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Blackstone Buys Spanish Real-Estate Assets

8 August 2017

MADRID – Blackstone Group LP said it has agreed to acquire a majority stake in rescued Spanish lender Banco Popular Español SA’s real-estate portfolio, a vote of confidence by the U.S. asset manager in Spain’s robustly recovering economy.

Blackstone said Tuesday it will take a 51% stake in a newly created company that will include approximately EUR30 billion ($35.2 billion) worth of real-estate assets transferred from Banco Popular and will also include the bank’s real-estate management company, called Aliseda.

Banco Popular was rescued by European Union and Spanish authorities in June after a bank run earlier this summer and sold to Banco Santander SA for a token EUR1.

Banco Popular had been a weak link in the Spanish banking system since the country’s property boom went bust starting in 2008. The lender had been unable to make enough headway shedding its mountain of foreclosures, undeveloped land and bad loans.

Santander’s stake sale to Blackstone is an additional and important step as the bank seeks to clean up Banco Popular and focus on its core business of selling loans and other products to individuals and businesses, rather than managing billions in troubled real-estate assets.

Banco Popular’s EUR30 billion in real-estate assets had been written down to approximately EUR10 billion, Blackstone and Santander said in statements. Blackstone will manage the new company and Banco Popular will own the remaining 49% stake. The deal is the largest real-estate portfolio sold in Spain and among the largest in Europe, a Santander spokesman said.

 “This significant investment reflects our continued confidence in the robust recovery of the Spanish economy,” Jonathan Gray, Blackstone’s global head of real estate, said in a statement.

Since emerging from recession in 2013, Spain’s economy has expanded more strongly than European peers. The country’s annual economic growth rate is expected to once again top 3% this year. Real-estate prices in major Spanish cities such as Madrid and Barcelona have been rising, although in some of the less-populated areas of the country prices are still falling.

Blackstone and Santander didn’t disclose the price paid for the assets.

Blackstone’s offer, the companies added, topped those made by two other unnamed investment firms. The agreement was confirmed after European Union competition authorities formally approved Santander’s acquisition of Banco Popular earlier Tuesday.

Santander said the sale to Blackstone doesn’t trigger a material capital gain or loss for the bank. The deal will boost Santander’s capital ratio by 0.12 percentage point under international regulations known as “fully loaded” Basel III criteria, the bank said. Santander’s capital ratio was 10.72% as of early June and the bank aims to have a “fully loaded” ratio of above 11% in 2018.

The transaction is expected to close in the first quarter of 2018.

Story: MarketWatch / Jeannette Neumann