Apollo Returns to Spain with the Purchase of Properties from Santander for €200M

13 February 2019 – Expansión

The US fund, which barely has any financial assets left in Spain, is acquiring offices in secondary areas of Madrid and Barcelona.

In recent years, Apollo has dedicated itself almost exclusively to the sale of assets in Spain, which caused experts to speculate that it might be leaving the country. But the fund led in Spain by Carlos Colomer and Pablo Crespo is still present and is very much backing Spanish assets once again.

According to reports from financial sources speaking to Expansión, Apollo reached an agreement with Santander in December (…) to purchase a portfolio of so-called tertiary assets (commercial properties) worth €200 million. The transaction, according to the same sources, will be definitively closed at the end of February.

A large part of these assets are offices located in secondary areas of Madrid and Barcelona. “Half of the value of the portfolio acquired corresponds to large office buildings located in secondary locations. All of the assets are in Madrid, except for one building that is in Barcelona”, they said.

Apollo is acquiring this portfolio because it considers that rental prices in secondary markets have not recovered yet. The sources consulted believe that “the rental prices of core (higher quality) buildings are recovering, but, as prices in the city centres rise, so tenants will consider moving to more secondary locations”.

The fund’s plan goes beyond this purchase. In fact, it wants to acquire new assets to incorporate into a new vehicle to generate value from them, through capex investment, with the aim of selling them a posteriori.

The rest of the portfolio

The rest of the portfolio that Apollo has purchased from Santander comprises a mix of more heterogeneous properties, some with an industrial component, other smaller offices and other premises that they intend to sell to retail investors.

This purchase is the first that Apollo has undertaken with its latest fund called European Principal Finance III, which it raised in December 2017 with USD 4.6 billion (almost €4.1 billion). It is also the first investment that it has made since the departure of its main executive in Spain, Andrés Rubio (…).

Apollo, led by Andrés Rubio, the executive who left the firm in September last year, arrived in Spain in 2011 to take advantage of the opportunities that were emerging as a result of the financial crisis. Since then, the fund has made purchases in Spain amounting to more than €1 billion (plus debt), such as the acquisition of 85% of Altamira, Evo Banco, the credit cards of Bank of America, the mortgage business of Citi and General Electric, and the hotels that had been awarded to CaixaBank and Popular (…).

Original story: Expansión (by Daniel Badía)

Translation: Carmel Drake

Cerberus, Intrum & DoBank Bid to Acquire Altamira

15 November 2018 – El Confidencial

There is still an appetite for the servicers’ business. The sale of the 85% stake that Apollo owns in Altamira is making its first cut of candidates, with some of the most high profile investors in the segment amongst the finalists. According to financial sources, the fund Cerberus (Haya Real Estate), the Swedish firm Intrum (Nordic Capital) and the Italian firm DoBank (Fortress) are the candidates that have progressed in the process, which is being coordinated by Goldman Sachs, and which was relaunched after the summer following months on the table.

Other players in the sector interested in Spain are also in the process, both at the domestic and European level. One of those new candidates is the US firm Davidson Kempner, which has a portfolio of USD 30 billion under management and with interests in the transformation of toxic assets in the United Kingdom and Ireland, according to sources involved in the operation.

Apollo is willing to take advantage of the hunger for this type of vehicle to make gains, although it does so after four years at the helm of the servicer and having not been awarded any of the large real estate portfolios that the banks have sold (Santander to Blackstone, BBVA to Cerberus, CaixaBank to Lone Star and the Sabadell-Solvia process, in whose final stretch it is not participating). In fact, this divestment comes after Apollo’s manager for the last few years – Andrés Rubio – left the fund.

The price of the management platform could reach €1.5 billion (debt included), a business for which Apollo paid €664 million in January 2014 in exchange for an 85% stake (the remaining 15% is still owned by Banco Santander). The agreement comprised the management of toxic assets (recovery of loans and sale of properties) until 2028, although the transformation of that perimeter has led to a change in the management conditions (commissions) and to the repayment of a €200 million dividend.

Altamira has assets under management amounting to more than €50 billion, compared with €26 billion in 2014, and a portfolio comprising more than 82,000 properties at the end of 2017, making it the largest servicer in operation in Spain. In addition to its contract with Santander, it also manages assets for Sareb (which account for 30% of its portfolio) and for third parties – international investors, financial institutions, family offices and institutional clients – as a result of the international expansion plan launched in 2017.

Original story: El Confidencial (by Carlos Hernanz)

Translation: Carmel Drake

Cerberus to Buy €5M Portfolio from Santander whilst BdE Reviews its Deal with Sabadell

19 September 2018 – El Confidencial

Banco Santander has chosen a buyer for the last portfolio of toxic assets that it still has on its balance sheet. The chosen entity is Cerberus, the opportunistic fund with which the bank chaired by Ana Botín has been holding exclusive negotiations for the sale of the so-called Apple portfolio, which has a nominal value of €5.1 billion, according to confirmation from sources close to the operation. If the deal is closed, the US entity will be the owner of a large part of the real estate business of Santander, BBVA and Banco Sabadell.

The final agreement depends exclusively on locking down the price that Cerberus is offering and that Santander hopes to obtain. The operation could be closed for a price of between €2.8 billion and €3.2 billion, according to the same sources. Banco Santander declined to make any official comment about this information, just like Cerberus. Debtwire, the specialist medium for professionals in financial markets revealed the name of the US fund as the main candidate to acquire this portfolio on 3 September.

If the exclusive talks prove fruitful, Cerberus will fight off competition from Apollo, Lone Star and Blackstone, the other three vulture funds that have also bid for this portfolio of homes, premises and land that Santander foreclosed in exchange for the non-payment of loans by its clients. In theory, the natural winner of the auction was going to be Apollo, which reached an agreement in principle with the Cantabrian bank at the beginning of August for around €2.9 billion.

Nevertheless, that deal fell apart in the middle of last month, to the anger of the fund led at that time by Andrés Rubio, President of Altamira, the real estate company owned jointly by Apollo and Santander since 2013. Rubio left Apollo in the middle of the transaction, which further weakened that firm’s chances of becoming Santander’s natural partner.

With this operation, Spain’s banks will complete the transfer of the majority of the risk linked to the property sector that they still have left over following the financial crisis. In fact, Santander already sold half of the toxic portfolio that it inherited from Popular last summer 2017 – €30 billion – to Blackstone for around €5 billion. Afterwards, BBVA placed almost €13 billion with Cerberus, whilst Lone Star acquired a portfolio worth €6.7 billion from CaixaBank along with its real estate arm Servihabitat.

The most recent high profile transaction announced was the purchase by Cerberus of €9 million of doubtful assets from Sabadell. Nevertheless, that operation is now being reviewed by the Ministry of the Economy given that the Deposit Guarantee Fund is going to have to recognise losses of around €3 billion as a result. That money will go against the State’s own income statement, given that what the Catalan bank, headquartered in Madrid, has sold to the US fund is the former Caja de Ahorros del Mediterráneo (CAM) portfolio, for which it received an asset protection scheme (EPA) (…).

Original story: El Confidencial (by Agustín Marco)

Translation: Carmel Drake

Apollo Gets Ready To Buy Property Developers & Hotels In Spain

14 March 2017 – El Confidencial

A new player has emerged in the Spanish real estate market. Apollo, one of the largest fund managers in the word, has decided to join the fray between Värde, Castlelake and Lone Star, and analyse the purchase of its own property developer, according to sources familiar with the entity.

The firm led in Spain by Andrés Rubio is tackling this strategy through its new fund (its third), which already has €2,700 million and which plans to raise up to €4,000 million. This money will be used to acquire real estate assets, NPLs and hotel portfolios in Spain, Italy, UK, Ireland and Germany. Our country could receive around €1,000 million of investment, given that Apollo is expected to continue its commitment to the hotel sector, into which it took a giant leap last December, when it acquired two portfolios from CaixaBank and Popular, and looks set to enter the property development business with a bang.

According to the same sources, one of the companies that is on the fund’s radar is Levitt, which has some of the best plots of land and fame in the sector. Its possible sale has been mooted in the market for a while, given the generational change that the group faces and the appeal of the company, which operates in the high-end segment.

Asentia, Colonial‘s former bad bank is one of the other companies that has been making a name for itself in the market; Acciona Real Estate has also been considering its options, which range from an IPO to the entry of a large fund into its share capital; whilst Procisa, the former property developer behind La Finca, has sold 40% of its offices to Värde and continues to control important developments on plots of land in Madrid (Pozuelo de Alarcón and Brunete), Huelva (Cartaya) and Lleida (Baqueira).

In fact, Apollo was previously involved in negotiations regarding a similar operation to the one that Värde ended up signing with the Cereceda family. But the rapid consolidation that has taken place in the market, with the creation of Aedas by Castlelake, the purchase of Vía Célere by Värde and the imminent debut of Neinor on the stock market, has convinced the fund that a window of opportunity has now opened up in the property development sector.

Apollo plans to invest this new €1,000 million fund over the next three or four years, during which time it wants to become a top-tier player in the property development sector, in line with the moves made by its competitors, and to create its own hotel platform.

In the residential sector, it intends to focus on buildable land, located primarily in Madrid and Barcelona, the two provinces where the incipient recovery is being felt most strongly.

In the tourist segment, in parallel to the strategy to purchase loan portfolios secured by hotel collateral, the fund is actively looking for well-located establishments to create a vacation platform along the coast and on the islands, comprising around 20 assets.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

Altamira Obtains More Than €500M Of Financing

16 June 2015 – Expansión

Altamira Asset Management has just signed an agreement with a syndicate of 12 domestic and international banks to renew its financial structure and obtain financing of more than €500 million.

This operation forms part of the company’s strategy for growth and diversification, as it aims to position itself as one of the major independent and multi-client operators in the sector for the management of financial and real estate assets.

In fact, Altamira has just begun the process to migrate assets with a total value of €29,000 million from Sareb into its portfolio.

The portfolio awarded to Altamira for seven years comprises 44,000 properties and loans (to property developers) originated by Catalunya Caixa, BMN and Caja 3, for which Sareb disbursed around €14,000 million. By taking on these assets, Altamira doubled the value of its portfolio of assets under management and became the industry leader with a portfolio of total assets that exceeds €55,000 million.

Compared with a year ago, the company has increased its volume of assets under management by 113% and has started to manage portfolios from six different clients. In summary, it has significantly grown and diversified its client portfolio.

Santander closed the sale of 85% of Altamira to the US fund Apollo in January 2014, for €664 million. The bank retained the remaining 15% stake in the asset manager.

The operation involved the transfer of 500 employees from Santander to the new Altamira platform, although the annual accounts for 2013 only reflected the movement of 272 people: 183 from Santander, 60 from Altamira Santander Real Estate, 7 from Reintegra and 22 from Elerco.

Apollo hired the former Director General of Citi, Julián Navarro to lead this project; he joined Altamira as the CEO. The presidency is reserved for Andrés Rubio, the partner assigned by the US firm to design the strategy in Spain. This banker has led transactions such as the purchase of Evo Banco and Altamira.

Original story: Expansión

Translation: Carmel Drake

Apollo Commits To Spending €1,000M On Land And Loans

3 June 2015 – El Confidencial

The fund that bought Banco Santander’s real estate arm has reiterated its commitment to Spain and says that the new political map that has emerged following the elections will not alter its plans to invest up to €1,000 million in loans and property.

Whilst several foreign banks and funds are looking askance at the new political map and deciding whether to continue with their expansion plans in Spain or put the brakes on, Apollo, the owner of Banco Santander’s real estate arm, has confirmed that it will continue with its investments in our country, mainly focusing on the purchase of portfolios of loans and land, an asset that none of the investors have shown any interest in until recently.

According to sources close to Apollo, Andrés Rubio, the President of the US fund in Spain, has said that the firm has authorised a budget of €1,000 million for further investment in the Iberian Peninsula, where it has already made two significant purchases: the acquisition of Altamira Real Estate from Santander for almost €700 million and the purchase of EVO Bank from Abanca. His statements were made a week before the local and regional elections, but sources close to the firm have reaffirmed his plans.

Rubio did not specify the timeframe in which the €1,000 million budget will have to be put to work, but sources close to Apollo say that the majority of the funds will be invested during the next 18 months for two reasons. The first is that prices are starting to increase and the second is the arrival of many specialist funds, which are snapping up offices, shopping centres and residential developments.

Given the concentration of competitors in other segments, Apollo has decided to focus its efforts on land, an asset that has been fully depreciated in the portfolios of most banks, which hold it on their balance sheets following foreclosures due to unpaid client loans. Jorge Valle, from Deutsche Bank…said that funds are being invested aggressively in the purchase of land in large cities such as Madrid, Barcelona and Valencia.

Although Apollo’s investments are made through Bisonte Luxco, an equity company owned by Apollo that is based on Luxembourg, the management of the real estate assets acquired to date is being handled by Altamira Real Estate, which now has assets under management amounting to €55,000 million.

(…)

The proof that Apollo remains committed to Spain lies in the fact that it has hired more than 100 people to work at Altamira that in recent months. The company has become the largest real estate management servicer in Spain and currently has more than 300 residential developments underway. Internally, the firm is adapting its IT systems to receive new assets from third parties…which indicates that Apollo will soon start to spend the €1,000 million authorised from the USA.

Original story: El Confidencial (by Agustín Marco)

Translation: Carmel Drake