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Liberbank Accelerates Sale Of Its RE Arm For €80M

20 July 2017 – Voz Pópuli

A defensive operation by Liberbank. The Asturian entity is accelerating the sale of its real estate company Mihabitans to strengthen its capital, according to financial sources consulted by Vozpópuli. The group led by Manuel Menéndez (pictured above), which declined to make comments, had been considering this possibility for months but has decided to fire the starting gun now, when the market’s focus has been placed on the entity. The prices being considered for this sale come in at just over €80 million.

The operation has been underway for several months under the watch of Alantra (formerly N+1). The subsidiary up for sale is Mihabitans Cartera, which Liberbank created in June last year. This company is responsible for managing the financial group’s homes and real estate debt. Liberbank has transferred some of its staff to the new entity. Its CEO is Víctor Sánchez, the Director that Menéndez entrusted to sort out the property portfolio at CCM following its purchase.

This sale, known in the market as Project Pipe, includes only the management of the real estate assets, a priori, and not their ownership. The idea is that it will take a similar form to the operation carried out by Santander with Altamira when Apollo purchased an 85% stake of that entity; as well as CaixaBank with Servihabitat, which is now controlled by TPG; and Popular with Aliseda.

According to the same sources, the process is in an advanced phase and several candidates have been selected to submit binding offers. The candidates include Lindorff, owner of Aktua; and Haya Real Estate, owned by Cerberus.

Crucial moment

These types of operations are undertaken to generate capital gains and strengthen capital. Given that they only manage properties, companies such as Mihabitans do not have any assets of their own other than their employees and the contract with the bank(s) that own(s) the properties. Depending on the contract agreed, the price may be higher or lower. In this way, Popular obtained around €700 million for Aliseda and Santander received €664 million for Altamira.

This sale comes at a key moment for Liberbank. Following the termination of CCM’s asset protection scheme (EPA), the group’s default rate soared in the last quarter and its capital decreased to 12%, above the levels required. Nevertheless, it is considering several options, such as the deal involving Mihabitans to strengthen itself and calm the market (…).

Liberbank has been compared to the entity that is now in the hands of Santander (Popular) in terms of its default rate, which in the case of the former amounted to 13% at the end of March. The objective is to bring it down below 7% within a year and a half. The entity had accumulated €2,951 million in doubtful debt and €2,414 million in foreclosed assets as at March, with a coverage (over the latter) of 40%. The sale of homes, which Mihabitans is responsible for, reached historical highs in the first quarter of €56 million (…).

Original story: Voz Pópuli (by Jorge Zuloaga)

Translation: Carmel Drake