Santander & Blackstone Hold Onto the Real Estate Company GAC40

18 May 2018 – Voz Pópuli

Project Quasar Investment, the company created by Santander and Blackstone to bring together Banco Popular’s real estate assets worth €30 billion, has absorbed the company ‘Gestión de Activos Castellana 40’ (GAC40), whose debt amounting to €220 million Popular forgave on 30 December 2014, a move that caught the attention of the European Central Bank.

According to sources familiar with the operation, GAC40 filed for creditor pre-bankruptcy after it found itself in the cause of dissolution, but that measure was cancelled after the formal agreement was reached to transfer Popular’s assets to Project Quasar Investment in March. Sources consulted describe the operation as a “bargain”, given that Santander and Blackstone have effectively acquired GAC40’s assets at a discount of almost 69% and without the burdens that was weighing it down.

The Hispania Buildings in the centres of Murcia and Alicante are just two of the assets owned by GAC40. The company also owns the following shopping centres: La Fuensanta in Móstoles (Madrid); Juan de Borbón (Murcia); and Hispania, in Orihuela. Moreover, it has one supermarket in Totana (Murcia) and another one in Vinarós (Castellón), as well as a hotel in Cartagena. Although most of the properties are occupied, the mortgage charges that had been hanging over them since the real estate boom meant that their sale was unfeasible, according to the sources consulted.

The properties form part of Grupo Hispania, which the businessman Trinitario Casanova, the same person who agreed the sale of Edificio España in Madrid to the Riu group last year, sold in 2008 to José Ramón Carabante – the former shareholder of real estate companies from the boom and the founder of the only Spanish team to have operated in the Formula 1 arena, Hispania – for €650 million.

Carabante abandoned the management of Grupo Hispania in 2011 and was replaced by José Fernando Martínez Blanco, an expert in the liquidation and restructuring of companies. According to the sources consulted, Martínez Blanco was appointed by Banco Popular to acquire Carabante’s companies.

Martínez Blanco changed the registered name of the companies acquired from Carabante to ‘Gestión de Activos Castellana 40’ (GAC40) in 2012. The firm was weighed down by a debt amounting to €562.5 million, with Banco Popular as the main creditor. Until the absorption of GAC40 by Santander and Blackstone, Martínez Blanco had continued as the administrator of the company.

Forgive and refinance

GAC40 has remained active all these years thanks to financial support from Popular, which has been forgiving and refinancing the company’s debt year after year.

On 30 December 2014, Banco Popular’s Board of Directors decided to waive GAC40’s debt. That decision caught the attention of the European Central Bank, which conducted an inspection and identified “deficiencies” in the authorisation of the operation, as this newspaper reported.

The most recent refinancing of GAC40’s debt happened a month after the intervention of Banco Popular and its sale to Santander. On 6 July 2017, the company agreed “as the primary financial creditor”, to “convert the debt into a participation loan amounting to €19.4 million”.

With that debt conversion agreed just a month after Popular’s intervention, GAC40 was able to correct the critical situation that it found itself in. According to the company’s accounts for 2016, to which this newspaper has had access through Insight View, the company was in cause of dissolution with a negative goodwill balance of €221 million and financial debt of almost €250 million.

Original story: Voz Pópuli (by Alberto Ortín)

Translation: Carmel Drake

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