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Värde Buys San José’s RE Arm & Will Build 1,500 Homes

7 August 2015 – El Confidencial

After months working on the sidelines, the private equity firm Värde Partners has finally taken control of San José Desarrollos Inmobiliarios, the real estate arm of the Galician group. The US fund has purchased a 25% stake in the company from Banco Popular for €90 million, in a deal signed on Wednesday, taking its ownership stake to 51%.

From this position of power, Värde expects to immediately carry out a €60 million capital increase, in a move aimed at shoring up the company and laying the necessary foundations to start developing properties. The aim of the fund, which will invest €150 million in the company in total, through its purchase from Popular and the subsequent capital injection, is to start the construction of 1,500 homes across Spain, clearly underlining its commitment to the Spanish property market.

The US firm is one of the most active foreign investors in the sector, where it has now made three major investments. It all began in the Summer of 2013, when it partnered up with Kennedy Wilson in an agreement to acquire Catalunya Banc’s real estate management platform for almost €30 million, although the two parties ended up breaking that pact a few months later.

The two firms crossed paths once again at the end of 2013, when they pipped Centerbridge at the post, to acquire Aliseda, the real estate arm of Banco Popular, for €815 million. That operation allowed them to take over the management of mortgage-backed loans with a net value of €9,350 million and foreclosed assets worth €6,500 million.

Far from being content with that transaction, Värde then began to acquire stakes in San José Desarrollos Inmobiliarios through the back door, by purchasing loans from its creditor entities. It signed those purchase agreements with discounts of around 90% and whereby became the company’s main creditor, just when the parent company of the Galician group was finalising the refinancing of its €1,600 million debt with the banks.

The final agreement was signed at the end of 2014 and involved dividing the company chaired by Jacinto Rey (pictured above) into two: on the one hand, the construction business, and on the other hand, the real estate company, which it was agreed would pass into the hands of the creditors to repay €743 million of the debt.

Sources state that Värde does not currently have any plans to integrate Aliseda with its recent purchase of San José Desarrollos Inmobiliarios…(…).

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake