Sabadell weighs up the sale of its real estate

23/01/14 – Expansión.

Received many offers for Solvia in 2013/ The financial entity evaluates the possibility to put up for auction its real estate subsidiary in the next few months and for which the funds are willing to pay more than for Altamira and Aliseda.

Banco Sabadell’s real estate is the next big goal for the opportunistic funds in Spain. After the recent sale of Santander´s Altamira and of Popular´s Aliseda the investors are now interested in the subsidiary of the Catalan bank, Solvia, and would be willing to offer more money than their rivals did: Santander received 664 million for Altamira and Popular 815 million for its real estate division.

Being conscious of this interest, Sabadell has begun meeting with the foreign funds- including Apollo,Cerberus, Centerbridge or Kennedy Wilson- in order to choose the best moment  for Solvia’s sale, according to information provided to Expansión by these consultants. The group chaired by Josep Oliu informed the investors that there is no rush, and that it will wait whatever it takes, even though it is taken for granted in the market that the transaction will be announced within the following months and that the matter will be closed within 2014.

Less competition

The possibility of Solvia’s sale is being considered in the Banco Sabadell’s offices since mid-2013, at the same time that their competitors were also considering it. But this entity decided to wait till this year mainly to avoid coinciding with other important transactions like those of Santander and Popular. The bank even refused some proposals to the funds that wanted to buy Solvia.

This subsidiary arouses a lot of interest to the investors because this real estate (among other agencies) has the most of its assets in process and one of those agencies that sell the most properties in the Spanish market. Solvia, the result of a merger between the Sabadell’s real estate and Mediterranean, the previous division of CAM, in 2012, last year reached its primary goal to sell more than 16.000 flats, for more than 3.000 million Euros. This figure was increased by a 16% vs. the previous year when the company sold 13.777 properties for 2.300 million Euros. Following these transactions, Sabadell accumulates real estate assets valued at 18.000 Euros.

Sabadell was even one of the few Spanish banks that place a real estate portfolio among funds, after selling more than 1.000 flats to the North American Anchorage.

The strategy of waiting before selling the real estate has its pros and cons, according to financial sources. On the one hand, being the only real estate in the market could increase Solvia’s price. In the market they hope that Sabadell will keep improving the management and the team of its subsidiary before the sale, which could give results.

On the other, the entity risks that some of the few rivals that have not sold yet their real estate, like BBVA, could follow a similar strategy, although the bank chaired by Francisco González has not shown signs of adopting this kind of strategy for Anida.Moreover,if Sabadell waits too much then the interest of funds for Spain may be reduced.

Two important groups

This is not the case. Dozens of international funds are approaching the Spanish market during the last years. Among them there are two groups of investors interested in Solvia:

1)    Those who already have a real estate platform in this market and they search for partnerships and want to gain money. For the experts, it makes more sense for Solvia to agree with one of these funds, because otherwise it will end up having more competitors in this business segment. This group includes: Centerbridge that bought Banesto’s Aktua,Cerberus that bought Bankia Habitat, Kennedy Wilson and Varde Partners that bought Popular’s Aliseda and could also buy CatalunyaCaixa Real Estate, TPG that absorbed Caixabank’s ServiHabitat and Apollo the new owner of Santander’s Altamira.

 2)    Those who have been looking into these transactions without success can now pay a premium, unlike the rest, in order to make their place in the market. WL Ross, Starwood, Lone Star and Fortress can be included in this group.

Source: Expansión