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Goldman Closing Bankia Real Estate Fund Buyout

11/11/2014 – Expansion

The real estate fund of Bankia will change hands pretty soon. Investment bank Goldman Sachs is found in the final negotiations phase of the sale of the €300 million in properties of the nationalized group with majority stemming from vehicle Bankia Inmobiliario.

The operation, called Project Lake, has been initiated at the beginning of summer and also funds like Cerberus, Blackstone or Starwood took part in the bidding.

Together with the assets grouped in the real estate fund created in 2003 by Caja Madrid, there are also other-descent type of assets added to Bankia’s books, like those inherited from savings bank Laietana.

Precisely, the €300 million worth of real estate includes leased blocks of flats in Madrid, Barcelona, Tarragona, Avila, Salamanca and Valladolid, valued at €240 million total. Also, eleven office buildings are at stake, Bloomberg reports.

Bankia was obliged to divest in its real estate and loan portfolios by Brussels. The entity has recently sold a €772 million NPL portfolio to Starwood for between €300 and 400 million.

Origins of the Fund

Caja Madrid set up Madrid Patrimonio Inmobiliario – now Bankia Inmobiliario– in 2003, as this kind of assets became increasingly fashionable in Spain to give a chance to benefit from the property boom to small investors. Constantly growing until 2008, the fund had almost 20.000 stakeholders and €450 million in owners’ equity. The vehicle posted a 26% return total between 2003 and 2008.

When the recession hit, the shareholders rushed to leave and finally Bankia received control over practically the entire fund. In March this year, 100% was assigned to the entity and the remaining few shareholders were transferred to another fund, Bankia Monetario Euro Deuda.

The Interest of Investors

The slump the fund went through and the type of assets inside it – mainly residential and commercial to let – invoked huge interest about Project Lake.

If Goldman Sachs seals the deal, it could consolidate on the Spanish property market while large international funds are seeking opportunities.

Last year, the U.S. investment fund and its partner Azora acquired 3.000 dwellings from Madrid’s Community for €201 million.

Goldman Sachs wants to arrive beyond that and has already placed a firm bet on the final stage of Kutxabank’s Project Lion bidding for its real estate manager Neinor Barria. Goldman, competing with Lone Star, is ready to put €800 million for the affiliate of Kutxabank and a €500 million to €1 billion REO worth.

 

Original article: Expansión (Jorge Zuloaga)

Translation: AURA REE