Cerberus, Oaktree, Orion Strike Barcelona’s Hotel Arts’s Debt

9/01/2015 – El Economista

Funds Cerberus, Oaktree and Orion represent three out of four bidding finalists who are one step closer to lucrative Project Gaudi. This €740 million portfolio includes 18 loans with tempting collateral properties, among which the Hotel Arts, situated on Barcelona’s coast, immediately catches eyes of investors.

The credit package was up for sale in October by German bad bank FMS Wertmanagement.

The best bids oscillate around €450 million, meaning that the bidders assume a risk of default which suggests a 40% discount on the loans’ face value.

Apart from the Hotel Arts (pictured on the left), the deal includes such gems as the high-end Penha Longa Hotel & Resort in Cascais (Portugal), owned by a fund of Deutsche Bank.

Moreover, the portfolio consists of five shopping and leisure centers and four business parks in Madrid and Barcelona. Likewise, debt of Bluespace’s 17 storage spaces in Madrid, Barcelona and Valencia is at stake. In 2007, the German entity approved €125 milion in loans for their development.

Of the 18 credits making the Project Gaudi, there are 6 performing, 6 sub-performing and 6 totally non-performing loans.

This is not the first time a German entity decided to shed Spain-related real estate exposure. Last year, Commerzbank transferred huge Project Octopus worth €4.5 billion granted by its Spanish branch to U.S. fund Lone Star allied with JPMorgan.

In turn, Sareb has also sealed several NPL portfolio sales, like Project Pamela (€200 million worth) or Agatha (€260 million).

“Altogether, receivable and defaulting loan transactions amounted to €16 billion in 2014”, assured Patricio Palomar, Alternative Investment head at CBRE.

The Volume to Boost More

“We expect that this year will bring greater figures as many debt refinancing operations and sales are scheduled throughout”, Mr Palomar said.

“Such types of packages will be poached by foreign funds and insurance companies which are already forging vehicles to invest in assets through debt or by financing property developent and rehabilitation projects”, the executive added. To give a few of examples, such is the strategy of Prudential, Alliance and AXA. The last has established a fund called CRES with over €5 billion to spend on real estate across Europe.


Original story: El Economista (by Alba Brualla)

Translation: AURA REE