2 August 2017 – Expansión
A month after announcing that it was putting Popular’s toxic real estate up for sale, Santander has chosen the fund with which it wants to negotiate. The bank is looking to sell a portfolio of Popular’s foreclosed assets and doubtful real estate debts with a gross value of €30,000 million. It will be the largest sale of a toxic real estate portfolio in Spain in recent years. And the process is already taking shape, in the hope that Brussels will give the definitive green light to the Cantabrian bank’s acquisition of Popular, due at the end of this month.
Yesterday, Santander announced that it will negotiate exclusively with Blackstone from now on to sell a majority stake in the vehicle in which it placed the toxic property inherited following the purchase of the entity wound up by the European authorities. Santander’s initial idea is to sell 51% of this vehicle, which will allow the group to deconsolidate those real estate assets from its balance sheet. The assets and doubtful loans that Blackstone plans to acquire will be managed by Aliseda. That company already administers Popular’s real estate assets and is 100% owned by Santander after the bank repurchased the 51% stake held by Kennedy Wilson and Värde Partners a month ago.
After buying Popular, whose merger will be completed over the course of the next two years, Santander has increased its exposure to real estate risk to €41,048 million, according to the latest available data. Popular’s real estate risk amounts to almost €37,000 million, including its stakes in real estate companies, which amount to around €7,000 million.
According to a statement made to the CNMV yesterday, Santander has received binding offers from “several investors” over the last few days for one of the largest portfolios ever to go onto the market in Spain, and also in Europe. The operation sparked immediate interest amongst the large international funds when Santander announced that it was putting Popular’s real estate up for sale on 30 June. In addition to Blackstone, Apollo, TPG, GreenOak and Goldman Sachs, amongst others, approached the bank to find out more.
Financial sources indicate that Apollo and Lone Star fought hard until the end to acquire the majority of Popular’s toxic real estate. In the last few days, some of the interested funds have asked Santander, which is being advised by Morgan Stanley, for more time to conduct due diligences (…).
The rapid sale of Popular’s real estate portfolio, which is being piloted by the Deputy Director General of Santander, Javier García-Carranza, could result in revenues of €5,000 million, according to estimates in the sector. Santander has recognised provisions of €7,900 million to increase the coverage ratio of Popular’s real estate to 69%, well above the sector average (52%). This means the bank can afford to get rid of the real estate portfolio at significant discounts and thereby recognise gains (…).
Original story: Expansión (by R. Sampedro)
Translation: Carmel Drake