Project Goya: Ibercaja To Sell Loans To Oaktree For €350M

27 October 2015 – Expansión

Ibercaja continues to take steps to clean up its balance sheet as the rumour mill runs rife about mergers in the sector.

The Aragonese entity is negotiating the finishing touches on the transfer of one third of its portfolio of property developer loans to the US fund Oaktree, with a nominal value of €900 million, according to financial sources. The agreed price will amount to between €350 million and €400 million.

This will be the largest divestment undertaken by Ibercaja to date and fits within the current clean up strategy that the medium-sized entities are accelerating ahead of going public or merging next year.

The sale forms part of Project Goya, which Ibercaja put up for sale before the summer, guided by the investment bank N+1.

This portfolio comprises debt from 124 Spanish property developers and is secured by finished housing and developable land. In total, the loans are linked to almost 2,200 homes and other residential assets, primarily located in Andalucía, Madrid and Cataluña.

Goldman Sachs and Blackstone are also competing in the final stage of the process alongside Oaktree. These types of portfolios tend to be placed in the market for around one third (of their nominal value), therefore Ibercaja looks set to make a gain of €50 million more than it initially expected.

With the sale of these kinds of assets, Ibercaja is looking to fulfil two main objectives: clean up its credit portfolio and obtain resources – free up provisions – to use in its recurrent business.

Express clean-up

After Bankia, the entity led by Amado Franco is the Spanish group that has taken the most decisive strategy to divest its real estate portfolio. Both entities have launched operations to drastically reduce their real estate exposure. In the case of Bankia, this strategy is focused on Project Big Bang – comprising assets amounting to €4,800 million – for which it has so far received offers from Oaktree and Cerberus.

Meanwhile, in addition to Project Goya, Ibercaja has another project underway known as Project Kite. There it is looking to sell the majority of its foreclosed assets: 6,900 residential units, 1,300 premises and industrial warehouses and 600 plots of land, worth €800 million. (…).

For Oaktree, this operation would enable it to strengthen its strategy in Spain. The fund has already closed two large purchases in recent months, namely: the problem debt from the German bad bank, FMS, in Spain, with loans secured by hotels, such as the Arts de Barcelona hotel; and a portfolio of unpaid mortgages from Bankia.

Original story: Expansión (by Jorge Zuloaga)

Translation: Carmel Drake

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