Project Bull: the first great operation of the “bad bank”.

The company created to check-out toxic real estate assets for more than 90.000 million Euros prepares its first great sale operation for the next 18th July. It will be called “Project Bull” and in order to manage it, Sareb has hired KPMG.

As informed by Bloomberg, the consulting company has identified a “pool” or package of properties in Andalusia and Valencia, as well as unfinished buildings, that will be put on auction on the 18th July, with a forecast of collecting at least 200 million Euros, according to the sources consulted by the agency. It will be the first serious test that will measure the capacity of the bad bank to attract investors interested in its assets.

“The success in the first sale would be a sign that there are opportunities here”, the analyst of the Royal Bank of Scotland, Lee Tyrrel-Hendry explains. In his opinion, the investors are looking for good profit and Spain is one of the rare places that offers it, but this is due to the fact that “there are still a lot of risks and the economic forecasts continue to be very weak”, this expert points out.

The most important vulture funds in the market, such as Colony Capital or Apollo Global Management are awaiting this operation and will try to take advantage of the burst of a bubble that has reduced prices by nearly 40% from the peak reached in 2007. Their participation is vital for Sareb, as most of its forecasts depend on its capacity to attract foreign capital. Only this year it needs to sell assets for around 1500 million Euros. And in the next five years it intends to sell 45.000 properties, half of its portfolio.

The first sale of Sareb – the core of “Project Bull”- includes 38 finished housing developments (most of them located in Valencia and Andalusia) and at least another unfinished project. For Scott MacDonal, analyst at the company MC Asset Management, Sareb “will probably find buyers” as there is now a real interest in finding assets in Spain. The liquidity injections of central banks have impelled investors to look for opportunities and to demand riskier assets.