Banking Asset Funds of Sareb Turn Out to Be Counter-Productive

5/09/2014 – Inmodiario

It is difficult to find out how are faring Sarebs Banking Asset Funds (or BAFs). They were established by the bad bank in order to sell some of its REO assets but in fact this is not what they do. Sarebs website offers absolutely no information about the Funds and the first trace one may come across is the site of the National Stock Market Commission (the CNMV) and its updates (if) available on the topic.

Once the information localized, one learns that in the first half of 2014, BAFs Bull and Teide brought a joint loss of €6.4 million as the €34.4 million amount obtained from the sale of 437 properties seem to be insufficient to defray expenses of these vehicles. The biggest volume of the equity goes to Sareb itself in shape of repayments.

The Bull Fund sold 235 properties for €15.75 million in total and still it closed the half year results with a €2.84 million loss. Created as a joint venture with HIG Capital on 26th July 2013, the fund encompassed 1.687 housing units (939 homes, 550 parking spaces, 21 retails and 177 storage rooms). HIG holds a 51% stake in the BAF, while Sareb – 49%. During the first year of its existence, the Bull portfolio shrank to 1.322 properties.

This Banking Asset Fund was legally established on December 13th under management of Intermoney Titulizacion. Rapid refinancing by its shareholders helped to reduce its €93 million debt before it received another credit line of €10 million.

In case of the Teide BAF, Fortress, which holds it together with Sareb, does not take any risk in spite of having an 85% share in it. All 2.441 properties from this portfolio could start being marketed after the bad bank absorbed an €88 million share issue and lent another €58 million. Then, a credit line of €15 million made it complete.

During the first ten days of its lifespan, the Teide Fund lost €2 million and its total H1 2014 loss showed €3.53 million in the red. During this time, 202 properties left the portfolio (+€18.7 million from the sales) and around €41.000 has been earned from rentals of 37 units.

In July, Sareb conveyed its share in Teide to Deutsche Bank.


Original article: Inmodiario (by Juan C. Martinez)

Translation: AURA REE