Deutsche, Apollo & Cerberus Compete For BBVA’s Largest RE Development

21 June 2017 – Voz Pópuli

BBVA has three multi-million euro deals on the table to acquire some of its problem assets. In the last few days, the entity chaired by Francisco González has received binding offers from three funds to acquire the portfolio known as Project Jaipur, comprising €600 million in unpaid loans linked to real estate developments.

The three candidates to buy this portfolio, the largest that has been placed on the market to date by the entity, are Apollo, Cerberus and Deutsche Bank, according to financial sources consulted by Vozpópuli.

According to the same sources, these funds have put around €200 million on the table, and the best positioned of the three is the German fund, pending the outcome of the negotiations. BBVA and Deutsche both declined to comment. The other two candidates, Apollo and Cerberus, have their own real estate platforms in Spain, Altamira and Haya, and so they almost always analyse these types of operations.

The Spanish bank now has a few days to decide the winner of the bid, although the result will be announced imminently given the interest in closing it before the end of the first half of the year, and thus being able to reflect it in the results that will be presented in a month’s time.

Selling off property

According to the latest figures, at the end of March of this year, BBVA held almost €6,500 million in property developer loans, of which only €1,700 million were up to date. Another €4,750 million were doubtful, with a provisioning level of 56%. Almost all of these loans were secured by land and finished buildings.

In addition, BBVA has another €13,500 million in foreclosed assets, with a coverage ratio of 63%. On Monday, the CEO of the entity, Carlos Torres, insisted that cleaning up this property is one of the group’s major priorities, in order to whereby improve the profitability of Spain. At the presentation of its last results, it announced a period of three years to achieve its goal of cleaning up its balance sheet.

Torres shielded himself behind the property balance to explain why the entity he leads did not present a bid for Banco Popular, after studying its possible purchase together with Banco Santander just two weeks ago. In the end, Popular was acquired by the entity presided over by Ana Botín, for the price of €1, plus a capital increase of €7,000 million.

Original story: Voz Pópuli (by Jorge Zuloaga)

Translation: Carmel Drake