22 September 2017 – Expansión
Liberbank is on the verge of closing the sale of a portfolio of real estate assets worth €800 million. The funds Bain and KKR are the finalists in the process, according to financial sources in the know. There may also be a third finalist in the running, which could be any one of Apollo, Blackstone and Lone Star.
These last three funds approached Liberbank during the initial phase to express their interest in the portfolio of real estate assets for sale, according to sources close to the operation. The funds will have already had access to the virtual data room to find out more details about the assets for sale.
As is usual for this type of real estate operation, they would have also performed the corresponding due diligence. The interest parties signed confidentiality agreements during the first few weeks of August.
The sources specify that Liberbank will close the binding offer phase in the last week of September, most likely on Friday 29.
Development of land
Liberbank is willing to offer favourable conditions to those funds interested in developing the land included in the portfolio, according to sources familiar with the operation, which has been baptised as Project Invictus by Alantra. An incentive for the sale in light of the good times that the Spanish real estate sector is enjoying, which is in the middle of a growth spurt.
The objective of the bank is to divest this batch of property, mostly homes, during the month of October, at the same time as it undertakes a capital increase, amounting to €500 million, which it plans to launch on 9 October. The capital increase, which has preferential subscription rights, is expected to be approved by the Extraordinary General Shareholders’ Meeting on that date.
At the end of July, Liberbank engaged Alantra to coordinate the sale of a package of 9,000 real estate assets, worth €1,200 million. But that firm has reduced the sale perimeter to a batch worth just over €800 million.
The entity is being forced to clear up the uncertainty over the health of its balance sheet. The bank’s high real estate exposure led to doubts in the market following the resolution of Popular’s future on the morning of 7 June. Its stock of non-performing assets accounts for 22% of its balance sheet, one of the highest levels in the sector.
Until then, Liberbank had been selling its real estate assets to individuals above all, and it was even generating profits in some cases. The sale of the real estate portfolio worth more than €800 million to one of the major funds will represent a change of strategy to accelerate the reduction of the entity’s real estate exposure.
But the speed of getting rid of this real estate could come at the expense of its financial results. Operations with opportunistic funds are typically signed at a loss, and so sources at the bank have not ruled out the possibility that this strategy will see Liberbank record losses this year. During the first quarter of the year, the most recent accounts published in the market, Liberbank earned 8% less than during the same period in 2016. The entity thinks that the pure banking business, the interest margin, bottomed out in June, when it dipped by 11%.
Real estate subsidiary
In August, the bank led by Manuel Menéndez started its cleanup plans. It sold its real estate subsidiary, Mihabitans, to Haya Real Estate for €85 million. The company specialising in the provision of management services for financial and real estate assets for entities and funds then become a partner of the bank for the next seven years.
Liberbank, the fruit of the integration between Cajastur, Caja Extremadura, Caja Cantabria and Caja Castilla-La Mancha (CCM), has been facing the rumour of a takeover for several months. The entity’s share price is trading at 0.29% of its book value (..).
Original story: Expansión (by R. Sampedro)
Translation: Carmel Drake