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Oaktree Expresses Interest in Buying Sabadell’s Real Estate Arm

6 July 2018 – Cinco Días

The Spanish house building business is continuing to spark interest amongst international private equity firms. This was demonstrated yet again by the recent agreement signed between the fund Oaktree Capital and Solvia – the real estate arm of Banco Sabadell–, which created a joint venture to purchase land from Iberdrola, in a deal that may be extended in the future into an even greater alliance.

In fact, the US fund has just informed Sabadell of its interest in acquiring a majority stake in its property development business, in a company called Solvia Desarrollos Inmobiliarios, according to two sources in the financial sector. In this way, it would take another step forward in its strategy to position itself in the house building business.

For the time being, after closing the agreement in June to create the real estate joint venture, contact has now been made between the parties with a view to a possible purchase. Oaktree is expected to specify the details of its bid over the next few days and whereby the sales process would begin. Sources at the bank deny knowledge of any negotiations or offers at the moment. Meanwhile, Oaktree declined to make any comment.

Solvia is currently the parent company of Sabadell’s real estate business, which is divided into three arms. On the one hand, Solvia operates as a servicer to the bank; it also has a real estate agency division; and, finally, it has a property development arm, in the form of Solvia Desarrollos Inmobiliarios, which is the part that Oaktree is interested in, to develop land for own and third-party projects and to build homes.

Last month, Solvia and Oaktree announced that they have created a joint venture in which the fund owns 80% of the capital and Sabadell, through its subsidiary Bitarte, controls the rest. This company, which will be dedicated to identifying, acquiring, developing and marketing plots of residential land in Spain, received approval from the European Competition Authorities in June. The joint company’s first operation is the purchase of land belonging to Iberdrola, for almost €100 million, on which to build homes in several places across Spain.

But financial sources explain that Oaktree wants to deepen its commitment to house building and, for this reason, wants to purchase Solvia’s property development business from Sabadell. It is not known whether the bank is open to bids from the fund or not.

Oaktree’s intention through this corporate move is, primarily, to acquire a team with experience in the house building sector in Spain, according to the same sources. The US firm, meanwhile, has huge financial capacity and also owns several important real estate assets in Spain, acquired from financial institutions such as Bankia, the German bad bank and Sareb. In Spain, it has a subsidiary Sabal, led by Eduardo Bóveda, to manage those bank portfolios.

Original story: Cinco Días (by Alfonso Simón Ruiz)

Translation: Carmel Drake