Cerberus Plans to Create a Real Estate Giant by Acquiring Altamira & Solvia

10 November 2018 – Expansión

Cerberus is increasing its commitment to the Spanish real estate market. The US fund is the favourite candidate to take over the reins at Altamira, the manager of property loans and foreclosed real estate assets currently owned by Apollo and Santander. Moreover, Cerberus is battling it out with the fund Lindorff (now Intrum) and other investors to purchase Solvia.

As Expansión revealed on 8 October, Apollo renewed its contract with the investment bank Goldman Sachs at the beginning of the summer and distributed the teaser (the sales document containing a general description) to potential interested parties to dispose of this asset for between €500 million and €600 million. Although it is not alone in the process, Cerberus is the candidate that has the best chance of acquiring that company.

But Cerberus is not going to settle for that asset only. Financial sources assure that the US fund is also bidding for Solvia, in a process in which it is also competing with Lindorff. The CEO of Sabadell, Jaume Guardiola, noted, during the presentation of the results on 26 October, the “good appetite” in the market for Solvia, “whose sale will close “soon”. He whereby confirmed the sale of Solvia Servicios Inmobiliarios (SSI) and Solvia Desarrollos Inmobiliarios (SDI). For the sale of SSI, in which it is being advised by Alantra, the bank hopes to receive up to €400 million.

Concentration of the market

If Cerberus ends up being the winner of both processes, it will become the clear leader of the servicer sector and a proponent of concentration between the servicers. These companies, created from the former real estate subsidiaries of the banks, have become some of the stars of the new real estate cycle.

Currently, almost all of the assets under management of the banks are in the hands of a few companies such as Altamira, Servihabitat, Haya Real Estate, Aliseda, Anticipa, Solvia and Divarian (previously Anida). These firms are mainly responsible for the management and recovery of debt and transformation of loan obligations into foreclosed real estate assets, as well as the sale and rental of assets.

If Cerberus ends up taking control of Altamira and Solvia, it will control almost 65% of the market for servicers, which will allow it to mark a differentiation in its strategy. Currently, the US fund controls Haya Real Estate, one of the large servicers with €40 billion in assets under management. Moreover, it took over the reins at Anida, which was in the hands of BBVA, and which manages €13 billion.

If it adds Altamira and Solvia to its portfolio, the volume of assets under management will soar to €138.9 billion, with a market share in the servicer segment of 65%. According to numbers managed by the consultancy firm Axis, the other two dominant funds are Blackstone, with Anticipa and Aliseda (also from Santander) and LoneStar, which controls Servihabitat after purchasing that company from La Caixa in the summer.

Other assets

In addition to the servicers, Cerberus is also the owner of the property developer Inmoglacier; the online estate agency between individuals Housell; and the debt recovery company Gescobro (…).

Original story: Expansión (by R.Arroyo and D.Badía)

Translation: Carmel Drake

Ibercaja Puts €600M Portfolio of Toxic Assets up for Sale

9 November 2018 – Eje Prime

The banks are continuing to divest property. The financial institutions have been working hard over the last two years to erase the ballast of toxic assets from their income statements, which they inherited during the immense economic crisis that Spain lived through at the end of the 2000s. One of the latest to make a move is Ibercaja, which has placed a real estate portfolio worth €600 million on the market.

In this operation, called Project Cierzo, the Aragon financial institution is being advised by the investment bank Alantra. Both companies expect to close the sale within the next few weeks, according to Vozpópuli.

The objective of Ibercaja, like that of other Spanish banks, is to clean up its accounts. In its case, it has the added incentive of its stock market debut in 2019, ahead of which it needs to divest more than half of its property.

Original story: Eje Prime 

Translation: Carmel Drake

Cerberus is the Favourite to Acquire Solvia for €300M

31 October 2018 – El Economista

The sale of Solvia, the servicer of Banco Sabadell, is heading into the final stretch. According to reports, the US fund Cerberus is lining itself up as the favourite to acquire that company, worth just over €300 million.

According to market sources, binding offers were submitted on Tuesday for Solvia Servicios Inmobiliarios – the firm responsible for marketing the assets – of which those presented by Cerberus, Intrum (the company resulting from the merger between Justitia and Lindorff) and that of another overseas fund stood out. In particular, the offer submitted by Cerberus is the favourite in the process, which is being coordinated by Alantra.

The entity has engaged Rothschild to find a buyer for its property developer.

In any case, according to the same sources, this transaction exclusively contemplates the sale of the management activity, and not the transfer of assets, which opens the door for Sabadell to obtain greater profits, unlike some of its competitors such as BBVA, which did sell its servicer (Anida) together with a portfolio of assets worth €13 billion to Cerberus, applying a discount to those assets. It is worth recalling, nevertheless, that the US fund closed the acquisition of a portfolio of assets (from the Catalan entity) for more than €3 billion in the summer.

This operation comes in a context in which the international investment funds are very interested in Spanish property, which is allowing the owners to sell at higher multiples. That, together with the requirements of the European Central Bank (ECB) to accelerate the sales of financial institutions to the real estate business, has created the ideal breeding ground for Sabadell to decide to sell this asset.

Moreover, this divestment is going to allow the financial institution to reduce the consumption of capital and, whereby, avoid penalties from the ECB. El Economista made contact with Sabadell, but the entity declined to comment on the operation.

It is worth recalling that the entity – in parallel to the sale of its servicer – has engaged Rothschild to find a buyer for its property developer (Solvia Desarrollos Inmobiliarios) and a portfolio of its best plots of land, worth €1 billion, according to Vozpópuli.

Original story: El Economista (by Araceli Muñoz)

Translation: Carmel Drake

Sabadell Could Receive up to €400M for Solvia

24 October 2018 – Expansión

Change of tack for Sabadell. The bank has put Solvia up for sale, its real estate subsidiary, which it owns in its entirety, to try to earn €400 million, according to sources familiar with the process. Sabadell has awarded the mandate to sound out offers to Alantra, although other investment banks may also be advising the entity. Sources at the bank preferred not to comment in this regard.

Sabadell has activated the sale of Solvia three months after cleaning up its balance sheet to remove €11.5 billion in toxic assets. At that time, it decided to go against the trend in the sector and not divest its real estate platform, taking advantage of the sale of the portfolios.

Sources at the entity defend that the real estate platform holds significant latent value.

Other sources in the sector estimate that a reasonable price that the bank could obtain for divesting this asset is €200 million. That figure is equivalent to four times its EBITDA, a reference that the market has used for the sale of the property management arms of Servihabitat (CaixaBank) and Aliseda (Popular).

Sabadell’s strategy of separating the sale of the two portfolios from that of Solvia is to maximise revenues.

As is typical in these types of transactions, the final price will depend on whether the management of future toxic loans, known in the financial jargon as NPLs, are included in the sale.

Appetite

Alantra has already received interest from three opportunistic funds. One of the best positioned is Cerberus, according to various financial sources. In fact, the US fund acquired two large portfolios of foreclosed properties (Challenger and Coliseum) from Sabadell in the summer, with a combined gross value of €9.1 billion.

The US fund’s Spanish platform, Haya Real Estate, could gain muscle with the operation to accelerate its plans to debut on the stock market. And it could also benefit from important synergies, given that it already manages almost €40 billion in assets.

Sources at the sector also point to Intrum, the new brand that the Norwegian fund Lindorff is operating under, following its merger with the Swedish firm Intrum Justitia, and a new international player that wants to enter the European market with this operation, whose name has not been revealed.

In theory, the deadline for firm bids for Solvia, through binding offers, will close this month. Nevertheless, Sabadell is already holding very advanced negotiations with a single fund to sign the sale of Solvia, according to sources in the know. Sabadell has been weighing up the sale of its real estate platform for months. Jaime Guardiola, CEO of the bank, admitted at the beginning of the year that it was considering putting it on the market in light of the appetite from the funds for real estate and these platforms.

Solvia manages 148,000 assets, with a value of more than €30 billion. Since 2015, the company has focused on the marketing of new build developments and has put more than 10,000 homes on the market. It has 36 franchises and 18 own centres, which together make 54 offices located all over Spain (…).

Original story: Expansión (by R. Sampedro & S. Saborit)

Translation: Carmel Drake

Project Newton: Bankia Puts €450M Toxic Asset Portfolio Up for Sale

21 September 2018 – Voz Pópuli

The insatiable appetite of the opportunistic funds for Spanish property is never ending and the banks are taking advantage to reduce their exposure to real estate assets and whereby clean up their balance sheets. The latest to come to the market is Bankia, which has put a €450 million portfolio up for sale comprising primarily property developer loans, although Project Newton, as the operation has been baptised, also includes a small proportion of foreclosed assets, according to financial sources consulted by Vozpópuli.

Newton’s sale is expected to be completed this year and will be followed by two other asset portfolios that the bank plans to sell soon, according to reports from Bloomberg. The operations disclosed by the US agency include a €1,500M portfolio comprising unpaid mortgages and a €2,000M portfolio comprising foreclosed assets.

At the end of the first half of the year, the entity chaired by José Ignacio Goirigolzarri held €15.2 billion in toxic assets, after reducing its balance by €1.7 billion between the months of January and June.

Strategic plan

With the sale of the three aforementioned portfolios before the end of the year, the bank would more than exceed its annual objective in terms of asset sales, which amounts to €2.9 billion per year for the next three years. In fact, if Bankia divests all three portfolios, its real estate exposure would decrease to €11.25 billion, and so it would follow in the footsteps of the other entities that have accelerated the sale of these types of assets in the last year.

The most recent example is Santander, which on Wednesday closed the sale to Cerberus of a portfolio of properties worth around €2.79 billion with a 45% discount. The initial perimeter of the operation was €5.1 billion, but in the end, the commercial premises and land that had been included in Project Apple were left out of the final portfolio.

The entity already transferred Popular’s property last year to a joint venture with Blackstone, and so its real estate exposure will decrease to around €7.3 billion once the Apple sale is completed.

Meanwhile, BBVA, which also sold €13 billion in foreclosed assets to Cerberus, has entrusted the sale of €2.5 billion in problem loans to Alantra. That operation will reduce the real estate exposure of the bank chaired by Francisco González to almost zero.

Moreover, Sabadell and CaixaBank have also completed significant operations in recent months. The former sold €9.1 billion in foreclosed assets to Cerberus, whilst the latter divested almost all of its real estate business: €12.8 billion in real estate assets, which were acquired by Lone Star.

In this way, the banks are complying with the guidelines set out by the European Central Bank (ECB) and are generating returns from their businesses in Spain, which have been weighing them down since the economic crisis.

Original story: Voz Pópuli (by Pepe Bravo)

Translation: Carmel Drake

BBVA Puts another €2.5bn Property Portfolio up for Sale

12 September 2018 – Voz Pópuli

BBVA’s exposure to the real estate sector will have been reduced to almost zero by the end of the year. Following the sale of almost all of its property to Cerberus, the entity chaired by Francisco González has decided to accelerate the divestment of its remaining delinquent loans. To this end, it has entrusted the sale of €2.5 billion in problem loans to Alantra, according to financial sources consulted by Vozpópuli.

The operation has not been put on the market yet but it is expected to be communicated to opportunistic funds within a matter of days, maybe even this week. The name of the operation is Project Ánfora.

The operation is expected to be completed during the last quarter of the year. In that case, the year-end accounts for 2018, the final set that González will present, will reflect the fact that BBVA will have become the first large Spanish entity to clean up all of its real estate inheritance, with the exception of Bankinter, which barely had any to start with.

The latest official figures, as at June 2018, show that BBVA had real estate exposure amounting to €14.9 billion: €2.5 billion in loans to property developers and €11.5 billion in foreclosed assets, whose transfer to Cerberus will be closed soon.

Sudden push

Another entity that has also accelerated its clean-up process in recent months is Santander, with Project Apple, amounting to €5 billion, whose sale is currently being finalised, also to Cerberus. Afterwards, it will be left with another €5 billion to divest. The exposures of CaixaBank, Sabadell and Bankia are still above that level.

With this sudden push, the banks are seeking to fulfil the mandate established by the ECB and make their businesses in Spain profitable, which have been weighed down over the last decade by the digestion of property.

The sources consulted explain that Project Ánfora includes relatively small loans, such as mortgages and SME credits, which received financing linked to properties.

In addition to Ánfora and Marina – the sale of foreclosed assets to Cerberus – this year, BBVA has also closed the transfer of the Sintra portfolio to the largest Canadian fund, Canada Pension Plan Investment Board (CPPIB), containing €1 billion in loans to property developers.

Original story: Voz Pópuli (by Jorge Zuloaga)

Translation: Carmel Drake

Arcano Advises on the Sale of One of the Largest Resorts in Andalusia: the Islantilla Golf Resort

31 August 2018

The shareholders have sold 100% of the Resort to a vehicle managed by Alantra REIM, in a transaction advised by Arcano.

The Resort will be operated by GAT (Gestión de Activos Turísticos), and comprehensive renovations are planned.

The integral plan to reform the Resort will boost the forthcoming urban development of “Islantilla Norte,” which has more than 160,000 m2 in area.

The Islantilla Golf Resort, which was inaugurated in 1992, is a Resort with a 4-star hotel, located between Isla Cristina and the marshes of the Piedras River (Costa de la Luz).

The Resort counts with a 4-star hotel with 204 rooms, a spa with thermal baths, gym, a large outdoor pool and an indoor pool, a 27-hole golf course, the “Beach Club Islantilla”, 2 tennis courts, a paddle court, 3 football fields with natural grass and FIFA measurements, facilities for events, and special bird watching routes in southern Andalusia. It also has a school for nautical activities such as windsurfing, kite surfing, surfing, catamarans and sailing.

The Resorts has a total of 5 restaurants: the Las Carabelas Buffet Restaurant, Colon Bar, La Ola Grill Restaurant, Beach Club Restaurant, and an Italian restaurant in the golf clubhouse.

The Resort has a national clientele, but more than 50% of its clients are international (mainly from the United Kingdom, Denmark, the Netherlands, Iceland, Portugal and Germany) who can enjoy the Resort during its 365 day-year.

The new owner of the asset is a vehicle managed by Alantra REIM. Investors have opted for the hotel as an investment and development opportunity, which will be exploited on a rental basis by GAT, and where an investment to reposition the establishment is planned.

The selling shareholders are also the owners of 1.4 million square meters of adjacent land, called “Islantilla Norte” with more than 160,000 buildable square meters for the development of a hotel, golf course, commercial area, as well as a 120,000-m2 residential area.

According to the selling shareholders: “The complete reform of the hotel will increase occupancy and variety of the current Islantilla Golf Resort clientele, which will benefit the residential, commercial and leisure development of Islantilla Norte, which we will undertake during the coming years.”

According to Luis Iglesias, Partner at Alantra REIM: “With this second hotel investment in 2018, we continue to build a quality hotel portfolio in a sector with a great capacity.”

Arcano, a leading independent financial advisor, has been the exclusive financial advisor to the sellers.

About ARCANO PARTNERS

Founded in 2003, Arcano is a leading independent financial advisory alternative management firm. With offices in Madrid, Barcelona, Lisbon and New York, it has a team of more than 155 professionals. Within the Investment Banking team, Arcano has more than 55 professionals in Spain, with previous experience in some of the largest investment banks in the world.

The team has successfully closed 56 transactions since 2016. Arcano has a strategic alliance with the investment bank Jeffries, which has a presence in more than 34 cities around the world and a team of 3,800 people, which provides a global platform for execution and distribution.

Original Story: Arcano Press Release

Translation: Richard Turner

 

Alantra Finalises Acquisition of KPMG’s Financial Advisory Business

14 August 2018

Alantra Partners has finalised its purchase of KPMG’s division specialising in advising on loan portfolios and non-strategic bank assets, based in the United Kingdom.

The acquisition involved an investment of 2.8 million euros (2.26 million plus another 565,000 euros for ongoing KPMG operations) plus the assumption of €7.3 million by Alantra to finance the project.

With this purchase, Alantra will take on 35 professionals operating in diverse European markets that will strengthen its current workforce of more than 40 people who are already focused on credit portfolio and banking asset advisory.

The transaction, which was announced on July 11, was conditioned on compliance with certain requirements established in British legislation that have already been fulfilled, Alantra added in a statement sent to the National Securities Market Commission (CNMV).

Original Story: Expansión

Photo: Rafael Marchante – Reuters

Translation: Richard Turner

 

SGR Seeks Buyer for Real Estate Assets that Had Been Destined for Generalitat

27 August 2018

Though it has not yet concluded its first real estate transaction since its rescue, the Sociedad de Garantías Recíprocas (Society of Reciprocal Guarantees – SGR) is already preparing a second sale, looking to unload additional real estate assets. The financial institution, saved from bankruptcy by the current municipal council with 200 million euros from the FLA (liquidity fund), is concluding the sale of an important portfolio made up of loans and real estate that will allow it to end the year with debts of 15 million euros, well below its previous €400 million that had nearly pushed it into bankruptcy.

Within the portfolio are real estate assets valued at 26 million euros that SGR had intended to place with the Generalitat as part of the restructuring process. According to the original plan to save the institution, prepared and executed by the Valencian Institute of Finance (IVF), the Valencian administration had to stay in the operation to comply with its requirement to perform due diligence in the recovery of public resources. That requirement was a part of the €200 million guarantee that the Generalitat concluded in 2013 – or the EU could consider the guarantee as illegal state aid.

Now, however, those assets will no longer go to the Generalitat. The entirety of that portfolio, consisting mainly of urban land or lots, industrial buildings (23%), buildings (11.5%), rural lands (11%) and building plots (8.5%) plus a part of the assets that remain in the balance of the SGR will be subject to a second sale, once the sale of the first real estate portfolio is formalised.

According to Manuel Illueca, general-director of the IVF and president of the SGR, the composition of this second package is “attractive” for investors, since the high percentage of land included in this portfolio “may be better placed on the market now that the real estate market has once again taken off.”

The director of the IVF highlighted the market’s favourable response to the placement, which is why it is already preparing the second phase of asset disposals before signing the first, something that will happen in September. The potential investors include international investment funds and, although exact nature of the portfolio is still to be defined, he estimated that it would be concluded “within the range of typical discounts of this type of operation.”

“We needed to sell because we had to achieve a net positive asset ratio over a period of three years. The market has been receptive, and we have been able to reduce our debt. We are now going to carry out a second operation to further advance the restructuring process. The expectation for financial institutions that operate with the SGR today, is a full recovery of the amounts owed,” says Mr Illueca.

When the first sale of assets ends, the solvency ratio of the SGR will rise to 14.5%, with net senior debt at approximately €15 million, compared to the €400 million it had before. Apart from that, there are the €40 million in subordinated loans it has with the entities, the director of the IVF explained.

The first operation, in which SGR is being advised by Alantra, includes 793 properties that range from industrial warehouses, homes, parking spaces and land, stemming from a time that saw “endless guarantees.” The expectation, when the operation was announced, was to unload the equivalent of 75% of the properties on its balance sheet, raising 30 million euros. The net book value of the portfolio amounts to €44 million, while the assessed value reaches €83 million.

In 2016, SGR already tried to raise 180 million euros with its ill-fated Citrus Project, a portfolio of executed guarantees of more than 800 million euros, with foreclosed assets and loan losses initially valued at €82 million for which it expected to obtain €170 million.

After the project failed to move ahead, as the best offer received was only €65 million and not even for the entire portfolio, the new head of the IVF opted to move ahead with the execution of the €200-million guarantee, which expired in 2018, to try to sell the assets. The operation aimed to get more time to find a better solution on the market, as has occurred.

After the early repayment of the 200-million-euro guarantee in favour of the Generalitat, negotiated with the group of banks that already participated in its rescue in 2013, SGR’s outstanding debt with the financial institutions fell to 94 million euros: €54 million of senior debt and another €40 million in an unsecured participative loan from the municipal council.

Original Story: Valencia Plaza – Xavi Moret

Translation: Richard Turner

 

Alantra Acquires Two Office Buildings in Madrid

18 July 2018 – Eje Prime

The Alantra group’s real estate investment and asset management platform, Alantra Reim, has signed the purchase from the Spanish family office Autocampo of two office buildings in Rivas Vaciamadrid. The properties are located on Calle Marie Curie in the Madrilenian suburb. The amount of the transaction has not been revealed.

The properties are two twinned but independent buildings located on the Rivas Futuras Business Park. The assets have a surface area of 44,000 m2 containing office space spread over two ground floors, six upper floors and a penthouse. The consultancy firm CBRE has advised the operation.

Led in Spain by Luis Iglesias, Altantra Reim has now completed four operations in 2018, a sign of the investor appetite in the Spanish market. “The operation allows the group to gain a presence in the office market and benefit from the recovery in the sector over the coming years”, according to Iglesias.

Original story: Eje Prime

Translation: Carmel Drake