Tag: AEB

Three New Tenants Move into Torre Espacio

25 September 2018 – Eje Prime

Torre Espacio is almost completely full. The Spanish group Villar Mir has added three new tenants to its property on Paseo de la Castellana in Madrid. The companies have leased 3,019 m2 in the property.

Thanks to this operation, the Spanish group led by Juan Miguel Villar Mir has leased 94% of the total surface area of Torre Espacio, the fourth tallest skyscraper in all of Spain. The supermarket cooperative Coviran, the application design firm Mobetia and the fibre optic operator Ufinet are the three companies that will now carry out their activity in the building.

The property is distributed over 57 floors and is currently owned by the Philippine group Emperador. Its tenants include several embassies, such as those of Australia, Canada and the United Kingdom, as well as the Spanish Banking Association (AEB) and firms such as Red Bull and Equifax.

The arrival of the new companies in Torre Espacio comes in the middle of the divestment plan in which Villar Mir is immersed. A few months ago, it sold 12.2% of its shareholding in OHL, reducing its stake to 38.2%. The main reason for that move was to decrease the group’s debt.

In August, Villar Mir sold the 32.5% stake that it held in the share capital of Project Canalejas to OHL, the construction firm owned by the holding company, for €50 million, according to a statement filed by the company with Spain’s National Securities and Market Commission (CNMV).

Original story: Eje Prime

Translation: Carmel Drake

Overseas Funds Compete to Finance & Buy Land in Spain

15 April 2018 – Voz Pópuli

At the beginning of 2012, at the height of the economic crisis, one of the directors of the Bank of Spain – José María Roldán, now the President of the AEB – faced a tough meeting with investors. One of them told him that land in Spain was worth nothing. “If that’s the case, then I’ll take it all”, replied Roldán.

And if he had done so, today, the executive would be a millionaire and the same funds that raised doubts over the banks’ balance sheets would today be knocking at his door to buy that land and finance developments on it.

The good times in the Spanish economy and the real estate recovery are causing the opportunistic funds to look for ways to take advantage of the situation. They are buying assets, real estate companies – Habitat and Inmoglacier are the most recent examples – and trying to fill the gap left by the banks in the financing arena. That is where they have set their sights on land, the last bastion, where traditional entities are still wary of lending.

“Bank financing is available for projects and occasionally for parts of plots, but it is inflexible and restricted to certain locations and pre-sales levels. Ours (financing) is flexible in terms of volume, periods and conditions”, says Luis Moreno, Senior Partner at Ibero Capital Management, a firm that has just teamed up with Oak Hill Advisors to lend the property developer at least €400 million. In just a few weeks, they already have projects on the table exceeding that amount.

Types of investors

“Bank financing is still almost non-existent and is only granted in very low percentages in situations of high pre-sales”, says Pablo Méndez, National Director of Capital Markets at Savills Aguirre Newman.

The example of Oak Hill is just one of many. Julian Labarra, National Director of Corporate Finance at CBRE, explains the different types of investors that are interested in land. A first group comprises funds that provide bridge loans. Whilst the banks require “that a development already has the necessary permits and a certain level of pre-sales”, some of the funds financing certain projects with “yields of 14-15%”. And they exit after 18-24 month, by which point the development meets the requirements of the traditional banks (…). Active funds in this segment include Incus, Oquendo and Avenue.

Other funds have chosen to team up directly with Spanish property developers: they put up the capital to buy and develop land and the managers contribute their knowledge. There are several examples: Lone Star with Neinor, Castlelake with Aedas, Cerberus with Inmoglacier; Bain Capital with Habitat; and Morgan Stanley with Gestilar.

Another similar, more recent, example is the association between FS Capital – from Finsolutia – and Inmobiliaria Espacio, a company owned by the Villar Mir group, to relaunch the construction business and sell homes by investing €400 million on land purchases (…).

Other funds also interested in land are those committed to financing the whole process, such as Oak Hill, and those that are buying portfolios of land from the banks and from Sareb, but not to resell them, such as Deutsche Bank and Blackstone.

By location, the experts agree that financing has gone from being limited to the large capitals to appearing in increasingly more cities. “(…). Until two years ago, interest was limited to Madrid, Barcelona, Málaga and the Balearic Islands. Now we are seeing operations along the whole coast, as well as in Sevilla, Zaragoza and Pamplona, amongst others (…)”, says Labarra, of CBRE. “This year we will see operations in cities such as Bilbao, Vigo, Salamanca, Zaragoza and Murcia, which have recently come onto the radar of the large investment groups”, adds Méndez, of Savills (…).

Original story: Voz Pópuli (by Jorge Zuloaga)

Translation: Carmel Drake

AEB Sells Its HQ For €10M & Moves To Torrespacio

21 September 2016 – Expansión

The change in AEB’s headquarters represents the final milestone in the transformation and modernisation process that the banking association began a year ago.

The banking association AEB will move out of its traditional headquarters (two and a half floors in a property on the Madrilenian Calle Velázquez) to move, under a lease contract, to one of the floors in Torre Espacio. The skyscraper was constructed by the group OHL and was sold to the Philippine group Emperador at the end of last year. AEB will move at the end of this year or in January 2017.

The economic operation involves the sale of the property in which the headquarters of the banking association has been located since it was founded, for an amount that market sources estimate to be in the vicinity of €10 million. AEB occupies a surface area of 2,400 sqm in that building, therefore, the sales price will amount to around €4,200/sqm. The buyer is a mutual insurance company, whose name has not been revealed, and it will have to modernise the property before leasing it out given that, although it is in good condition, it does not meet the requirements of the new tenants.

In the new location, AEB will occupy most of the 30th floor of Torrespacio, one of the towers that comprises the most modern office complex in the north of Madrid. There, AEB will occupy a surface area of 1,000 sqm, which is significantly smaller that its current headquarters, because, amongst other reasons, the office there is going to be open-plan for all employees, with the exception of the Secretary General and the Chairman, José María Roldón. This move follows a wider trend (towards open-plan offices) in the sector, implemented by BBVA at its new headquarters and a format that Santander is also planning to adopt – it wants to extend the pilot scheme that it has been trialling in its compliance department until now across the whole of its Boadilla del Monte complex. The rest of the floor in Torrespacio, approximately one third of it, will be leased for other activities, completely unrelated to the sector. (…).

Original story: Expansión (by Salvador Arancibia)

Translation: Carmel Drake

Evo Buys GE’s Spanish Mortgage Business For c. €300M

14 April 2016 – Expansión

As a result of this operation, involving Evo’s acquisition of almost €400 million in mortgages from GE Capital, Apollo’s subsidiary expects to increase its balance sheet by 10% and its loans to customers by 25%.

(…). The Spanish subsidiary of the US fund Apollo is acquiring General Electric’s mortgage business in Spain: almost €400 million in loans to individual borrowers, according to financial sources consulted by Expansión. According to the same sources, Evo will pay almost €300 million for the portfolio.

This operation brings the bank led by Enrique Tellado closer to its objective of achieving critical mass to emerge from the red in 2016.

Since Apollo acquired Evo, the former subsidiary of NCG Banco, the entity has registered three consecutive years of losses: €3.6 million in 2013, €78 million in 2014; and €13 million last year, according to the latest figures published, as at September, according to the Spanish Banking Association (AEB).

GE Capital Bank, the financial arm of GE, launched this divestment last year, as part of Project Zágato, advised by PwC. The portfolio, worth €400 million, contains 5,000 mortgage contracts and mainly contains loans that the US entity granted through APIs (real estate agents).

With this sale, GE Capital Bank is virtually shutting down its business in Spain, following the transfer of its leasing portfolio to Incus Capital, at the end of last year; and the repayment of the majority of its consumer loans.

This departure is the response to a change of strategy for the multinational company at the global level. At the beginning of 2015, GE decided to divest the majority of its financial business to focus on its industrial turbine, aircraft engine and medical equipment businesses, amongst others. It did so because of the risk posed by this financial exposure following the outbreak of the subprime mortgage crisis in 2008. At the time, the group had financial assets worth $500,000 million (€438,400 million).

Since then, GE Capital has been selling off parts of this business through different agreements in different countries, such as those signed with Evo and Incus in Spain.

This subsidiary reached its peak in Spain with partnerships that it signed with CAM and BBK before the crisis.

In 2008, it recorded losses and has remained loss-making ever since.

Quantitative leap

Project Zágato allows Evo Banco to make a significant quantitative leap. The portfolio acquired represents around 10% of its current balance sheet, which according to data from AEB as at November amounted to €4,000 million. The growth in terms of loans to customers is greater, almost 25%, given that it held €1,771 million last November.

Apollo’s standard strategy since it arrived in Spain has been to make purchases of entities, such as Evo Banco, which it acquired in 2013. Evo’s loan portfolio comprises purchases such as Finanmadrid, from Bankia; Bank of America’s credit card business; and portfolios of consumer credit and mortgages from Citi.

In the last few months, Evo Banco and Apollo have looked into other acquisitions in Spain, such as the BarclayCard sale, where it was pipped to the post by Bancopopular-e, the subsidiary of Värde Partners and Banco Popular, which is now in exclusive negotiations.

Original story: Expansión (by J. Zuloaga)

Translation: Carmel Drake

GE Finalises The Sale Of Its Banking Business In Spain

16 December 2015 – Expansión

GE Capital Bank is finalising its exit from Spain. The financial subsidiary of the US multi-national is holding negotiations with several investors to sell its entire loan business in the country. According to various financial sources, the business is primarily mortgage based and has a volume of almost €600 million.

The multi-national company has engaged PwC to manage this operation, known as Project Zágato.

There are three key candidates on the list to take over GE Capital’s portfolio, namely: Blackstone, which has experience in the management of banking mortgages after its acquisition of Catalunya Banc’s loans; Oaktree, which closed a similar operation with Bankia earlier in the year; and Evo Banco, owned by Apollo, which is looking to grow its assets through this type of portfolio, like it did with a portfolio from Citi in April.

The mortgages that GE Capital has put up for sale have a default ratio of 30% and the majority come from loans that the US entity granted through APIs (real estate agents).

The Australian fund Pepper Group is currently managing the portfolio. The other businesses that the Group has in Spain, mainly consumer financing, have been maturing in recent months.

GE Capital’s exit from Spain comes in response to a change in the multi-national company’s strategy at the global level. At the beginning of the year, the US group decided to divest the majority of its financial activity to focus on its industrial business involving turbines, aircraft engines and medical equipment, amongst others. At the time, the group had financial assets amounting to $500,000 million (€455,000 million).

Strategic shift

The multi-national took this decision due to the commercial risk that the financial arm of its business represented when the financial crisis hit in 2008, despite the fact that it generated half of the group’s profits.

Since then, GE Capital has been selling off parts of its business through agreements such as the one reached with Wells Fargo in October, for the transfer of assets amounting to $32,000 million. Just over a year ago, when its financial unit had not yet been dismantled, it sold part of its consumer business in Sweden, Norway and Denmark to Santander, for €700 million.

The group began to withdraw from Spain at the beginning of 2015, when it delisted itself from the Spanish banking register. At the time, it had negative reserves of €220 million as a result of the losses accumulated over several years, due to its high default rate.

The entity first started recording losses in 2008 with €13.6 million and did not manage to emerge from the red until 2014, when it recorded profits of €53 million.

At the end of 2014, GE Capital Bank held assets worth €524 million, according to data from the AEB.

Before the outbreak of the crisis, GE Capital had partnerships in Spain with CAM and BBK.

Original story: Expansión (by J. Zuloaga)

Translation: Carmel Drake

Guindos Changes Risk Traffic Light Amidst Criticism From Banks

5 November 2015 – Cinco Días

The Ministry of the Economy is reforming the risk traffic light originally designed by the CNMV once again. It is reducing the number of colours and is resisting criticism from banks, brokers, insurance companies and pension fund managers with an avalanche of arguments. It is also reducing its robustness. The ministry led by Luis de Guindos has sent a letter to the State Council setting out his aim of approving the regulation before the general election.

The Ministry of the Economy picked up the gauntlet from the CNMV at the end of May. The supervisor, led by Elvira Rodríguez, responsible for ensuring the proper marketing of financial products, amongst other things, designed a first draft of the risk traffic light in September 2014. (Note, the CNMV is not responsible for the oversight of deposits, since they are looked after by the Bank of Spain, or pension funds and insurance products, since they are managed by the Department for Insurance and Pension Funds).

The draft circular was modified after it was subjected to public consultation. Initially, the standard comprised a five colour scale, in a style very similar to the labelling system used for the energy classification of household appliances in Europe. The colours corresponded to the letters A to D. The CNMV took into account most of the comments it received from the sector, such as increasing the number of risk categories from five to seven.

Several months passed and Elvira Rodríguez made a complaint in Congress on 27 May, flagging that the Ministry of the Economy had not yet sent the proposal to the State Council. The ministry of Luis de Guindos replied the following day, by publishing its own risk traffic light standard for consultation. As such, it withdrew the CNMV’s power to take responsibility for it. The ministry had updated the traffic light and added another risk level. (…).

Various consultations, discussions and criticism ensued, including reprobation from the sector that this standard was unnecessarily anticipating the European rules governing the fundamental data relating to retail investment products. Those rules, approved in 2014, will enter into force at the end of 2016. The Spanish Banking Association (AEB) for example, said that it is unreasonable “to bear the costs [..] of a domestic solution that will last for one year only, not to mention the considerable confusion that it may cause for consumers”.

The latest draft of the classification, which has now been sent to the State Council, has undergone a new metamorphosis. The number of colours has been reduced (from eight) to seven and a long introduction has been included to defend its legality in the context of the new European rules and to justify the powers of the Ministry of the Economy to design this regulation. The aim is for the standard to be ready during this parliament. (…).

Original story: Cinco Días (by Pablo Martín Simón)

Translation: Carmel Drake

The AEB Thinks That The Mortgage War Is “Very Positive”

6 January 2015 – Expansión

AEB/ The Chairman of the bankers’ assocation says that the current battle for mortgages indicates that the financial sector is still competitive, despite the concentration of entities.

The on-going battle between banking institutions to offer new mortgages is a clear sign that the system is performing well following the restructuring of the last few years, according to the Spanish Banking Association (Asociación Española de Banca o AEB). Its Chairman, José María Roldán, said yesterday that it demonstates “that we have a competitive financial system. We are seeing a very strong degree of competition, to the extent that opportunities and confidence have allowed, and I believe that this is very encouraging. The most important thing is that the choice of loan is appropriate in terms of risk. All of this indicates that, despite the process of concentration that has taken place, healthy competition is still very much alive”.

Re-activation

Roldán was speaking at the Conference on the Spanish banking sector, organised by the Valencian Institute of Economic Research (el Instituto Valenciano de Investigaciones Económicas or IVIE). In his speech, he said that the most important thing right now is that demand for credit in Spain is returning. “Excessive leveraging has been corrected, in some cases loans have been written off and in other cases they have been refinanced, and so we now have sectors with less debt, which the uncertainties would not allow to commit to any investment projects”, he explained.

Now “we are in a situation in which the banks are fully prepared to finance the process of economy recovery, financing rates are very low and demand for credit is beginning to return. At present, there is strong competition between banks to grant loans. Although that does not mean that everyone asking for a loan will be granted one”.

Growth

Nevertheless, he considers that it is “difficult to predict when bank credit (on an aggregate basis) will begin to grow, since it depends on two processes. One, in which economic agents with good financial standing are able to demand and obtain credit, and the other, whereby the agents that are still heavily indebted are continuing to service their debts”.

But he reiterated that “that is not the most important thing. What is important is that demand for credit is increasing and that financial institutions are prepared to meet it”.

Original story: Expansión (by J. Brines)

Translation: Carmel Drake