Tag: Abanca

Agartha Real Estate Socimi to Debut on the Euronext Access in July

4 June 2019 – Eje Prime

Agartha Real Estate Socimi is getting ready to make its debut on the Euronext Access platform in July, with an estimated valuation of €28 million.

The co-working and co-living specialist will make its debut with a portfolio of three flexible office spaces in Madrid, located on Calle Piamonte, 23, Calle Serrano Anguita, 13 and Calle Javier Ferrero, 10.

The company is owned by the Venezuelan businessman Miguel Ángel Capriles, a relative of the opposition leader Henrique Capriles and director of Abanca.

Original story: Eje Prime 

Translation/Summary: Carmel Drake

Unicaja Considers the Sale of a Large RE Portfolio in 2019

12 February 2019 – Expansión

Unicaja accelerated the clean up of its balance sheet during the course of 2018. The Málaga-based entity decreased its volume of non-performing assets by 22%, in such a way that it is now close to the reduction objective it established in its latest strategic plan for 2020. That is according to the figures provided by the bank itself during the presentation of its results for last year.

The entity chaired by Manuel Azuaga (pictured above) ended 2018 with a volume of non-performing assets (NPAs) amounting to €3.6 billion, of which €1.7 billion were foreclosed assets and €1.9 billion were non-performing loans.

In five years, the bank has reduced its toxic legacy by 51% or more than €3.8 billion. Unicaja’s commitment to investors was to bring its exposure to problem assets down below the €3.5 billion mark before the end of 2020. The rate of sales of small NPA portfolios has allowed it to get ahead in the calendar that it established in its strategic plan. But the entity will continue its clean up.

The heads of Unicaja have reported their intention to continue with small portfolio sales during 2019. Moreover, they do not rule out carrying out the sale of a large portfolio in order to segregate a majority of the non-performing exposure, in a similar way to what most of the Spanish banks have been doing over the last two years.

Unicaja’s decision to carry out a massive property sale will depend, like in other cases, on the discounts that the entity will have to apply to its portfolio. The NPAs of the Malagan bank have an average coverage level of 57%, which means that a discount of a similar percentage could be applied to the book value without resulting in accounting losses for the entity this year.

High asset quality

Unicaja is, together with Abanca, the only Spanish bank entity that still retains ownership of its servicer, the real estate subsidiary through which it sells its homes and commercial premises.

The recent decision by Sabadell to sell 80% of Solvia to Intrum followed other previous operations that have seen the Spanish banks undoing their positions in the property segment, including the sale of Servihabitat to Lone Star by CaixaBank, and of Aliseda to Blackstone by Santander.

Beyond Unicaja’s plans for its property, the entity has been recording a positive trend in terms of the quality of its assets for several years now. The net inflows of problem loans have registered eight consecutive quarters of decreases, and between September and December, they recorded the largest decrease in the bank’s historical series.

Since 2014, Unicaja’s default ratio has also decreased by almost half: from 12.6% recorded in December 2014, the Málaga-based entity has managed to clean up its balance sheet to bring the rate of toxic loans down to just 6.7%.

Original story: Expansión (by Nicolás M. Sarriés)

Translation: Carmel Drake

Inditex Caused the Ministry of Development’s Results to Soar in Galicia in 2017

13 November 2018 – Economía Digital

Inditex purchased more square metres of land from the Ministry of Development’s land manager than the Xunta sells in one year. In a single transaction, the company owned by Amancio Ortega acquired 218,000 m2 of land last year spread over 26 plots on the A Laracha industrial estate (A Coruña) from the company Suelo Empresarial del Atlántico, controlled by the department led by José Luis Ábalos.

The implementation of the multinational’s new logistics hub to complement the group’s central complex in Arteixo, multiplied the revenues and profits of the Ministry of Development’s land manager, which has 13 industrial estates up for sale in Galicia, but which faces serious difficulties when it comes to selling the plots unless it offers them  significant discounts.

The Inditex effect: revenues multiplied by six

Last year, Suelo Empresarial del Atlántico multiplied its revenues by six, up from €2.5 million in 2016 to €15.7 million in 2017. Of that amount, €13.4 million proceeded from the plots sold in A Laracha, the industrial estate chosen by Inditex. The remainder (€1.1 million) was invoiced in Rianxo or was received through subsidies to the business parks of Cee, Muros, Vimianzo and Rianxo itself, given that the entity is a recipient of European funds.

The dependence on a single operation in 2017, the one involving Inditex, shows the difficulties faced when it comes to finding companies to set up shop in Galicia, both for the property developer of the Xunta, which in just two years since its creation has sold 200,000 m2, as well as for the Suelo Empresarial del Atlántico, formerly Plan Galicia promoted by José María Aznar in 2003 to compensate the Prestige disaster.

The purchases by the textile giant also caused the profits of the land manager to soar, up from €53,554 to €444,500, an eight-fold rise. Suelo Empresarial del Atlántico is owned by the Xunta (15%) and by Abanca (1.6%), although the bulk of its share capital, more than 83%, is in the hands of the Ministry of Development through the Public Land Management Company (‘Entidad Pública Empresarial de Suelo’ or Sepes) (…).

Original story: Economía Digital (by Rubén Rodríguez)

Translation: Carmel Drake

Azora Postpones the Liquidation of its European RE Investment Fund

6 March 2018 – Expansión

Strategy / The manager is asking the shareholders of Azora Europa 1, including Sabadell, Bankia, Abanca, Manuel Jove and the President of Ebro Foods, Antonio Hernández Callejas, to extend the divestment period.

With renowned shareholders, the firm Azora Europa 1 has convened an Extraordinary General Shareholders’ Meeting on 21 March, where it is going to address a change of strategy. The company was created by the heads of Azora in 2005 with the aim of looking for real estate investment opportunities. Two years later, when the real estate bubble burst in Spain, the firm started its journey with investments from Sabadell, Bankia, Kutxabank and Abanca, the businessman Manuel Jove – President of the holding company Inveravante and founder of the real estate company Fadesa –, and the President of the listed company Ebro Foods, Antonio Hernández Callejas.

Azora Europa 1 chose Eastern Europe as its primary investment destination and rental properties as its main asset. Thus, between 2008 and 2015, Azora Europa undertook 10 real estate projects in Poland and another one in the Czech Republic. During that period, Azora’s fund closed its investor period with a total volume of €410 million, of which €140 million corresponded to own funds.

Ten years after its launch, its directors terminated the fund’s journey and requested authorisation from its shareholders to initiate the divestment process. Nevertheless, one year on, the company has taken a step back from that initial plan and is going to ask its investors to postpone its complete liquidation. The fund, which at its height accumulated a dozen properties, two for residential use and the rest for office use in Poland and the Czech Republic, has decided to divest the residential complexes and the Galerías Louvre in Prague, and exclusively hold onto its office portfolio in Poland. The reason given is the high returns offered by those assets, say sources at Azora. It is a portfolio leased almost in its entirety and which includes, amongst others, the headquarters of BNP Paribas Fortis in Krakow and the Harmony Office Centre in Warsaw, whose main tenant is Millennium Bank.

Now, the heads of Azora (the company that also manages the Socimi Hispania) are going to have to obtain approval from their shareholders, on 21 March, to extend the initial divestment period. At the meeting, the subject of a capital reduction will also be addressed, for a maximum amount of €6.16 million.

Valuation

According to the latest published accounts, Azora Europa 1’s real estate investments were worth €260.7 million as at December 2016, compared with €269.5 million a year earlier. In 2016, the fund recorded revenues of €30.6 million, of which €12.8 million proceeded from the sale of properties (compared with €1.8 million generated from the same concept a year earlier). In that year, Azora Europa 1 recorded losses of €3.73 million, primarily due to provisions recorded for the impairment of tax credits.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

Bankia, BBVA & Abanca At War with Sareb for “Breach of Contract”

30 January 2018 – El Independiente

Bankia, BBVA and Abanca are at war with Sareb. The three entities are not willing to sacrifice their own results just because the bonds issued by the ‘bad bank’, which they received as payment for the real estate assets that they transferred to it, are now generating a negative return when, according to the conditions established, the coupon should not have been allowed to fall below 0%.

The conflict is in the middle of an arbitration process to determine whether the banks will be forced to accept that Sareb has decided to change the price of those bonds, explain sources familiar with the negotiations, speaking to El Independiente. The affected entities accuse “Sareb of a breach of contract”.

Sareb was created to take on 200,000 financial and real estate assets from the banks in exchange for which it issued €50.781 billion in 1-, 2- and 3-year bonds, which are renewed each time they mature. The interest rate on those bonds comprises two variable components: the 3-month euribor rate – which is currently trading at -0.32% – and the Treasury interest rate over the term in question. On the secondary market, that interest rate currently amounts to -0.43%, -0.21% and 0.03% for one, two and three years, respectively.

Of the €50.781 billion issued, Bankia granted the company assets worth €22.317 billion, Catalunya Bank – now absorbed by BBVA – contributed €6.708 billion and Novagalicia – which now belongs to the Venezuelan group Abanca – just over €5.0 billion.

Officially, the bonds were issued with a coupon that included a floor clause to prevent the interest rate from being negative depending on the conditions in the market. That floor had its own raison d’etre: so that the securities could be used by the entities to approach the ECB to request liquidity, given that, until last year, the bonds had to trade with positive coupons in order to be discounted by the central bank.

Nevertheless, a regulatory change in the middle of 2017 means that the banks can now use this debt as collateral even when those coupons are negative. This argument is enabling Sareb to refuse to maintain the floor clause that kept the coupons at 0%. And Bankia, BBVA and Abanca are not willing to assume that cost.

An executive familiar with the conflict explains it like this: “Sareb agreed that,  in exchange for the real estate assets that the banks transferred to it at the end of 2012, it would pay them a specific amount, not in cash but in bonds. Now it says that it is going to pay less and so, naturally, the banks need to defend their interests and those of their shareholders”.

Of the more than €50 billion in Sareb bonds issued to pay for the 200,000 real estate assets – 80% in loans and credits to property developers and 20% in properties – which nine entities transferred to it, the outstanding balance now amounts to €37.9 billion. In this way, the company has repaid almost €13 billion. Moreover, it has also paid interest on that debt of almost €2.8 billion.

Original story: El Independiente (by Ana Antón and Pablo García)

Translation: Carmel Drake

Socimi Vitruvio Signs €19M Loan With Abanca

5 December 2017 – Eje Prime

The Socimi Vitruvio has paid off an outstanding debt with a new loan. The company has subscribed a financing contract amounting to €19 million with Abanca. According to explanations provided by the group, the funds will be used to repay the debt resulting from the merger by absorption of Consulnor.

The debt assumed following the merger with the real estate company Consulnor amounting to €12.7 million will be paid off thanks to this new loan. The Socimi will also proceed to cancel the line of credit granted by Banco Santander amounting to €4.6 million.

The new loan with Abanca has a two-year grace period (until 30 November 2019) and a monthly repayment schedule of 14 consecutive instalments. The interest rate that Vitruvio will pay will be fixed at 1% during the first year, before rising to 1% plus 1-year Euribor from November 2018 onwards. The loan is due to mature in December 2031.

At the end of 2016, Vitruvio and Consulnor Patrimonio Inmobiliario (CPI) signed a merger agreement whereby CPI, a real estate investment vehicle created by Consulnor (the manager in which Banca March holds a 48% stake), transferred its assets to the Socimi in exchange for shares.

After closing the operations involving CPI and Madrid Rio, Vitruvio plans to undertake new investments amounting to more than €30 million this year.

Original story: Eje Prime

Translation: Carmel Drake

Spain’s Banking Sector Fears ECB Stress Tests

27 November 2017 – Voz Pópuli

Spain’s banks are facing a new perfect storm, albeit on paper. In an already difficult scenario in which the financial institutions are having to adapt to the new provisioning requirements (IFRS 9), they are also having to deal with the upcoming stress tests that are being prepared for 2018.

If we take an analogy by way of example – what is happening in the banking sector is equivalent to what would happen to a student if a decision was taken to change the language of his/her class and then a few months later force him/her to take an entrance exam in that new language. The entities have gone to the wire to try and persuade the authorities to examine them in their native language (based on their current provisions) but the European Banking Authority (EBA) and the ECB have outright refused.

The new provisions mean a radical change in the model. Until now, the banks recognise losses when their loans are impaired, in other words, when non-payments begin. Under the new system, the banks will have to anticipate advance signs of impairment.

A report from the consultancy firm Alvarez & Marsal estimates that the potential impact of the new IFRS 9 provisions on the stress tests is 465 basis points. More than half of that amount will come about in the first of the three years covered by the exercise, which reflects that from now on, crises are going to hit banks faster.

Impact

If we apply these calculations to the latest official figures from the sector (published on Friday as part of the EBA’s transparency exercise), the result in the loss of one-third of the regulatory capital (CET 1). Even so, they are stress test scenarios and so will not necessarily happen.

KutxaBank and Bankia were the entities with the largest buffers in the last year of transparency, with more than 14% of capital, although the group chaired by José Ignacio Gorigiolzarri will see its figure reduce once it completes its takeover of BMN. They are followed in the ranking by Unicaja, Abanca, Sabadell and Liberbank.

Another finding from the data published as part of the transparency exercise is that Spain’s banks have moved away from those of other peripheral countries (Portugal, Italy, Ireland and Greece) in terms of delinquency.

Original story: Voz Pópuli (by Jorge Zuloaga)

Translation: Carmel Drake

Liberbank Agrees To Sell €750M RE Portfolio To Bain

11 October 2017 – El Confidencial

Liberbank has agreed to sell a portfolio of foreclosed properties worth €750 million to the fund Bain Capital, after ruling out a rival offer from KKR. According to sources familiar with the situation, the transaction will be closed at a price of between 45% and 48% of the initial value (the final figure is the only matter that still needs to be agreed), in other words, with a discount of between 52% and 55% of the book value. That haircut is lower than the 66% that Santander had to apply to divest Popular’s property portfolio in the summer.

The aforementioned sources explain that, in the end, this portfolio does not include any non-performing loans, but rather contains foreclosed assets only. The sales price implies a higher discount than the net value (after provisions) at which Liberbank recognises these assets on its balance sheet (around 40%, albeit based on their appraisal value as at 2017), which means that the entity will have to recognise an additional loss as a result of this sale. But it will cover some of that loss with funds resulting from the €500 million capital increase that it approved on Monday and to which its main shareholders have already signed up.

The fact that Liberbank has had to offer a lower discount than Santander did for the sale of Popular’s assets is explained by three factors. Firstly, the size and urgency of the operation: the bank chaired by Ana Botín sold a much larger portfolio, amounting to €30,000 million, which it wanted to divest from its balance sheet as soon as possible, and whereby shield itself from the possible legal annulment of its purchase of Popular.

The second is that Santander sold only 51% of its portfolio, in other words, in that case, the bank will continue to receive income from the rental or sale of the assets in its remaining 49% stake. A better price can always be negotiated when the buyer acquires the rights to all of the revenues associated with a given portfolio. The third reason is that “not all of the assets are the same, and Popular’s portfolio contained a lot of poor quality properties”, according to one of the sources consulted. In other words, Liberbank’s portfolio contains better quality assets.

Ensuring survival on its own

(…). As El Confidencial has reported, both this real estate operation, as well as the capital increase, are consequences of demands made by the (Spanish) Government and the Bank of Spain to strengthen Liberbank’s solvency for fear of a repeat of a collapse like Popular’s (a fear that also led to the supervisor imposing a ban on the short selling of the entity’s shares, which still continues). In the face of interest from Abanca, Unicaja and CaixaBank to acquire Liberbank, the entity led by Manuel Menéndez decided to undertake these operations to ensure its survival as an independent player.

Moreover, the entity sold another €215 million in real estate assets unrelated to this portfolio during the third quarter. In that case, it sold the assets at their net book value, in other words, without the need to record any additional losses. In this way, Liberbank will easily exceed its objective of decreasing its property portfolio by €800 million this year, with most of the fourth quarter still remaining. In addition, during the same period, it decreased its non-performing loans by a further €230 million thanks to recoveries and foreclosures.

Original story: El Confidencial (by Eduardo Segovia)

Translation: Carmel Drake

KKR & Cabot Compete To Acquire Hipoges

31 August 2017 – Voz Pópuli

KKR and Cabot Financial are competing in one of the processes that has generated the most excitement amongst overseas funds in recent months. The two Anglo-Saxon investors are the finalists in the bid to acquire Hipoges, a platform created at the end of 2008 by former directors of Lehman Brothers, the investment bank that went bankrupt in September of that year.

The platform is controlled by Cerberus, with a 40% stake, and by its CEO, Juan Francisco Vizcaíno, who owns 18.3%. It is not clear how much of the company is up for sale, although the various sources consulted by this newspaper explained that the initiative to launch the sales process has been taken by the directors. The final price of the transaction could amount to €25 million.

The bid is being led by Alantra as an advisor and funds such as Bain Capital have participated in it, in addition to Cabot and KKR.

Hipoges has a presence in four countries, although most of its business is concentrated in Spain. In total, it administers almost €8,000 million for 22 clients, above all overseas opportunistic funds and financial institutions.

Intense competition

The platform advises investors regarding the acquisition of portfolios and the subsequent management of the assets acquired. Hipoges is responsible for administrating debt, filing claims to recover it, going to court and in the event that a property is repossessed, managing and selling it. It also competes with the major real estate companies, such as Haya Real Estate, Altamira, Servihabitat, Aktua, Aliseda, Solvia and with other independent firms such as TDX, Finsolutia and Copernicus.

Of the €8,000 million that it administers, 72% are unpaid loans granted to property developers and mortgages. The remainder are loans to SMEs (14%), consumers (12%) and invoices (2%).

By entering this process, KKR wants to take another step forward in its real estate strategy in Spain. After purchasing a portfolio of mortgages from Abanca – formerly NCG Banco – the North American fund is negotiating the acquisition of a platform that will allow it to continue gaining experience in the property sector.

Meanwhile, Cabot is another of the foreign groups that is most committed to the purchase of banking assets. It arrived in Spain in 2015 with the acquisition of Gesif and is hoping to enter the real estate business with Hipoges.

Original story: Voz Pópuli (by Jorge Zuloaga)

Translation: Carmel Drake

Operation Tramuntana: CaixaBank Assesses Offers Worth €200M

31 May 2017 – Voz Pópuli

CaixaBank is accelerating the sale of Project Tramuntana, one of the largest divestments that the Spanish bank is currently working on. The entity chaired by Jordi Gual is looking to sell off almost €600 million in unpaid loans linked to real estate developments.

The three funds that have progressed through to the final round of the process are: Cerberus, Deutsche Bank and Bain Capital, according to financial sources consulted by Vozpópuli. Those funds have reportedly put offers on the table of around €200 million for the portfolio during the non-binding offer phase.

They now have one more week to analyse all of the loans in the portfolio before submitting their binding offers, given that the cut-off date that was initially stipulated for this sales process was 8 June. With this, CaixaBank wants to be certain about who has won the bid by the middle of next month, so as to have all of the paperwork ready to close the agreement before the end of the first half of the year and whereby include the results in its half-year accounts.

CaixaBank sold the second largest volume of problem assets in Spain in 2016 (€2,100 million), after Banco Sabadell (€2,800 million) and ahead of Abanca (€2,100 million), Sareb (€1,400 million) and Bankia (€1,100 million), according to data from Deloitte.

Buyers

Project Tramuntana is almost a replica of an operation closed last year, Project Carlit, in which CaixaBank sold a portfolio of loans worth €850 million to Goldman Sachs. In addition, the entity sold hotel loans to Apollo.

Of the buyers left in the running, Cerberus is the one that most urgently wants to purchase the portfolio, given that it did not win any of the processes that it participated in last year. The US fund needs to accumulate assets in order to leverage its two platforms in Spain, Haya Real Estate, which it purchased from Bankia, and Gescobro.

Bain Capital, meanwhile, was the largest buyer of bank portfolios in Spain last year, acquiring real estate assets and debt worth €1,700 million from Sabadell, Bankia, Cajamar.

Meanwhile, Deutsche Bank also had a busy year. On the one hand, it bought assets from several entities, such as the case of the Ocean portfolio, from Bankia, but it also sold the majority of the problem assets held by its own bank in Spain. They were purchased by Oaktree, which forced the entity chaired by Antonio Rodríguez Pina to recognise a provision amounting to €68 million.

Original story: Voz Pópuli (by Jorge Zuloaga)

Translation: Carmel Drake