Bankia Markets €800 Mn in Real Estate-Backed Loans

31/07/2014 – Expansion

Vulture funds have become one of the best allies of Bankia found in the middle of restructuring. The entity chaired by Jose Ignacio Goirigolzarri has sold to them large volume of non-core assets, gaining liquidity and squeezing default.

Following the suit, the nationalized group started-off a sale of non-performing loans lent to medium and big companies. Particular attraction of the portfolio lays in its collateral real estate assets and hotels. The operation, known as the “Amazon Project“, encompasses loans valued at €800 million.

The deal is a pioneer sale among the Spanish banks, following the footsteps of Eurohypo which has sold the “Octopus” portfolio to Lone Star and JPMorgan earlier this year.

Bankia is being advised on by Deloitte in the process.

The divestment splits into two portfolios:

1. Entirely real-estate: including 217 loans to medium-size firms with 133 properties as collaterals. Almost all of them are situated in the Valencian Community and Castille-La Mancha. None of the companies operates in the real estate sector but in industry or construction, putting warehouses, office buildings, plots and shops as warranties. In total, this part of the portfolio consists of 38 debtors with the total debt amounting to €431 million. On average, each firm owes €11.3 million.

2. Hotels only: on the other hand, Bankia trades 77 loans with collateral 43 hotels (ranging from 3* to 5*). They are mainly located in Catalonia, the Valencian Community and the Canary Islands. In total, 21 companies owe jointly €370 million.

The “Amazon” provides two pros for Bankia. Firstly, it cuts in the bank´s default and secondly, it will allow the entity to free equity for new credits instead of dumping it in management of NPLs.

Year-to-date, Bankia has reduced its toxic assets volume by €1.4 billion (0.7%) in regard to 2013. Now it posts 14%.

In the first quarter, the entity transferred a €715 million worth of delinquent credits to Elliot, Oaktree and Savia. Also, Bankia sold its holdings in 26 real estate companies to Blackstone and is at the verge of sealing a deal on REO and developer loan worth of €430 million.


Original article: Expansión (by J. Zuloaga & Y. Blanco)

Translation: AURA REE