its other large portfolio of hotel assets in Spain, in other words, those proceeding from Banco Popular.

As El Confidencial published, when Blackstone definitively closed the purchase of 51% of the Santander-Popular portfolio, the fund’s objective was to gradually divide it up, taking advantage of the range of vehicles that it already owns in Spain, such as the Socimis Fidere, Albirana and Corona Patrimonial, and undertake direct sales of both assets and debt portfolios.

HI Partners now forms part of that same strategy. The plan is to transfer only those hotels that comply with the group’s business model, which focuses on high category coastal hotels and very selective urban establishments. The Hilton Inn Sevilla, Gran Hotel La Toja in Pontevedra, Tamisa Golf in Mijas and Hotel Ayre in Oviedo are some of the assets that were held under the Popular umbrella.

Nevertheless, given that the bulk of this portfolio is debt whose collateral are these establishments, the transfer of the assets chosen to form part of HI Partners will have to be performed gradually, on an asset by asset basis, depending on the progress of the negotiations regarding the loan status in each case. Blackstone has time on its side since its objective with these acquisitions is to take advantage of the growth curve of the Spanish tourism sector and to do so through an asset repositioning strategy.

Management team

After selling HI Partners, along with its 14 best establishments, Sabadell will now continue with more than a dozen lower category hotels under its umbrella, which it plans to transfer gradually. All of the bank's debt secured by hotel collateral also remained inside its perimeter for the time being; until now that was being managed by the team led by Alejandro Hernández-Puértolas and Santiago Fisas, and it will probably end up being sold off through Solvia.

The HI Partners management team will continue to be linked to the hotel group even after the completion of the sale to Blackstone, once the operation has received the green light from the Competition authorities. The team will face the challenge of continuing to make the company grow by repositioning the hotels, like they have been doing since 2015, in line with Blackstone’s plans for Popular’s establishments.

Original story: El Confidencial (by R. Ugalde)

Translation: Carmel Drake

Blackstone & Apollo Vie For BBVA's Remaining RE

18 October 2017 - Expansión

BBVA’s real estate portfolio is sparking a lot of interest in the market. The bank is holding exclusive negotiations with Cerberus to sell its real estate manager Anida along with around €4,000 million in foreclosed assets and non-performing real estate loans. But, other investment funds do not want to miss out on the assets that they consider to be juicy and so are setting their sights on the rest of the portfolio.

Financial sources indicate that other funds, such as Apollo and Blackstone, have expressed their interest in the loans and assets linked to the property that do not end up being included in the perimeter of the portfolio sold to Cerberus. BBVA has a gross exposure to the real estate sector in Spain of €20,190 million, and so Cerberus will be acquiring around 20% of the total. The entity currently has a coverage ratio of 57% over its real estate exposure after recognising provisions amounting to €11,431 million in total, according to data as at June, the date of the most recent audited accounts. Moreover, according to sources familiar with the deal, during the negotiations, Cerberus has communicated to BBVA its intention to purchase more than the aforementioned €4,000 million in doubtful loans and foreclosed assets.

Advanced phase

The conversations with Cerberus began before the summer and are now in a very advanced phase. The operation is expected to close before the end of the year, explain sources in the sector.

BBVA’s real estate activity is grouped around Anida. The bank is one of the few entities that retained full control over its real estate business. During the crisis, several banks sold their managers to specialist funds to accelerate the divestment of their problem assets. BBVA’s plans now involve the deconsolidation of its real estate risk.

Some of the sources indicate that Cerberus decided to bid aggressively to acquire Anida after failing to get past the first round of the bidding for Popular’s toxic real estate. Its desire is so great that even the most senior figure at the firm, John Snow, met with the President of BBVA, Francisco González, to make their interest clear. In fact, Cerberus is hoping to acquire 100% of Anida, according to sources in the sector.

More than a dozen large international funds are currently buying real estate assets and loans in Spain. They include Blackstone, which reached an agreement with Santander to acquire 51% of the company created for shelving Popular’s problem assets. Meanwhile, Bain Capital is holding exclusive negotiations with Liberbank to purchase a portfolio of property worth €700 million.

Original story: Expansión (by R. Ruiz and R. Sampedro)

Translation: Carmel Drake