19 November 2015 – Cinco Días
The fourth quarter of the year is usually the most hectic for any real estate business, but this year Sareb’s activity is off the scale as year-end approaches. On the one hand, this is because following the decrease in the rate of house sales to individuals during the year, the company is looking to benefit from the traditional retail boom that always happens in the final quarter.
On the other hand, it is because a new, and onerous, accounting circular has just been officially approved, and it will govern the results of the so-called bad bank for this year end, which means that, amongst other things, it has been forced to launch a race against the clock to re-appraise, and value at market price, at least half of the €44,000 million assets it still owns.
Moreover, because it is trying to at least partially alleviate both effects, Sareb is also preparing the relaunch of several macro-operations with large investors. Specifically, according to sources, it has launched the sale of four portfolios with a combined nominal value of €1,500 million.
All of the portfolios contain loans, which represent 80% of Sareb’s total burden, and those loans are secured by real estate assets as collateral. In this way, the purchasers of these packages, who will have the option of acquiring specific tranches in each case and not necessarily each of the portfolios in their entirety, may invest with the objective of trying to recover the loans or of enforcing them and repossessing the properties that secure them.
The first two portfolios, which have a combined nominal value of €800 million, comprise loans secured by unique assets as collateral, in other words, luxury properties or large buildings, which could lend themselves to being shared between a group of buyers.
The third portfolio, worth €400 million, contains loans secured by both finished homes and land. In this case, the portfolio could be sub-divided into tranches to allow various buyers to participate if they are interested in acquiring just one specific part of the portfolio.
Finally, the fourth portfolio has a nominal value of €200 million and comprises loans secured by hotels, warehouses and retail premises. As an additional feature, besides the loans in this portfolio, the package also includes certain physical assets, specifically some industrial warehouses that have already been foreclosed.
Although the sales prices that Sareb will obtain for these portfolios remains to be seen (the figure of €1,500 million represents the combined nominal value), market sources claim that the conditions in the market have improved and so the bad bank could well obtain good prices. Those same sources reveal that the most demanding international investment funds have reduced the size of their discounts from 20% of asset values to around 12%, on average.
Either way, Sareb’s objective is ambitious (…), given that the assets for sale in these portfolios significantly exceed the volume sold at the end of last year, when the bad bank divested portfolios worth €1,000 million to large investors. (…)
Original story: Cinco Días (by Juande Portillo and Ángeles Gonzalo Alconada)
Translation: Carmel Drake