• Transaction / Assets
  • Seller
  • Buyer
  • € MM

Bankia Sells Hotel Loan Portfolio To BofA & Hedge Fund

5 June 2015 – Expansión

Project Castle / Following the sale of Realia, Bankia has now made profits of €926 million from the transfer of its investments.

Yesterday, Bankia closed the first sale of a loan portfolio since the regional and local elections, which have been threatening to destabilise the market. Far from that, the entity has managed to attract a US hedge fund (to the market), which has not closed any deals in Spain until now, namely: Davidson Kempner Capital Management (DK Capital).

This fund and Bank of America (BofA) have won the auction for Project Castle against other large international investors. This portfolio, whose sale has been advised by N+1 and the law firm Ramón y Cajal, comprises hotel loans worth €383 million. In total, the portfolio contains 91 loans linked to 45 properties of this type.

Bank of America will take ownership of the performing loans and DK Capital the doubtful loans. These types of hedge fund are renowned for carrying out aggressive restructurings of loans to take ownership of the assets and, subsequently sell them at a profit.

Optimisation

Sources at Bankia highlight that the transaction: frees up resources for the granting of new credit; increases the bank’s liquidity; and contributes to an improvement in the quality of the assets. Moreover, it will have a positive impact on capital (at the height of the Basel III implementation) amounting to €21 million.

As well as Project Castle, Bankia is also advancing with Project Big Bang, containing €4,800 million foreclosed assets for sale; and Project Wind, with €1,300 million doubtful loans, primarily mortgages to individuals.

These divestments come after Bankia sold its 24.9% stake in Realia to Carlos Slim on Wednesday. Bankia has now made profits of around €926 million on the sale of all of its investments in listed companies, such as Iberdrola, Mapfre, Deoleo and NH Hoteles.

The transactions closed since 2013 have generated revenues for the entity of €4,879 million, according to the company’s own data.

Having exited as a shareholder of Realia, Bankia now only retains minor industrial holdings, such as in the infrastructure concession group Globalvía, in which it holds a 50% stake alongside FCC, although these two shareholders are expected to close the sale of that company to the Malaysian sovereign fund during the course of this year.

Original story: Expansión (by J. Z.)

Translation: Carmel Drake

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