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Project Buffalo: BBVA Puts 4,000 Homes Up For Sale

16 November 2016 – Voz Populí

BBVA is stepping on the gas with the sale of its real estate assets. In recent weeks, the entity chaired by Francisco González (pictured above) has put up for sale its largest real estate portfolio since the outbreak of the crisis. The portfolio in question, known as Project Buffalo, contains around 4,000 homes worth between €300 million and €400 million, which the entity hopes to sell to international funds, according to financial sources.

The Spanish group is still one of the entities most weighed down by the property on its balance sheet, which amounts to €22,700 million, according to its results as at September 2016. €6,000 million of that figure relates to unpaid loans (doubtful and sub-standard credits) and almost €15,000 million corresponds to foreclosed assets. Even though it has a high coverage ratio (51%), BBVA has made a commitment to having an “immaterial” real estate exposure by 2018, according to its CEO, Carlos Torres.

Alongside this promise to investors, BBVA, like all of the other entities, needs to get rid of its real estate as soon as possible in order to make its business profitable again. (…). The bank chaired by González lost €315 million due to the Spanish property sector during the first nine months of this year, down by 24% compared to a year earlier.

In this context, “the strategy is to sell this exposure as quickly as possible, provided we do not destroy any value”, said Torres, speaking a few weeks ago. And for this reason, the entity has launched Project Buffalo.

This portfolio is the third largest, containing foreclosed properties, to be launched by a Spanish bank in recent years. The largest portfolio, Project Big Bang, was launched by Bankia and contained almost 40,000 homes worth €4,800 million, but in the end it was withdrawn after negotiations with Cerberus and Oaktree broke down. Subsequently, Sabadell sold 4,500 rental homes, worth €600 million, to Blackstone.

Now it is BBVA’s turn to whet the appetitive of the large international investors. Cerberus, Oaktree and Blackstone are all expected to study the operation, as well as Apollo, owner of 85% of Altamira and the purchaser of a small portfolio of homes from BMN last year; and Bain Capital (Sankaty), which acquired 2,500 properties worth around €350 million from Bankia a few months ago.

Project Buffalo is the sixth portfolio that BBVA has launched in the market this year, as part of a new drive from the new leader of the area, Javier Rodrígeuz Soler, Director of Strategy and M&A. He has taken over this role following Pedro Urresti’s move to HSBC.

The other portfolios include Project Vermont, containing €100 million of unpaid loans to property developers; Project Boston, with 16 offices buildings located in Madrid, Barcelona and Valencia; Project Coliseum, whereby BBVA sold its consumer business to Link Financial for €100 million; Project Detroit, with 441 warehouses and industrial plots of land; and Project Rentabliza, for the sale of real estate developments.

Original story: Voz Populí (by Jorge Zuloaga)

Translation: Carmel Drake