OPERATION ‘ELCANO’

26 May 2015 – Expansión

Banco Popular wants to sell the first half of a portfolio this year, which features apartments, land plots and hotels in Madrid, Barcelona and Toledo, among other cities.

Banco Popular is picking up speed to fulfill one of its major strategic goals this year: accelerate the sale of property. The company is preparing the sale of 451 million in real estate assets, leveraging the growing appetite of international investors. The portfolio includes 1,473 homes in Madrid, Barcelona, ​​Toledo and the Costa del Sol, worth 300 million euros. In addition, it includes land plots in different Spanish regions worth 103.4 million, according to sources consulted by Bloomberg. The portfolio also includes 13 hotels, worth 47.2 million, according to the document prepared by the investment firm N + 1 and sent out to potential investors.

Regarding the timing of Project Elcano,

Popular wants to complete the transaction during the first half of the year.

Record

The entity continues to accelerate the sale of non-strategic assets which, during the first quarter, had already set another record. Between January and March, Popular closed property sales for 534 million euros, representing a 115% increase, compared to 249 million over the same period back in 2014.

360 million of the total were properties acquired by retail investors and the remaining 174 million by institutional investors. The company had set a sales target of 405 million euros between January and March. It is currently at 32% above the initial forecast.

In recent months, the bank has also stressed that, apart from their increasing volume, transactions are being closed at prices similar to their book value, which backs current levels of portfolio valuations.

Last year Banco Popular partnered with North American funds Värde Partners and Kennedy Wilson in its real estate property management business.

The strategy of the bank, headed by Angel Ron, is in line with that of other banls, which have also made it a top priority to sell unproductive assets that remain on their balance sheets after a six-years-long crisis. In recent weeks, Spanish banks have offered unpaid debt and foreclosed assets worth 10,000 million euros to international investment funds (see Expansión magazine, May 22).

Provisions

The aim of financial institutions is to reduce the volume of non-performing assets, in order to release financial resources tied to them, reduce default rates, allocate its resources to new borrowers and increase their profitability.

The transactions contain a much larger real estate component than a few years ago, as the level of provisions in this segment has reached a point where banks can agree on prices with funds without  registering new losses.

The most active financial institution has been Bankia, which has revolutionized the market with the so-called ‘Big Bang project’, with which it plans to sell all foreclosed assets that remained on its balance sheet after the transfer to Sareb. In total, it has placed for sale 38,000 residential units (apartments, garages and storage rooms), worth 4.8 billion.long with this operation, which some competitors could replicate this year, Bankia was also the first to bring to market a portfolio of outstanding mortgage loans.

Original story: Expansión

Translation: James Leahu

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