33
11
122
88
36
191
96
107
108
52

npl-reo Market News: Spanish Real Estate Intelligence

Cerberus & Lindorff Compete for Bankia-BMN's RE Business

14 February 2018 - Real Estate Press

Bankia has started talks with Haya Real Estate (Cerberus) and Aktua (Lindorff) to award the management of all of the real estate assets that it has incorporated into its portfolio following its merger with BMN (…), according to sources in the know. Bankia has been working with Haya since 2013 and BMN with Aktua, the former real estate arm of Banesto, since 2014.

The same financial sources indicate that Bankia is now in a stronger position to improve the conditions of its contract in light of the good times being enjoyed in the real estate sector. Although the technological integration of the two entities will not take place until 19 March, the authorities already approved the merger at the end of December.

In 2013, the entity chaired by José Ignacio Goirigolzarri awarded the business to manage and sell around €12.2 billion gross in real estate assets to Cerberus. That agreement comes to an end at the beginning of 2023. Haya Real Estate, the Spanish subsidiary of the US fund Cerberus, has become a major player in the real estate market in recent years. It manages debt and assets worth almost €40 billion and has engaged Rothschild to handle its upcoming stock market debut later this year. It also holds agreements with Sareb, BBVA, Cajamar and Liberbank.

In its failed attempt to go public, BMN got rid of its property manager Inmare in 2014 to focus on the traditional business. It then signed a 10-year agreement with Aktua.

Subsequently, the Norwegian fund Lindorff purchased Aktua in 2016. That company also manages the real estate assets of Ibercaja, amongst other entities.

Cerberus and Lindorff are re-enacting the battle fought last summer. Then, the funds were bidding to acquire the real estate subsidiary of Liberbank, Mihabitans. In the end, the US won those negotiations and was awarded the contract to manage Liberbank’s foreclosed assets for the next seven years.

Original story: Real Estate Press

Translation: Carmel Drake

 
A&M: Spain's Top 5 Banks Cut Their Toxic Assets to Below €100bn

18 February 2018 - Voz Pópuli

Good news for the banks. The heavy burden of recent years, their exposure to real estate, is causing less concern, little by little. The work undertaken over the last year has allowed the large institutions to reduce their volume of problem assets (doubtful and foreclosed loans) to less than €100 billion.

That is according to the findings of a report from the consultancy firm Alvarez & Marsal based on figures at the end of 2017: the five largest banks (Santander, BBVA, CaixaBank, Sabadell and Bankia) decreased their toxic assets from €145 billion to €106 billion. That calculation does include the transfer of €30 billion from Popular to Blackstone – which will be completed within the next few weeks, - but not the sale of €13 billion from BBVA to Cerberus.

Taking into account the latter operation, the level of toxic assets held by the five largest banks amounts to €93 billion, having decreased by 36% since 2016. Those figures do not include exposure to other entities that also made significant efforts in this regard during 2017, such as Liberbank.

According to the report, after all of the events of last year, CaixaBank is the entity that now has the largest volume of problem assets on its balance sheet, with €27 billion. The group chaired by Jordi Gual has engaged KPMG to undertake a large divestment of its foreclosed assets, but that it is taking longer than expected.

The second-placed entity in the ranking is Santander, with an exposure of €25 billion, which in net terms (after provisions) amounts to €13 billion. Its CEO, José Antonio Álvarez, announced a few months ago that he expects to divest around €6 billion this year.

The third bank in the ranking is BBVA, with €21 billion, before the sale of €13 billion to Cerberus. Once that operation has been closed (scheduled for the end of the first half of this year), it will be the most healthy entity, with the highest levels of coverage.

Plans underway

Sabadell is another of the entities that has made the greatest efforts to liquidate its property in recent months. It decreased its balance from €19 billion to €15 billion in 2017 and is planning big sales this year, provided it receives approval from the Deposit Guarantee Fund.

Meanwhile, Bankia has actually increased its exposure, by integrating BMN, although it will not reveal its plans in this regard until it unveils its next strategic plan (at the end of this month).

The bulk of the work in the sector has now been completed. Nevertheless, the home straight still remains, which is what will be tackled this year, to a large extent. With this, the banks will be able to turn the page and dedicate their resources to granting credit rather than to covering past losses.

Original story: Voz Pópuli (by Jorge Zuloaga)

Translation: Carmel Drake

 
Cerberus Prepares for Haya's Stock Market Debut After the Summer

9 February 2018 - Cinco Días

Metrovacesa achieved it on Tuesday, despite problems to cover supply and the nefarious stock market session that it suffered. The large Spanish property developer, which abandoned the equity market in May 2013, made its return last week. It hasn't exactly eased the way for the upcoming debuts of Vía Célere, owned by the fund Värde, or the Socimi Testa. But it hasn’t made a total hash of it either.

In this way, the US fund Cerberus is in the process of contracting the banks that will handle the debut its Spanish real estate servicer subsidiary on the stock market. The aim is for that firm to be listed from September. The entities that are on the list of candidates have already done their calculations and are citing a valuation for the company, albeit preliminary, of around €1.2 billion. The aim is to place between 35% and 50% of Haya Real Estate’s capital at this stage. A spokesman for the company declined to comment on this information.

The company, which was created in October 2013, manages property developer loans and foreclosed real estate assets from Bankia, Sareb, Cajamar, Liberbank, BBVA and other financial institutions, worth €39.88 billion at the end of September 2017.

The process of going public is the logical next step, after Haya placed €475 million in high yield bonds in November, with ratings of B3 (Moody’s) and B- (S&P). In other words, in the junk bond range, six levels below investment grade.

The underwriters of that debt, which matures in 2022, were Santander, Bankia, JP Morgan and Morgan Stanley. And they sold it with considerable success. Despite its credit rating, the firm pays an annual return of just over 5% for that liability.

Haya, led by Carlos Abad Rico (formerly of Canal + and Sogecable) offers services across the whole real estate value chain, but it is not a property developer. Rather, it manages, administers, securitises (…) and sells real estate assets such as homes and offices, but it does not own any of the properties.

Bankia Habitat was the seedling of Haya, and it has grown in line with the need by the financial sector to get rid of assets linked to property. One of Haya’s key businesses is the management of loans linked to the real estate sector. It advises on loans and guarantees, recovers debt and converts loans into foreclosed real estate assets.

The other major part of its revenues stems from the recovery and management of properties through their sale or rental. Haya employs 680 professionals and has a sales network of 2,400 brokers. The value of its property developer debt portfolio amounts to €28.7 billion and its real estate asset portfolio amounts to €11.2 billion. Moreover, Haya is going to bid to manage the assets sold by BBVA to Cerberus in November. Haya’s current shareholder acquired 80% of the BBVA’s portfolio of real estate assets, amounting to around €13 billion, for €4 billion (…)

Consolidation

The Spanish banks' other real estate management companies are waiting for Cerberus to make the first move, according to financial sources. Haya will open the door to the stock market for them if everything goes well or it will serve to consolidate the sector, both here and in Europe.

There are three high profile players on the list. Servihabitat, which manages assets amounting to around €50 billion and which belongs to the fund Texas Pacific Group (TPG), which has held a 51% stake since September 2013, when CaixaBank sold it that percentage; the bank still holds onto the remaining 49%. Altamira, owned by Santander (15%) and the fund Apollo (85%), which also handles assets worth around €50 million in Spain. The volume managed by Solvia, owned by Sabadell, amounts to around €31 billion.

Moody’s warns that the business of Haya Real Estate, the largest company in the sector in Spain, depends on the economic performance of the company and the renewal of its current management contracts. Specifically, one of the most important, with Sareb (…), signed in 2013, is due to expire in December next year.

In terms of its strengths, the ratings agency indicates Haya's extensive knowledge of the market and its high margins. The firm's gross operating profit (EBITDA) during the first nine months of last year amounted to €89.8 million, with net income (the amount really invoiced by the company) of €165.8 million.

Original story: Cinco Días (by Pablo Martín Simón and Laura Salces)

Translation: Carmel Drake