Värde Sells Reyal Urbis’ Debt & Launches Bid For Habitat

7 June 2017 – Expansión

Corporate movements / The US fund is selling its stake in the debt of the property developer to the firm Taconic Capital after failing to reach an agreement ahead of the liquidation. In exchange, it will strengthen its commitment to Habitat.

After several intense weeks of negotiations, Värde has put an end to its relationship with Reyal Urbis. The US firm’s first dealings with the real estate firm saw it purchase a package of debt at the height of the process to negotiate an agreement that would allow the property developer to emerge from the bankruptcy proceeding in which it has been immersed since 2013. In a repeat of the deal struck with the real estate arm of San José, the final objective of the US fund was to obtain access to Reyal Urbis’ portfolio of assets (primarily land) by exchanging it for debt. To this end, Värde had started to negotiate with some of the most high-profile creditors, to buy up loans and propose an orderly liquidation plan, according to sources in the sector.

Nevertheless, Värde’s plans were thwarted by the Tax Authorities. Reyal owes the Public Administration more than €400 million (…), which was not willing to accept Värde’s proposal. As such, the US fund opted to sell its stake to another fund, specifically, to Taconic Capital.

According to sources in the sector, in addition to Taconic, some of Reyal’s other creditors include other funds such as Aurelius and Morgan Stanley. It will be them, along with the banks such as Santander, the Tax Authorities and Sareb who will now decide the future of the company.

Habitat

The decision to sell its debt in Reyal Urbis does not represent a setback in Värde’s commitment to the Spanish real estate sector and, in fact, the fund has already placed its focus on another one of the country’s large real estate companies: the Catalan firm Promociones Habitat.

Controlled by several funds such as Bank of America, Melf, Goldman Sachs and SP 101, the owners of Habitat put the company up for sale in March, through a process organised by the consultancy firm Irea.

These funds acquired stakes in Habitat’s share capital in 2015, after exchanging the debt that they acquired months earlier from the creditor bank. Although a longer period of continuity in the company was established at the time, in the end, the investors have decided to exit two years early, in light of the interest that investors have expressed in the Spanish real estate company. Although the process is still in its initial phase, Värde seems to be the best-placed candidate to purchase it, according to sources close to the process. The sale of the company is expected to be completed before the end of the year.

Sources in the sector indicate that other possible candidates in the running to acquire Habitat include Apollo, Cerberus, Bain Capital and Bank of America Merrill Lynch.

Habitat is one of the most highly regarded Catalan real estate companies in the sector. Led by Bruno Figueras, the company filed for voluntary creditor bankruptcy at the end of 2008, a process that it then emerged from in 2010 (…). After a series of negotiations with the creditors (…), the banks that had financed Habitat back in the day agreed to give way to the international funds that specialise in debt purchases. Two years later, those same funds have started to look for their exit route.

The real estate company has convened a General Shareholders’ Meeting to be held on 21 June 2017, where it will present the results for last year. In 2015, the most recent year for which results are publicly availabe, Habitat recorded revenues of €10.53 million, compared to €27.7 million in 2014. (…), which translated into gains of €1,073 million in 2015, compared with losses of €370 million the year before (…).

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

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