Project Macarena: Sareb Sells 1,300 Homes & 30 Plots

16 October 2015 – Expansión

The company has put up for sale one of the at least three portfolio that it plans to sell before the end of the year.

Sareb has officially started its busiest season of the year. The company, led by Jamie Echegoyen, has now begun to put large asset portfolios on the market, aimed at overseas funds. It hopes to increase its annual sales as a result. According to financial sources, over the last few days, the entity has distributed information about Project Macarena, a portfolio comprising debt amounting to €410 million, which is secured by residential assets.

The portfolio has been divided into three tranches: the higher quality debt tranche, which is backed by 810 homes – including 11 complete developments – and 2 plots of land; one unpaid debt balance, which has 450 home as collateral; and overdue credits, with 29 plots of land as guarantees, located primarily in Madrid, Tarragona, Barcelona and Málaga.

Aside from the land, the majority of the portfolio is located in Madrid, which accounts for 24.5% of the portfolio’s nominal value; Barcelona (21.4%); and Málaga (16.3%). The sale is being advised on the financial side by Irea and on the legal side by Ashurst. According to the information distributed to investors, this project offers “a potential upside resulting from the macroeconomic improvement and in particular, the current recovery in the Spanish residential market”.

According to financial sources, this portfolio has been designed specifically for the large overseas funds operating in Spain, since it contains residential properties only and the assets are clustered together in a handful of areas – this makes the portfolio more manageable for these investors.

In the case of the unpaid loans, Sareb reports in the sales brochure that around 70% of them are already in the process of asset foreclosure or debt recovery. Meanwhile, the tranche of higher quality credits is secured by homes with an occupancy rate of 95%, which increases the chance of recovering the debt.

Other portfolios

In addition to Project Macarena, Sareb has two other portfolios ready to launch, which it will bring onto the market very soon: one contains debt from a few property developers, worth €600 million; and the other contains credits backed by tertiary sector assets – hotels, offices, retail premises and logistics sites – amounting to €200 million. And the entity has not ruled out the possibility of launching further operations before the end of the year.

These three portfolios join two others that were launched over the summer. The first, at the hand of Sareb’s asset manager Haya Real Estate. That was Project Silk, advised by N+1, whose portfolio comprises €1,000 million of overdue loans to small property developers. The second was Project Vega, through which the company hopes to get rid of €180 million of debt, backed by land.

If Sareb manages to complete the sales of these five portfolios only, then it will reduce its balance sheet by €2,400 million between now and the end of the year. These operations are even more important in 2015, given the slowdown experienced in the retail sales channel, caused by the migration of assets to new managers: Haya, Altamira, Solvia and Servihabitat.

Sareb also needs to strengthen the top half of its accounts to be in a better position to deal with the provisions that it is going to have to recognise following the new accounting circular, approved two weeks ago. And all of this, with the aim of continuing to repay debt -€3,000 million in 2015 – which Echegoyen has committed to and which is key to enabling it to reduce the financial costs of the company.

Original story: Expansión (by J. Zuloaga)

Translation: Carmel Drake