Month: November 2013

S&P alerts of the increase of default in the Spanish mortgages.

Standard&Poor´s calculates that the default of mortgages used as collaterals in securitizations has already reached 7,76% in the third quarter. As well, the so called “severe default”, that is, with more than three months delay in payments, has reached to 5,82%, from the 5,57% in June. The rating agency has stressed that this year, the increase reaches 40%.

The analysts from the rating agency explain that there are many differences in the mortgages used as collaterals depending on their duration and the institution that has originated them. It declares that those from Bankinter, Barclays, Ibercaja Banco and BBVA are among those with less default. On the other side, those from CatalunyaCaixa, Unión de Créditos Inmobiliarios, UCI, Banco Pastor (now Popular), Caja Madrid (now Bankia) and Banco CAM (now Sabadell) are those with more problems.

S&P emphasizes the strong and quick deterioration of the credits from the UCI and the nationalized  CatalunyaCaixa.  The  worse  situation  is  that  of  the  mortgages  awarded between 2005 and 2007.

The forecast of S&P is not optimistic. The agency considers that the default in mortgages will continue rising, due to the economic situation in Spain, that continues having a very high unemployment rate and the fall of housing prices, that will continue next year. The agency stresses that the new regulation on refinancing which has come into force at the end of the third quarter will oblige many institutions to reclassify mortgages as default that until now were considered normal.

Source: Expansión

S&P alerts of the increase of default in the Spanish mortgages.

Standard&Poor´s calculates that the default of mortgages used as collaterals in securitizations has already reached 7,76% in the third quarter. As well, the so called “severe default”, that is, with more than three months delay in payments, has reached to 5,82%, from the 5,57% in June. The rating agency has stressed that this year, the increase reaches 40%.

The analysts from the rating agency explain that there are many differences in the mortgages used as collaterals depending on their duration and the institution that has originated them. It declares that those from Bankinter, Barclays, Ibercaja Banco and BBVA are among those with less default. On the other side, those from CatalunyaCaixa, Unión de Créditos Inmobiliarios, UCI, Banco Pastor (now Popular), Caja Madrid (now Bankia) and Banco CAM (now Sabadell) are those with more problems.

S&P emphasizes the strong and quick deterioration of the credits from the UCI and the nationalized  CatalunyaCaixa.  The  worse  situation  is  that  of  the  mortgages  awarded between 2005 and 2007.

The forecast of S&P is not optimistic. The agency considers that the default in mortgages will continue rising, due to the economic situation in Spain, that continues having a very high unemployment rate and the fall of housing prices, that will continue next year. The agency stresses that the new regulation on refinancing which has come into force at the end of the third quarter will oblige many institutions to reclassify mortgages as default that until now were considered normal.

Source: Expansión

Housing prices increase by 1% in the third quarter.

After this increase, the registrars declare that the results of the next quarters will help to confirm if this change of trend is a reality or merely a temporary situation.

After  the  peak  levels  attained during  the  years  of  the  real  estate  boom, prices  have registered an accumulated decrease of 31,07% reaching right now levels of 2003.

As for the acquisition of properties, the demand continues to be fairly stable, reaching 76818 operations registered in the third quarter, which reflects an increase of 2,06% in annual terms.

Source. Expansión

Bankia initiates the sale of its package in NH through JB Capital.

Bankia has started the sale of its share of 12,6% in NH Hoteles. The institution presided over by José Ignacio Goirigolzarri has hired the investment bank JB Capital Markets, from Javier Botín, the son of the president of Santander, who will have to look for the best offers for the sale of the shares belonging to the bank.

This disinvestment process is framed within the restructuring plan approved by Brussels, due to which Bankia already sold its shares in Mapfre, IAG, Indra, Sacyr, and City National Bank of Florida, among others.

Right now, the biggest shareholder of NH Hoteles is the Chinese group HNA Group, whose participation reached 24,05% after acquiring 4,05% from Pontegadea Inversiones, a company belonging to Amancio Ortega. Hesperia holds 20%.

The disinvestment carried out by Ortega took place after several savings banks such as Kutxabank left NH´s capital.

The market value of  the participation of  Bankia reaches 155,5 million Euros, after an increase of 53% in the value of the share. Bankia held more than 15% of the hotel company before the capital extension opened the door to the company HNA.

Along with this participation, Bankia is still present in Iberdrola (5,14%), Realia (27,65%) and Deoleo (18,2%).

The portfolio of the Bankia group is completed with the participation in up to 70 unlisted industrial and financial companies, as well as from other sectors. These are mainly from the infrastructure, insurance, renewable energies, leisure and tourism, health and risk capital sectors. The main participations by Bankia in unlisted companies are Globalvía (50%), Renovables Samca (33,3%), Mecalux (20%), Inversis (38,5%) and Ribera y Salud (38,5%). (…)

 
Source: Expansión

Sareb will revise its business plan in February.

Sareb, the bad bank, has made an important progress in the last few months, but he negative evolution of the real estate prices and the deterioration of the portfolio of credits is affecting its cash flow, yield and business plan, the IMF describes. The plan will be revised, as demanded by legislation, in February.

Sareb, in line with the forecast, will close the year with losses. As for 2014, the company hopes to improve thanks to the speeding up of the sales of assets, the development of a commercial strategy and the lesser financial burdens.

 
Source: Expansión

The fund Baupost is finalizing the acquisition of several malls for 180 million Euros.

The U.S. fund Baupost is finalizing the acquisition of a package of malls scattered around Spain. It includes Parque Vistahermosa, in Alicante, Mirador in Burgos, Atalaya, in Murcia, Montigola, in Barcelona, Las Rosas, Madrid Sur and Getafe III, all three in Madrid and the most important one, Rosaleda in Málaga.

The properties are included in the Spanish portfolio of the Dutch group VastNed Retail. Apart from the transferred malls, this real estate company specialized in retail owns several trade premises in Madrid, Barcelona and Castellón.

In its last presentation to analysts, VastNed admitted that the bad economic situation had affected the behavior of its malls, with a descent of rents. The Dutch group values at 13,7 million Euros the earnings it received from its commercial assets in Spain and Portugal.

Five years ago, the value of the portfolio of VastNed in Spain reached 409 million Euros. In 2011, the group put 50% of their national assets on sale, valuing them in 280 million Euros. After an unsuccessful offer last year, Baupost will now pay around 180 million Euros for the properties.

The operation is in its final stage awaiting a few details that could modify part of the transaction. Baupost could exclude two of the eight malls: Vistahermosa and Getafe III. “The operation will  probably be  closed before the  end  of  the  year  but,  as  these are secondary malls, that need an investment to update them, it is probable that they will exclude some properties”, a source close to the operation admits. (…)

Source: Expansión

The funds need to place their bids for the default credits of NCG blindly.

A new disagreement between the Frob and the foreign funds due to the default credits of NCG Banco. It seems that the five investors interested in the 4000 million in credits will not be able to carry out their own due diligence, as explained to Expansion by some of these funds. This would imply making offers without fully knowing about the quality of the assets. “This is like walking blindly”, investors assure.

In exchange, the Frob and NCG will provide the information which has been previously analyzed by EY, based on which the investors will need to present their offers. This is not the usual procedure in the sale of default credits. Investors have demanded some sort of guarantee in exchange to cover their position in case the information they have received is not correct. This request has not been accepted.

The Frob has taken this decision in order to speed up the process and because it considers that the foreign investors already know the situation of the balance sheet of NCG, after months of analysis.

The funds have the impression that the Frob is using this process in parallel to the auction of NCG as a way to put pressure on banks so that they will not give a zero value to the default credits of the group. The Frob has opened the door for banks and funds to go together to the auction of NCG, thus maximizing the selling price.

The first disagreement between the funds and the Frob started in the auction of UGAS, the bad bank from NCG, where one of the pieces was these default credits. After months of analysis and negotiations, the Frob decided to call off the auction in the summer, surprising the three final funds: the U.S. Fortress and Centerbridge and the Norwegian Lindorff. The decision was taken after Spanish banks pressured to prevent the sale of NCG in different pieces before the auction started. But once it had started, the Frob decided to offer the 4000 million Euros in default credits to the three funds as a measure to compensate them for the failed auction of UGAS and to increase the value of NCG. This operation has awaken so much interest in the market that the fund lead by Antonio Carrascosa has opened it up to at least two more investors, Elliot and Marathon. The latter would invest jointly with Savia, from Javier Botín, son of the president of Santander.

The five funds interested will need to present their offers on the default credits before the 13th December, in parallel to the auction of the Galician group. Within this one, there are four interested banks –  Santander, Caixabank, Banesco and  BBVA –  and five funds, although who seem to take it more seriously are Guggenheim Partners, WL Ross and JC Flowers. Most of them ask for public funding, something which was hinted by Economy this week.

 

Source: Expansión

The sale of properties to foreign investors increases by 25,5%.

The purchase of properties continues descending – an annual 6,8% in the third quarter of 2013 – but not as much as it was expected. The cause: foreigners are chasing for bargains, mainly in the Mediterranean coast, with an excess of properties after the bubble burst.

The transactions carried out by foreigners reached 12.070, 25,5% more than the 9.614 in the same quarter of the previous year. The foreign investors have 17,2% of the market in their hands (in the third quarter the number of transactions reached 70.196 properties). A new historic record.

As always, the foreigners residing in Spain are the ones who usually acquire these properties, but the number of non-residents is growing. Both groups registered annual increases for the ninth month in a row. The residents registered an increase of 24,7% opposite to the third quarter of 2012 (10.960 acquisitions). And the non-residents bought 1.110, 34,6% more than one year before.

Also, foreign investors acquire properties which are 15,5% more expensive than the average. Specifically, 153.437 Euros, opposite to the average 132.970 Euros. That is, 20.650 Euros more than the average.

Beatriz Toribio, in charge of Studies at fotocasa.es, believes that “right now only those foreign investors searching for good opportunities at low prices are buying”. But this “should not lead to euphoria, as the sector will not recover only thanks to the foreign demand”, she adds.

Manuel Gandarias, director of Studies at pisos.com, delves further into the idea: “The fact that those economies in better shape than the Spanish one decide to invest in our real estate market is positive for the sector, as this means a boost in confidence, but the ideal scenario would be one where Spanish families would also participate in this process”.

How? Toribio believes that “tax benefits on the acquisition and less taxes are needed, but above all Spaniards should feel that there is an improvement in the economy”. Gandarias adds that it is vital that “financing reaches the society, not only for companies but also for those individuals who wish to buy”. Without this and without a descent in the unemployment rate, there will not be a real estate recovery. (…)

Source: Expansión

Sareb and Santander sell 540 million Euros in debt from Realia.

Sareb has finalized the most ambitious operation since its creation by the Government: the sale of Realia´s debt. Sources close to the operation, known as “Project Elora”, declare that they  will  transfer  immediately  nearly  440  million  Euros  to  Fortress,  a  fund  that  will collaborate with the managing company Azora Gestión.

Sareb  had  planned  to  sell  a  higher  amount, but  in  the  end  has  decided to  leave  a participated loan out of this operation, which “will be sold at a later stage”, financial sources add. This is a credit for 114 million Euros, half of which is in the hands of Sareb.

The Project Elora is framed within another huge project, known as Bermudas, that includes all the exposure of the company to the listed real estate companies, Metrovacesa and Colonial. The total amount of this portfolio reaches 1200 million Euros, but several sales have already been carried out.

Along with this operation with Realia´s debt, Sareb awarded in August the fund Burlington Loan Management the package of syndicated loans from Grupo Colonial, with a nominal value of  245 million Euros. A bit earlier, in  May, it  had already placed a  credit from Metrovacesa for 35 million Euros. All this in addition to the sale last week of another 323 million Euros to Deutsche Bank. 90 million of these belonged to Bermudas as they were credits from Metrovacesa.

The two funds which will end up with Sareb´s package have been very active all year, especially Fortress. It acquired Lico Leasing, it was interested in the real estate company of Popular and it offered Sareb to enter its capital when it was created. On the other side, Azora  was  created  by  two  former  executives  from  Santander,  Concha  Osácar  and Fernando Gumuzio and its focused in investing in  the real estate sector on behalf of Spanish companies and banks, as well as Spanish and South American great fortunes.

But not only Sareb is taking advantage of the appetite of foreign investors for real estate assets in Spain, Santander has also joined in with the sale of the debt it had in Realia to the U.S. fund King Street Capital Management. Financial sources explain that the nominal value of that debt in the hands of Santander reached 100 million Euros. The bank declined any comments.

Both the debt of Sareb and the one from Santander were included in the loan refinanced by Realia  for  847  million  Euros,  which  was  participated  by  BBVA,  Sabadell,  Barclays, Kutxabank and CaixaBank. In total, the financial debt of the company reached 2166 million Euros at the end of the first half of the year.

With the agreement for the refinancing, the real estate company presided over by  Ignacio Bayón reduced this credit to 792 million Euros, increasing the recovery period to 3 years, until the 30th June 2016. KutxaBank and Barclays decided to leave the syndicate.

The sale carried out by Sareb and Santander includes 68% of the loan that was signed before the summer. (…)

 

Source: Expansión

Santander sells its real estate company Altamira to the Apollo fund for nearly 700 million Euros.

The financing matters are still pending but, if nothing goes wrong, the investment fund Apollo will close the most important acquisition in Spain. The firm with headquarters in New York  has won  the  auction on Altamira Real Estate, the real estate division of  Banco Santander, committing to pay nearly 700 million Euros. Official sources have declined any comments, as the final price is still subject to finance matters.

After a process of less than three months, Santander is again the first institution to get rid of its real estate business (development and management of assets). The existing interest in the market encouraged the bank presided over by Emilio Botín to hire PwC to manage the sale  after  the  summer. As  in  other  auctions  of  financial or  real  estate  assets,  those interested in the operation were the same great investors.

At the end, Apollo signed last Friday the letter of intentions which grants exclusivity over the other contestant, Centerbridge (owner of Aktua, the former recovery company from Banesto), in order to finalize the investment. The funds like Cerberus (Bankia Habitat) and Starwood did not reach the final stage, as they were worse than the main offers, after including  real  estate  assets,  as  well  as  the  management  contract  of  the  properties, operative structure and staff included.

Should this operation be completed, Apollo would become one of the most active investors in the market. At the beginning of the crisis, the NY firm landed in our country with the acquisition of  different portfolios of  consumer credits from  Bank of  America. Later, its managers succeeded in the acquisition of EVO Bank, the banking business of Novagalicia Banco developed under that brand outside Galicia, Asturias and Leon, for an amount around 60 million Euros.

Right now, the type of assets is rather different. Altamira Real Estate is one of the biggest real estate companies in the market. In April 2012, the institution with headquarters in Boadilla del Monte merged its subsidiary with Mesena, the specialized unit from Banesto, creating a giant that manages properties (under construction or finished) with a value of more than 3500 million Euros. (…)

Once this was carried out, it was necessary to enhance the commercial capacity of the subsidiary. For this reason, Santander extended the auction campaign until the end of the year, through Altamira´s web, for a catalogue of 5000 properties, garage spaces, storage rooms or  offices. This aggressive selling strategy has made it  possible to  sell 11800 properties during the first nine months of the year.

 

Source: El Confidencial