Category: NPL & REO

BBVA Puts Its RE Arm Anida Up For Sale

6 September 2017 – El Confidencial

A new major real estate transaction is on the horizon: BBVA has announced that it is analysing the sale of its servicer Grupo Anida. The real estate specialist is a giant in its own right, with gross assets of more than €5,000 million. BBVA is looking to take advantage of the appetite from large international funds to acquire a ring-side seat in the recovery of the Spanish market.

According to four sources in the know, the plans of the entity chaired by Francisco González are to focus on completely divesting this subsidiary, which accounts for just a proportion of the €8,750 million of net real estate exposure on its balance sheet. BBVA has declined to make any comments.

Nevertheless, last Thursday, the bank itself acknowledged in its results for the first half of the year, that its objective for the whole area known as Non Core Real Estate, which includes Anida, is “to accelerate sales and reduce stock, with specific actions for those products that have been on the balance sheet for the longest”.

Grupo Anida is the heir of the former fund BBVA Propiedad, which the bank practically rescued at the end of 2008, when the first effects of the crisis swept away these types of vehicles, a crisis that the entity averted by investing €1,600 million to continue as the sole shareholder and provide an exit for its other investors.

The bank also owns a property developer division, Anida Desarrollos Inmobiliarios and various subsidiaries that it has been accumulating under the same umbrella, such as Anida Operaciones Singulares, and subsidiaries in Mexico and Portugal.

According to the latest audit report, corresponding to the year 2015, the real estate company has managed to reduce its losses by 36%, to €311.4 million. But, since the publication of those accounts, BBVA has completed some major transactions, such as the sale of the Boston and Buffalo portfolios, and the transfer of 1,500 homes to Testa, whose gross value amounts to €485 million; and the transfer of land worth €431 million to Metrovacesa.

But, even after all of these moves, the entity is now willing to serve the main dish in the form of the sale of Anida, whose potential purchasers include some of the funds who expressed their interest in the sale of Popular’s toxic assets, such as Apollo and Cerberus, not to mention firms such as Bain, which expressed its interest in Vía Célere in the past, according to the sources.

For BBVA, closing an operation of this kind would represent the cherry on the top of almost ten years of hard work, a period during which the entity decided to follow its own strategic approach, setting itself apart from the market trend, by opting to retain the bulk of its property on the balance sheet rather than sell it badly.

The entity has been able to maintain this policy thanks to it high provisioning levels, one of the most generous in the finance sector, given that the average coverage rate of its entire real estate exposure, including live and foreclosed property developer loans, amounted to 57% at the end of the first half of this year.

The sale of Anida will, therefore, allow it to release the bulk of the provisions linked to those assets and take advantage of the soaring appetite from the large international funds to own a large real estate platform through which to try to benefit from the recovery in the market.

Nevertheless, any happy ending in this regard will always be dependent upon the thorny matter of price, a stumbling block that has caused the entity to reject several offers for Anida in the past.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

KKR & Cabot Compete To Acquire Hipoges

31 August 2017 – Voz Pópuli

KKR and Cabot Financial are competing in one of the processes that has generated the most excitement amongst overseas funds in recent months. The two Anglo-Saxon investors are the finalists in the bid to acquire Hipoges, a platform created at the end of 2008 by former directors of Lehman Brothers, the investment bank that went bankrupt in September of that year.

The platform is controlled by Cerberus, with a 40% stake, and by its CEO, Juan Francisco Vizcaíno, who owns 18.3%. It is not clear how much of the company is up for sale, although the various sources consulted by this newspaper explained that the initiative to launch the sales process has been taken by the directors. The final price of the transaction could amount to €25 million.

The bid is being led by Alantra as an advisor and funds such as Bain Capital have participated in it, in addition to Cabot and KKR.

Hipoges has a presence in four countries, although most of its business is concentrated in Spain. In total, it administers almost €8,000 million for 22 clients, above all overseas opportunistic funds and financial institutions.

Intense competition

The platform advises investors regarding the acquisition of portfolios and the subsequent management of the assets acquired. Hipoges is responsible for administrating debt, filing claims to recover it, going to court and in the event that a property is repossessed, managing and selling it. It also competes with the major real estate companies, such as Haya Real Estate, Altamira, Servihabitat, Aktua, Aliseda, Solvia and with other independent firms such as TDX, Finsolutia and Copernicus.

Of the €8,000 million that it administers, 72% are unpaid loans granted to property developers and mortgages. The remainder are loans to SMEs (14%), consumers (12%) and invoices (2%).

By entering this process, KKR wants to take another step forward in its real estate strategy in Spain. After purchasing a portfolio of mortgages from Abanca – formerly NCG Banco – the North American fund is negotiating the acquisition of a platform that will allow it to continue gaining experience in the property sector.

Meanwhile, Cabot is another of the foreign groups that is most committed to the purchase of banking assets. It arrived in Spain in 2015 with the acquisition of Gesif and is hoping to enter the real estate business with Hipoges.

Original story: Voz Pópuli (by Jorge Zuloaga)

Translation: Carmel Drake

Kutxabank Reduces Its Exposure to Real Estate by 70% in Five Years

 

21 August 2017

Kutxabank has reduced its exposure to the real estate business by 70% since the bank’s creation in 2012, having reduced its total exposure by 4.7 billion euros, with a further decline of 11% in the last year.

The financial institution has gone from the €7 billion in real estate loans and assets that it held in 2012, to 2.3 billion euros at the end of June 2017.

The sale of its real estate subsidiary Neinor to Lone Star in 2014 was decisive. The deal transferred 900 million euros in real estate assets and more than 90 employees to the American fund.

Kutxabank has continued to decrease its presence in the real estate business over the last year, by 11%.

The Basque group achieved this reduction without transferring assets to the Asset Management Company that was created in the bank restructuring (Sareb), and without receiving public aid, while contributing to the restructuring of the Spanish financial system, through its contribution to the Deposit Guarantee Fund and to the capital of Sareb itself.

Nevertheless, the group is maintaining its policy of acting in the mortgage loan market. Thus, according to Kutxabank, the financial institution is the second of 14 supervised by the European Central Bank in terms of the weight of its loan portfolio on its total assets, and the first in terms of loans to individuals for the acquisition of housing both on total assets and on total credit, with high levels of collateral in all its lending.

Its risk policy places the Basque group as one of the institutions with the lowest volume of refinancing and the institution with the second lowest level of delinquency due on its assets in Spain.

Specifically, at the end of the first half of 2017, Kutxabank had a default rate of 5.66%, 200 basis points less than at the time of its incorporation in 2012, and less than half that in March 2014, the time in which delinquencies reached the highest levels.

Original Story: EFE Madrid / Expansión

Translation: Richard Turner

Ranking of the 20 Developers With the Largest Pipelines for Delivery over the Next Three Years

 

22 July 2017

The reawakening of the residential housing sector in Spain has brought with it a large group of developers that promise to build thousands of homes in the next three years. It is sometimes difficult to discover details, to find out which developer is behind each new project.

This analysis lists what the Spanish Coordinating Institute for Governance and Applied Economics, an independent research centre, has identified as the top 20 of the country’s largest real estate companies, ranked by the number of homes they will develop by 2020.

At the top of the list is Metrovacesa, a developer controlled by Santander, BBVA and Banco Popular, which in the next three years will bring 12,600 homes to the market and, considering Neinor, Aedas, Via Célere, Corp and Pryconsa, is the only company that already owns in its portfolio all the land needed to build the new homes.

In addition, the company headed by Jorge Pérez de Leza, controlled by three Spanish banking groups, is a break from the leadership of large international funds, which are behind the bulk of the companies that make up the top 20, and which are negotiating with local companies to purchase land together to meet their housing development projections.

To reach the tally of 80,000 houses in these companies’ development plans, the institute counted both current developments and those that can be developed in accordance with the available land and projected purchases of new land. The institute’s studies drew upon various sectoral sources.

Neinor Homes (Lone Star), expects to deliver 10,250 homes; Aedas Homes (Castlelake), 9,850; Via Célere (Värde), 6,200; and AELCA (Värde) forecasts 5,750 residential dwellings, complete the top five positions in a ranking where only two companies linked to the large listed construction groups appear: Acciona Real Estate with 4,500 dwellings and Realia (FCC) with 1,650.

Another company stands apart is the Catalan Corp, which is the only member of the ranking with no national presence and that focuses all its interests in its autonomous community, where it plans to develop 3,000 homes.

Among the new phenomena of the real estate development sector that stand out, in addition to the hegemony of large funds, is the family structure of many of the Spanish developers (Amenabar, Quabit, Pryconsa, Lar, Ibosa…); bank’s greater requirements for granting mortgage financing to local investors, with requirements such as down payments of more than 50%; and a focus on the customer.

An increase is expected in the number of developers that will be listed on the stock market, where in the short term there will be between eight and ten companies

“It is clear that the Spanish real estate development sector has learned from the crisis and now operates with completely different criteria. A key factor is a focus on the client, which for the first time in a long time has become an essential part of the real estate business. Developers who know how to connect with what the customer needs will be assured of survival in the market, and whoever does not will disappear, “says Jesus Sánchez Lambás, executive vice president of the Institute.

Among those that will survive, many will do so by listing on the stock market, where Neinor and Quabit can already found.  Aedas, Via Célere and Metrovacesa are expected to join them in the short term. Even more should soon join them in the near future. The institute forecasts that eight to ten companies should be listed on the stock market in the short term.

Original Story: El Confidencial – R. Ugalde

Translation: Richard Turner

Sareb Will Launch Its Socimi with a Selection of More Than 1,500 Properties for Rent

 

20 August 2017

 

The aim of Témpore Properties, the name chosen for the future listed real estate investment company, is to attract the largest possible number of investors and, to that end, properties were chosen that offered the highest possible returns.

Jaime Echegoyen, the CEO of Sareb, announced that the socimi (Spanish REIT) that the company plans to launch later this year will have a selection of 1500 of its best rental properties and a volume of assets worth more than 200 million euros.

The aim of Témpore Properties, the name chosen for the future socimi (listed real estate investment company), is to attract the largest number of investors and, according to Echegoyen in an interview, to that end, Sareb’s most attractive rental properties were chosen for the socimi.

The real estate company, which has a portfolio of almost 5,000 rental properties, selected around 1,500 assets in areas with high demand for rental housing, in, for example, the large capitals of Madrid and Barcelona, ​​as well as in other large cities in Andalusia, the Valencian Community, Castilla-La Mancha and Aragon.

These are properties with attractive rental yields, above 3% per annum, which the real estate consultancy CBRE evaluated one by one throughout the month of July, to determine which assets Sareb will include in the socimi, and sold to future shareholders in Témpore.

Echegoyen intends to debut Témpore Properties on the MAB Alternative Stock Exchange, under which a large number of socimis incorporated over the last year. But the idea is to switch the socimi’s listing to the continuous market in the future, where companies with more visibility are listed.

With a volume of assets close to 200 million euros, Sareb’s socimi would be among the top five companies listed on MAB, behind General de Galerías Comerciales, GMP Properties, Zambal and Fidere.

An advantage of Témpore Properties to investors is that, in the future, if the shareholders of the company consider it appropriate, the size of the listed company can continue to increase thanks to Sareb itself, which has recently begun to bet on development.

Echegoyen recognizes that real estate development is very important for Sareb, which has gone from being almost exclusively focused on divesting its assets to investing in projects that can be highly lucrative if done right.

The real estate company already has 4,000 homes in progress, some in initial phases and some close to delivery and its development operations are being conducted at the same time as other assets continue to be liquidated.

In some cases, developments will be constructed on land owned by Sareb and in others, Sareb will complete construction on properties that are already at an advanced stage and which have economic viability, i.e., where it makes more sense to finish construction and thereby increase the value of the assets.

The completion of construction not only adds greater value to real estate assets and optimizes the investments that Sareb has, but also allows the company to collaborate with the estate development sector, contributing to the revitalization of that part of the economy.

Once the size of the socimi has been decided upon, Sareb will dedicate August to preparing the new company’s business plan and will choose a manager through a bidding process before starting, after the summer, the first talks with potential investors.

Despite the avalanche of socimis that have been listed in the last year, the president of Sareb believes that the real estate market has taken off in Spain and investors still want to benefit from it, whether buying property or investing through a socimi, which is “a very valid financial alternative.”

Original Story: EFE/Expansión

Translation: Richard Turner

Spain’s Housing Construction Boom Comes from Minnesota

 

17 August 2017

  • US vulture funds lead bets in the residential market
  • Blackstone becomes a huge property owner after buying 51% of Popular’s real estate assets

7,000 kilometres away from Madrid, in the US city of Minneapolis, Minnesota, decisions have been taken that have affected the recovery of the housing construction sector in Spain. The firms Värde Partners and Castlelake – known as opportunist, or vulture funds – had the opportunity to enter a depressed real estate market in the face of a foreseeable recovery. But they are not the only big U.S. investors who risked buying at bargain prices and restarted the bull market. Who is behind these companies?

One of the most active is Värde Partners, a Minneapolis-based company created in 1993, which began to buy troubled assets in Spain during the worst years of the financial crisis, at the beginning of this decade. The highlight of Värde’s participation in the Spanish market was its acquisition of Grupo Empresarial San José’s residential development business, to whose portfolio it added the land that it had been purchasing.

With that basis, Värde created the real estate company Dospuntos, one of the several firms created by the American investment funds to free up construction projects that had been paralyzed since the 2007 property market crisis. After that deal, it returned to the market at the beginning of 2017 when it bought the Spanish real estate developer Via Célere from Juan Antonio Gómez-Pintado, who was chosen to lead the newly merged company as its chief executive, and whose objective is a listing on the stock market early next year.

In parallel, Värde acquired 75% of the recently started developer Aelca from the Avintia group, which strengthened its position in housing construction. Aelca already had plans to start works on 1,900 new homes, adding to Via Célere’s 1,700 homes.

The fund has invested $50 billion since its inception and its chief executive is Marcia L. Page, a veteran alternative asset manager. Tim Mooney, responsible for Värde’s real estate business, has designed Värde’s investment strategy in Spain, which also includes the purchase of part of the property business of Procisa, which constituted the company La Finca Global Assets. In addition, Värde, together with the investment fund Kennedy Wilson, bought a majority stake in Aliseda, Banco Popular’s banking platform, that it resold recently after Santander acquired the bank.

The other Minnesotan investment fund behind the new construction boom is Castlelake, which has a total of $10 billion in assets under management around the world. It was created in 2005 and specializes in investments in troubled companies, distressed debt and mortgage loans in complicated situations. Castlelake has been buying land in Spain since 2012 and created the real estate company Aedas Homes, which is expected to go public this fall. The Minneapolis firm was created by Rory O’Neill, a manager from another similar fund called CarVal Investors, and Evan Carruthers, who serves as managing partner.

As an aside, this fund is also specialized in the purchase and management of aircraft for leasing. It has a fleet of 400 aircraft, comparable to the giant IAG, which has 530 aircraft, and 835 engines for the aircraft. The European team at Castlelake, which leads the real estate investment strategy in Spain, is located in London and led by Eduardo D’Alessandro.

Its real estate developer Aedas Homes has some of the old team from Vallehermoso and plans to begin construction on around 1,700 homes sometime in 2017.

The vulture fund which was the fastest to make its bet on the Spanish real estate market is Lone Star. The fund, based in Dallas, and whose name refers to the one star on the Texas state flag, bought the real estate developer Neinor from Kutxabank for €930 million.  Lone Star proceeded to inject new land into the developer’s portfolio and restarted its residential construction business.

Lone Star then launched an ambitious plan to turn the renamed Neinor Homes into the country’s largest real estate companies, practically the only one with plans for developments throughout Spain, a far cry from the small regional developers that survived the crisis.

In addition, it was ahead of other companies on their way to a market listing, when it debuted last March, in what became the first initial public offering of a real estate developer in the Spanish market in a decade. That move also allowed Lone Star to divest 60.1% of the capital of a company that was valued by the market at €1.3 billion.

Neinor is expected to be another of the market’s leading developers to head to the stock exchange, together with Aedas, Vía Célere and Metrovacesa, controlled by Santander (61% of capital) and which is already studying a possible IPO.

Lone Star, which in Spain is run by the Argentine Juan Pepa, was created 22 years ago in Dallas, founded by fund manager John P. Grayken. That firm has launched 17 investment vehicles in which it has bought troubled assets and debt in much of the world.

THE HOUSING GIANT

The Blackstone fund, the largest real estate owner in the world, has created a housing giant in Spain from foreclosed properties and the purchase of toxic assets from banks. Its latest move was the acquisition of 51% of a joint venture, for 5 billion euros, which will manage 30-billion euros in property assets acquired from Banco Popular, making it the largest real estate company in the country, ahead of Sareb.

Blackstone was created in New York in 1985 and currently manages assets worth $370 billion. In Spain, it created Anticipa, a platform that manages assets acquired from banks, which already has 12,000 homes for rent. To manage them, it formed the socimi Albirana Propertis, which is listed on the Alternative Stock Market. It also owns Fidere, another socimi that manages the portfolio that the asset management company bought from the Municipal Housing Company (EMV) of Madrid.

In the field of bank servicing, which appeared as banks were looking to divest their problematic real estate assets, other funds have also been active, although some have already sold off, such as Kennedy Wilson and Värde with Aliseda. TPG remains in Servihabitat, the platform linked to Caixabank. The Californian vulture fund entered the market in 2013. That year, Santander also sold its platform Altamira to the New York-based Apollo fund.

Original Story: El País/Cinco Dias – Alfonso Simón Ruiz

Translation: Richard Turner

Santander Finalizes Deal to Sell 51% of Banco Popular’s Real Estate Business to Blackstone

 

09 August 2017

The deal, the largest in the history of the real estate sector in Spain, will entail the creation of a new company.  Banco Popular will transfer its problematic assets, with a gross accounting value of €30 billion, as well as 100% of Popular’s real estate management business Aliseda. The assets will then no longer be consolidated on Santander and Popular’s balance sheets.

 

Popular has finalized the sale of 51% of its real estate business to the asset manager Blackstone, effectively ceding control of the portfolio to the American asset manager.  The sale will also allow both Banco Popular, presided over by its chairman, Rodrigo Echenique, and Banco Santander to de-consolidate the assets from their balance sheets, positively affecting the banks’ capital ratios. This is the biggest sale of a real estate portfolio in Spain’s history.

Santander estimates that the removal of the problematic assets from its balance sheet will result in an improvement of 12 basis points in its fully loaded CET1 capital ratio (including all Basel III regulatory requirements).

The deal was announced shortly after the European Commission, which found no potentially negative effects on competition resulting from the sale, gave its definitive green light to the purchase of Popular by Santander.  The transaction includes Popular’s portfolio of foreclosed properties, questionable loans also tied to the real estate sector “and other real estate assets related to Banco Popular and its subsidiaries (including deferred tax assets), registered at certain specific dates (March 31 or April 30, 2017),” as Santander explained to the Spanish National Securities Market Commission (CNMV) as a material fact.

Transfer of assets

 

The agreement with Blackstone will entail the creation of a new company to which Popular will transfer assets with a gross accounting value of about 30 billion euros, as well as 100% of the Aliseda real estate management business, of which Popular, which had previously owned 49%, announced in July the buyback of the remaining 51% held by the funds Värde and Kennedy Wilson.

With the sale to Blackstone, the buyback will have no effect on Popular’s capital ratios.  The buyback of 51% of Aliseda would have otherwise entailed a capital consumption of more than €300 million (leading to a reduction of 5 basis points in its capital adequacy ratio).

The valuation attributed to assets in Spain (real estate, credits and tax assets, not including Aliseda) amounts to about 10 billion euros. Considering this valuation, which is subject to changes depending on the volume of assets remaining at the closing date and the integration of Aliseda, the value of Blackstone’s controlling stake is estimated at approximately 5.1 billion euros.

According to the bank, this valuation is “in line” with the actual value of the assets, including provisions and adjustments made to Popular’s balance sheet after their purchase, so that “it does not generate a material capital gain or loss.”

The sale comes after a competitive selection process in which three international companies participated.  Of the three, Blackstone was chosen for “presenting the best offer” in economic terms and in terms of its strategic plan, as explained by the bank.

Following the finalization of the deal, which is scheduled for the first quarter of next year, Blackstone will assume the management of the assets, which will have been incorporated into a new company, of which Popular will control 49%.

Reducing exposure to real estate

 

Rodrigo Echenique, president of Popular, said that “we are very satisfied with the agreement reached with Blackstone,” and that this operation will allow the bank “significantly reduce real estate exposure on its balance sheet and continue to consolidate its operations, focusing all our efforts on the bank’s commercial activities.”

Ever since Santander bought Popular for a nominal cost of one euro on June 7, after European authorities determined that the bank was on the brink of insolvency, one of Santander’s main priorities has been to unload Popular’s real estate assets.

In fact, in early July, Popular’s new management team, with Rodrigo Echenique at the helm, announced that it had initiated “a search for potential partners” for a portfolio amounting to €30 billion.

The search was supervised by Pedro Pablo Villasante, an independent director of the bank, who was responsible for ensuring “transparency and management of potential conflicts of interest,” while Santander was also advised by Morgan Stanley.

As pointed out by Popular, the criteria for choosing partners took into account three main aspects: “price, experience in this type of operation and their capacity to manage and execute the deal.”

Original Story: Expansión – J. Díaz

Photo: J.M. Cadenas – Expansión

Translation: Richard Turner

Voyager: Sabadell Launches Sale Of €1,000M NPL Portfolio

2 August 2017 – Expansión

Banco Sabadell is accelerating the sale of the non-performing assets accumulated on its balance sheet during the crisis. In just three years, the entity chaired by Josep Oliu has managed to cut its doubtful loan balance in half, which means that it has divested non-performing loans amounting to almost €9,000 million since 2014. In this way, in June of that year, the bank held €17,386 million in problem assets on its balance sheet, compared to the current figure of €8,541 million, according to the accounts published last Friday.

This effort has been made possible by the fact that Sabadell has been one of the most active entities in the sale of debt portfolios in recent years (…). In the last few months alone, it has managed to divest almost €2,000 million through the sale of Projects Normandy and Gregal (…). In addition, the bank has just engaged Deloitte to sound out the market as to whether an appetite exists for another €1,000 million portfolio, known as Voyager.

Gregal and Normandy

Project Gregal contained non-performing loans amounting to around €800 million and was segmented into three sub-portfolios. The last one was sold this week to the fund Grove Capital Management, which has taken over a batch of doubtful loans granted to SMEs. The other two Gregal packages were awarded to D.E. Shaw and Lindorff (…).

On the other hand, at the end of July, the bank managed to definitively close the sale of the Normandy portfolio (€950 million) to Oaktree. That portfolio comprised loans linked to real estate developments and so the amount paid was much higher and is reported to have amounted to around €300 million, which would represent a discount of around 70% (…).

Original story: Expansión (by Sergi Saborit)

Translation: Carmel Drake

Healthcare Activos Buys Nursing Home In Barcelona

2 August 2017 – Expansión 

Healthcare Activos is pushing ahead with the construction of a portfolio of buildings to be used as hospitals and nursing homes for the elderly. The investment vehicle led by Jorge Guarner (pictured above) – former CEO at SARquavitae– and Oaktree Capital has just acquired a nursing home in Barcelona for €16 million, which until now belonged to a Goldman Sachs fund.

It is the Los Tilos nursing home, located in the neighbourhood of Gracia, and it has a surface area of 16,000 m2 – 7,000 m2 allocated to parking – and 258 beds. The facilities, located in a very sought-after area, are managed by Grupo Bastón de Oro and residents pay between €2,200 and €2,500 per month to live there.

Financing

Healthcare Activos has financed 60% of the operation through a loan granted by CaixaBank. The nursing home formed part of a package of assets that Goldman Sachs purchased at the beginning of 2015, through B Capital Partners, from the Barcelona-based property developer La Llave de Oro, in a deal worth €90 million that included 18 buildings. The fund owned by Guarner and Oaktree has invested €62 million since December on the purchase of seven healthcare assets, containing 1,263 beds, across Spain.

Original story: Expansión (by S. Saborit)

Translation: Carmel Drake

Santander Negotiates With Blackstone Re Sale Of Popular’s RE

2 August 2017 – Expansión

A month after announcing that it was putting Popular’s toxic real estate up for sale, Santander has chosen the fund with which it wants to negotiate. The bank is looking to sell a portfolio of Popular’s foreclosed assets and doubtful real estate debts with a gross value of €30,000 million. It will be the largest sale of a toxic real estate portfolio in Spain in recent years. And the process is already taking shape, in the hope that Brussels will give the definitive green light to the Cantabrian bank’s acquisition of Popular, due at the end of this month.

Yesterday, Santander announced that it will negotiate exclusively with Blackstone from now on to sell a majority stake in the vehicle in which it placed the toxic property inherited following the purchase of the entity wound up by the European authorities. Santander’s initial idea is to sell 51% of this vehicle, which will allow the group to deconsolidate those real estate assets from its balance sheet. The assets and doubtful loans that Blackstone plans to acquire will be managed by Aliseda. That company already administers Popular’s real estate assets and is 100% owned by Santander after the bank repurchased the 51% stake held by Kennedy Wilson and Värde Partners a month ago.

After buying Popular, whose merger will be completed over the course of the next two years, Santander has increased its exposure to real estate risk to €41,048 million, according to the latest available data. Popular’s real estate risk amounts to almost €37,000 million, including its stakes in real estate companies, which amount to around €7,000 million.

Several offers

According to a statement made to the CNMV yesterday, Santander has received binding offers from “several investors” over the last few days for one of the largest portfolios ever to go onto the market in Spain, and also in Europe. The operation sparked immediate interest amongst the large international funds when Santander announced that it was putting Popular’s real estate up for sale on 30 June. In addition to Blackstone, Apollo, TPG, GreenOak and Goldman Sachs, amongst others, approached the bank to find out more.

Financial sources indicate that Apollo and Lone Star fought hard until the end to acquire the majority of Popular’s toxic real estate. In the last few days, some of the interested funds have asked Santander, which is being advised by Morgan Stanley, for more time to conduct due diligences (…).

The rapid sale of Popular’s real estate portfolio, which is being piloted by the Deputy Director General of Santander, Javier García-Carranza, could result in revenues of €5,000 million, according to estimates in the sector. Santander has recognised provisions of €7,900 million to increase the coverage ratio of Popular’s real estate to 69%, well above the sector average (52%). This means the bank can afford to get rid of the real estate portfolio at significant discounts and thereby recognise gains (…).

Original story: Expansión (by R. Sampedro)

Translation: Carmel Drake