Santander Considers €3bn Offer from Cerberus for its Toxic Property

6 September 2018 – Voz Pópuli

Banco Santander is on the verge of closing the sale of half of the property that it still has left over from the crisis. The Spanish entity is holding advanced negotiations to transfer €5.1 billion in foreclosed assets to Cerberus, for around €3 billion, according to financial sources consulted by Vozpópuli.

The fund chaired by John Snow has fought off competition from three other major international investors: Apollo, Lone Star and Blackstone. It is currently the favourite in the running even though it has not submitted the highest bid. According to Debtwire, Cerberus put an offer of €2.7 billion on the table; Apollo offered €2.9 billion but with a less attractive payment plan; and Lone Star and Blackstone bid themselves out of contention.

The offers were presented at the end of August and Santander is expected to close the sale over the next two weeks. Small changes in the perimeter of the operation have not been ruled out.

Resetting the clock

The sale of these assets – known as Project Apple – represents the largest divestment currently underway in the financial sector. It follows other sales completed this year, such as CaixaBank’s sale of €12.8 billion to Lone Star; and Sabadell’s sale of €9.1 billion to Cerberus.

With Project Apple, in which Santander is being advised by Credit Suisse, the bank hopes to reduce its exposure to property in Spain to almost nil.

Following the purchase of Popular last year, Santander ended up with €45 billion on its balance sheet. Last year, it transferred 51% of the €30 billion from Popular to Blackstone – Project Quasar. And, according to figures reported at its results presentation in July, Santander now has €10.1 billion of real estate exposure in Spain. Following the possible sale to Cerberus, it would be left with less than €5 billion, equivalent to just 11% of the balance it held a year ago.

With this operation, Cerberus would consolidate its position as the fund that has purchased the most assets from the banks during the crisis. In the last year alone, it has acquired property from Sabadell and BBVA.

Original story: Voz Pópuli (by Jorge Zuloaga)

Translation: Carmel Drake