La Caixa Quietly Enters Foreclosed Offices of Santander

3/04/2014 – El Confidencial

Banking restructuring is stirring the sector sometimes to such extent that riddiculous situations occur. One of the most original and profitable transactions carried out these days has been undoubtedly the sale of one fourth of Banco Santander´s offices in Spain. Namely, the banks that financed the operation became the main direct shareholders of the property lot.

Santander itself is among the lenders as it pledged aid to funds acquiring the 1.152 offices for €2.4 billion in 2007. Precisely, the bank had to re-purchase the branches throught an agreeement with Sun Capital, Pearl Insurance and Drago Real Estate Partners, buyers that have been partially foreclosed.

According to financial sources, the contract involves swapping debt for €400 million for capital. The transaction converts the liability holders into majority shareholders of the offices. Other lenders are BNP Paribas and CaixaBank that now will possess a 25% stake.

The extraordinary situation might be explained with several arguments. One of the most feasible seems that originally the operation was of low-risk, sale-and-lease-back type. In the meantime, Santander obtained €800 million capital gains and signed a lease contract for 45 years, guaranteeing it priority in case of sale.

The acquisition was conducted via two credit lines: a senior one for €1.6 billion and a so-called mezzanine for €400 million. (…).

In the new operation, subordinated debt will be swapped for stake, (…) likewise happened in case of purchase of Santander´s headquarters in Boadilla del Monte (Madrid).

The office lot of 1.152 offices is presently in hands of Sun Capital, Pearl Insurance and Drago Capital. Its value has been estimated at €1.5 billion but the buyer will be given between 25% and 40% discount. (…).


Original article: El Confidencial (by Agustín Marco)

Translation: AURA REE