Tag: Anida

Axis: Spain’s Banks Have €31.7bn in Toxic Assets Up For Sale

15 March 2018 – Eje Prime

After a 2017 in which one of the key characteristics of the residential market was the interest from funds in going to banks for property, this year, the trend is set to increase. The investment funds are now being joined by Socimis, which want to take advantage of the rapid and generous divestments that the banks are undertaking of their real estate portfolios.

Pressure from the European Central Bank (ECB) for the financial entities to clean up their balance sheets has meant that they have been rushing, for the last year and a half, to sell almost all of their portfolios of assets and non-performing loans relating to the real estate sector. According to data from the consultancy firm Axis, the banks currently have €31.7 billion in toxic assets up for sale.

This large sum of portfolios up for sale is proving to be the subject of major battles between the main investment funds, the majority of which are international, and which in 2017 managed to close record operations in this sense. The sale by Santander of property inherited from Popular to Blackstone for €10 billion, and the agreement reached between BBVA and the fund Cerberus for €4 billion to transfer assets from the real estate firm Anida, fired the starting gun for a race that is going to reach its cruising speed this year, according to Cinco Días.

Spain is the third country in the Eurozone by volume of doubtful loans, with €136 billion and a default rate of 5.7%, a percentage that is above the European average of 5.1%. According to the Bank of Spain, non-performing loans held by the banks at the end of 2016 amounted to €190 billion.

The oligopoly of the servicers 

Axis details that the assets of the banks under the management of the servicers are no longer going to be a question of five, since some of the players may come out of the equation. In 2018, “there will be a greater concentration in the market, with the sale of some of the servicers”, according to the study.

Until now, 80% of the portfolios have been managed by the banks and funds, as demonstrated in the cases of Altamira, which is controlled by Banco Santander; Haya and Anida, companies that are both linked to Cerberus; Anticipa and Aliseda, which are both owned by Blackstone; and Servihabitat and Solvia, which are owned by CaixaBank and Banco Sabadell, respectively.

In addition to the aforementioned funds, Axis adds others with a presence in the Spanish market such as Lone Star, Oaktree, Deutsche Bank and Fortress, which will try to acquire one or more of the portfolios for sale.

Funds and Socimis are going to be searching to generate returns this year, above all, in the rental market, which with yields of 8% “is going to be the product with the most attractive investment prospects”, according to Axis.

Original story: Eje Prime

Translation: Carmel Drake

Spain’s Top 7 Servicers Manage 80% of the AuM

15 March 2018 – Expansión

The recovery of the Spanish economy, the reduction in unemployment, the improvement in household income and the decrease in financing costs, together with investors’ appetite for property, have contributed to the configuration of a new real estate map.

One of the distinctive features of the current scenario is the entry of new players, which are absorbing the loans and banking credits associated with real estate assets, mostly homes, and which have taken control of part or all of the servicers, created out of the banks’ former real estate subsidiaries.

These companies have gained prominence and have become a key piece of the real estate market. According to the Trends and Prospects in the Real Estate Sector report, prepared by Axis Corporate, more than 80% of the assets under management are in the hands of Altamira, Servihabitat, Haya, Anida, Aliseda, Anticipa and Solvia, which together have around €220 billion of financial assets under management. Specifically, Altamira – owned by Apollo (85%) and Santander (15%) – controls 22% of the market, with €54.1 billion in financial assets under management. It is followed by Servihabitat –owned by Texas Pacific Group (51%) and Caixa (49%)–, which has a market share of 17%, with €41.1 billion in AuM; Haya (Cerberus), with a market share of 16% and €39.4 billion in AuM; and Anticipa and Aliseda, in which Blackstone holds stakes, which manage 14% of the market between the them, or €35.1 billion.

Meanwhile, Solvia, owned by Sabadell, manages €31 billion, which represents 13%; and Anida, the real estate subsidiary of BBVA, manages around €15.3 billion.

For Luis Fernández de Nograro, Managing Director of Financial Services and Real Estate at Axis Corporate, most of these types of management companies are owned by investment funds whose plans do not involve staying put and industrialising the companies, and so, their exits will happen gradually. That is the case of Cerberus, which is exploring the possibility of debuting Haya Real Estate on the stock market.

For José Masip, Partner of Real Estate at Axis Corporate, the servicers are going to follow the path established by the financial institutions, which will involve concentration in the sector. Moreover, the future of these companies anticipates the implementation of value differentiation strategies that may range from: specialising in the management of rental properties, to the operation of an owned commercial network, to innovation over traditional channels and to their commitment to greater internationalisation in the management of assets or the development of land and promotion activity.

Similarly, the experts point to an acceleration in the sale of toxic assets by the banks to funds and Socimis. Together, the sector divested more than €50 billion in doubtful loans and foreclosed land in 2017 alone, which represents almost twice the figure (€27.4 billion) sold between 2012 and 2016.

Socimis

Another new group of players highlighted in the report are the Socimis, which have contributed to the regeneration of the real estate sector, reactivating investment through tax-optimised vehicles, according to the consultancy.

The report points out that, last year, 17 new Socimis made their debuts on the Alternative Investment Market (MAB), which now has a total of 44 vehicles of this kind. In total, the market value of the listed Socimis exceeds €19 billion.

For Axis Corporate, these types of companies will experience continuous growth until 2019 and the majority will maintain their commitment to the tertiary sector. Sources at the consultancy indicate that there are five Socimis listed on the main stock market, but that just two are in the Ibex 35: Merlin and Colonial. For that reason, they consider that it is very likely that, in the future, there will be mergers, acquisitions and new IPOs.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

The Funds Acquired €60bn of Banking ‘Assets’ in 2017

3 January 2018 – El Economista

International funds’ appetite for Spanish real estate is proving insatiable. And that was reflected in the final days of 2017, which saw a frantic year-end in the market for the sale by banks of debt portfolios secured by real estate collateral. On the basis of the operations that were underway during the final months of the year and the transactions that were actually closed, it is estimated that debt with a gross book value around €60 billion was sold in 2017, compared to €22 billion in 2016. Of that total volume, Blackstone was, undoubtedly, the great star, with its acquisition of the largest real estate portfolio ever sold in Spain and one of the largest ever sold in Europe.

The US fund agreed with Santander to purchase 51% of all the toxic assets – doubtful loans and foreclosed properties – from Popular, which had a gross value of €30 billion. A record operation in Spain, which the bank chaired by Ana Botín closed to clean up the balance sheet of the recently acquired entity.

Cerberus was the other major purchaser of 2017, after it acquired Anida and BBVA’s real estate assets with a gross value of €13 billion, through the creation of a joint company in which the fund will hold a majority 80% stake and BBVA will retain a 20% share.

Those two operations are a clear reflection of the dynamic role that funds are playing in the Spanish real estate market, given that in addition to having provided the impetus for the new generation of property developers, they are also serving as the main clean-up tool for financial institutions. “The funds have played a fundamental role, given that they have put a price on the portfolios and have provided capital to execute purchases”, explains Manuel Ángel González Mesones, Partner in Corporate Finance for the Financial sector at KPMG in Spain, who states that in the primary market – the sale of portfolios directly by the banks – property developers, the other great consumers of debt with real estate collateral “have not been particularly active, given that their criteria are very selective”. Nevertheless, “the large property developers have been buying foreclosed assets in a selective way for years from both financial institutions and different market players, such as Sareb and funds that have acquired those assets through the purchase of portfolios”.

In this sense, Emilio Portes, Director of Financial Advisory at the real estate consultancy firm JLL, highlights that, although the role of the funds has been key, the property developers have also played their part, by converting themselves into “instrumental vehicles for the funds in terms of the development of the land acquired in portfolios such as NPLs – doubtful loans – and REOs – foreclosed assets”. Thanks to that intense activity in which, in addition to Blackstone and Cerberus, other players have also featured, including Bain, Goldman Sachs, Oaktree, De Shaw, Deutsche Bank, Lone Star and Apollo, the banks have managed to decrease the volume of toxic assets relating to the real estate sector by almost half in one year, from more than €132 billion to around €75 billion. To that figure, we have to add the €40 billion sold by Sareb, which means that the total clean up figure amounted to €115 billion by the end of 2017.

That figure is still well below the almost €400 billion that was reached at the height of the crisis, but it also well above the less than €10 billion that was registered before the burst of the bubble (…).

More moderate operations in 2018

According to González, “Activity will continue to be significant, but due to the size of the entities that still have assets let to sell, I don’t think that we will see such large operations this year. The focus will certainly be more on transactions with nominal values of between €500 million and €2,000 million, although that could lead to an equally successful year…”.

Original story: El Economista (by Alba Brualla)

Translation: Carmel Drake

Spain’s RE Companies see their Share Prices Rise by 30% on Average in 2017

12 December 2017 – Expansión

Spain’s real estate companies are on a roll: the recovery in activity has given these companies more visibility on the stock market. On average their share prices have risen by 30% in 2017. Renta Corporación, Hispania and InSur are the best performers and all three are very much in favour with the experts.

The property sector is in fashion on the stock market. On average, the share prices of real estate companies rose by 30% in 2017, well above the 10% rise that the Overall Index has registered since the beginning of the year.

Within this group, three companies shine the brightest: Inmobiliaria del Sur, Hispania and Renta Corporación all saw their share prices rise by between 39% and 53%, and the experts think that the upward trend will continue.

Moreover, Urbas and Axiare also saw their share prices rise by more than 30% in 2017, but for diametrically opposite reasons. The first was suspended from trading in September after the National Court announced that it was investigating the firm’s President for “suspected fraud” following a complaint filed by the Anticorruption Prosecutor.

Meanwhile, Axiare is the target of a takeover by its counterpart Colonial, which launched its bid in the middle of November and saw it approved by the CNMV just a few days ago. The operation, which is expected to result in the creation of a real estate group with assets worth €10 billion, offered a 13% premium over the company’s share price at the time, which led to a sharp rise. Currently, the company’s shares are trading just below the offer price (€18.29 compared to €18.36 per Colonial’s latest offer).

The economic environment, improvement in activity and greater investor appetite for housing are all working in favour of these companies, said Nicolás López, from M&G Valores.

However, the expert points out that the low market capitalisation of some of them and their very low liquidity increase their volatility, which makes them options suitable only for high-risk profiles.

Renta Corporación’s share price has risen by more than 50%

In the case of Renta Corporación, which is limited in size: amounting to just €92 million. The company is the best performing real estate company of 2017, with a share price increase of 53% (…). The company has taken advantage of its knowledge of the real estate market to launch, together with the Dutch pension fund APG, a Socimi. Since its creation, eight months ago, the new listed company has invested €93 million in the purchase of more than 1,000 homes, all located in Madrid and the surrounding area (…).

Strategic diversification favours InSur

Inmobiliaria del Sur completes the podium of the most profitable real estate companies this year. Its share price has risen by 40%. The secret to its success is the new business plan that the company has launched and which has been welcomed warmly by the market.

The family business, which has more than 70 years of experience, splits its activity between the construction of homes and the rental of office buildings, which allows it to have two revenue streams. With a business plan that involves building more than 2,000 homes between now and 2020, InSur has closed alliances with partners such as Anida, the real estate arm of BBVA, to become a key player in residential development (…).

Hispania’s specialisation boosts its share price

Meanwhile, Hispania’s share price has risen by more than 39% since the beginning of the year. This year, the company (…) has initiated a new phase, specialising in hotel assets (in June, it became the largest hotel owner in Spain with 38 establishments) and divesting the rest of its properties (…).

A few weeks ago, the company published its results for the third quarter, which went down well. The Socimi recorded a profit of €179 million during the first nine months of the year, up by 31% compared to the same period in 2016 (…).

Original story: Expansión (by D. Esperanza and R. Ruiz)

Translation: Carmel Drake

Morgan Stanley Lends Cerberus €3bn to Purchase BBVA’s RE

1 December 2017 – Voz Pópuli

Of the cheque for €4 billion that BBVA is going to receive for the sale of its foreclosed real estate, €3 billion will be coming from Morgan Stanley’s coffers. The US investment bank has been awarded the mandate to finance Cerberus’s operation, whereby fighting off competition from other international and Spanish entities, according to financial sources consulted by Vozpópuli.

Unlike in the case of Blackstone and Popular-Santander, Cerberus has decided to close its financing arrangements in advance, even though the small print of the agreement will still take a few months to negotiate.

As this newspaper revealed, BBVA has agreed to sell all of its foreclosed assets to the US fund in an operation worth €5 billion. A new company will be created to which assets worth €13 billion and the Anida platform with its 450 employees will be transferred, with the option of also moving another 150 employees from the bank. And Cerberus will buy an 80% stake in this company for around €4 billion.

The figures may still vary slightly over the next few months, given that both BBVA and the fund have to review which assets have exited the portfolio in recent months because they have been sold (through the network).

The start

The operation, known as Project Marina, was launched at the beginning of June and is expected to be closed with a discount of approximately 61%, which is lower than the 67% that Santander obtained from its sale of Popular’s real estate.

That sale – Project Quasar – is also pending completion, expected during the first quarter of 2018.

After removing €13 billion in foreclosed assets from its balance sheet, BBVA will put one or more property developer loan portfolios on the market over the next year or so, as it continues to accelerate the digestion of its property assets. Those portfolios will be similar in size to Project Jaipur (€0.6 billion), which was also awarded to Cerberus.

Original story: Voz Pópuli (by Jorge Zuloaga)

Translation: Carmel Drake

BBVA Prepares Sale of €1.5bn Property Developer Loan Portfolio

30 November 2017 – Expansión

The property sector / The second largest Spanish bank detects a large appetite from opportunistic funds for the real estate risk it has left over: €4.8 billion, after deconsolidating €13 billion of foreclosed assets.

BBVA is making steady progress to clean up its balance sheet. The entity is preparing the sale of a portfolio of property developer loans with a gross value of between €1.5 billion and €1.6 billion (31% of the total) after deconsolidating the risk associated with its foreclosed assets.

The group’s gross real estate exposure has been reduced to €4.8 billion in the form of property developer loans following the agreement with Cerberus to transfer €13 billion in foreclosed assets to a newly created company. BBVA’s plan is to sell one-third of its property developer loan portfolio to an opportunistic fund.

“It is going to be a very competitive portfolio”, said Javier Rodríguez Soler, Head of Strategy and M&A at BBVA, speaking to Expansión. In parallel to the operation with Cerberus, the bank has identified a large appetite from the big funds, such as Lone Star, Blackstone and Apollo, for loans linked to the property sector. The portfolio comprises finishing buildings, properties under construction and land.

Transfers to its subsidiary

The intention of BBVA is to reduce its risk estate risk to almost zero. The Head of Strategy said that the bank is looking to transfer another €1.5 billion of performing property developer loans to its Spanish subsidiary.

Many banks separated out their real estate businesses to curb the impact of the fallout from the burst of the bubble on their annual accounts. BBVA’s property unit lost €281 million during the 9 months to September this year, down by 10.9% compared to a year ago. Sources at the entity expect the real estate business to stop generating losses in 2018.

Yesterday, BBVA took a giant step to clean up its real estate-related risk. The bank has created a company together with Cerberus to transfer 78,000 properties with a gross value of €13 billion. 47% of the foreclosed assets are located in Cataluña, the historical heartland of Catalunya Caixa (CX) and Unnim, which were both absorbed by BBVA during the crisis. Some of those properties are social housing units, whilst some of those proceeding from Unnim are covered by an Asset Protection Scheme (EPA).

The US fund will own 80% of the new vehicle after paying BBVA €4 billion; the banking entity will own the remaining 20%. Haya Real Estate, Cerberus’s platform in Spain, will manage the portfolio of properties that the bank holds onto. The agreement also involves the transfer of 400 employees from Anida, the real estate arm of BBVA, to the joint company with Cerberus.

Original story: Expansión (by R. Sampedro and R. Lander)

Translation: Carmel Drake

Cerberus Negotiates To Buy At Least 51% Of BBVA’s RE Risk

14 November 2017 – Expansión

Cerberus and BBVA are moving forward with their conversations. The US fund is negotiating to buy at least 51% of the bank’s real estate risk. Financial sources indicate that BBVA is weighing up whether to sell a majority stake in Anida, the bank’s real estate manager, or to structure the deal around a newly-created company.

BBVA’s real estate activity is grouped around Anida. The bank is one of the few that still retains full control over its real estate business.

The operation with Cerberus would follow the model adopted by Santander for the deconsolidation of Popular’s real estate risk. In fact, some sources indicate that Cerberus decided to intensify its negotiations with BBVA after missing out on the bidding for Popular’s toxic real estate; it fell at the first hurdle.

The two entities have been holding negotiations since the summer and, according to sources, the parties are going to set the perimeter of the operation on the basis of the price that the fund is willing to pay.

For the time being, Cerberus has already made it known to investors that the negotiations are very advanced. Those sentiments were expressed by the representatives of the asset manager Haya Real Estate, a subsidiary of Cerberus in Spain, during the road show that they held recently with investors in London to issue €475 million in guaranteed bonds, according to sources in the know.

The operation to deconsolidate some of BBVA’s real estate risk is expected to be closed this year.

BBVA’s gross real estate exposure in Spain amounted to €17,774 million as at September. The entity had an average coverage ratio of 56% at that date, and so the net risk stood at €7,828 million. The entity has reduced its net exposure to property by 23.3% since the end of 2016.

Original story: Expansión (by R. Sampedro)

Translation: Carmel Drake

Spain’s Banks Sell RE Assets Worth €52,000M+ In 2017

2 November 2017 – Cinco Días

According to all of the experts consulted, there is no doubt that the operation carried out by Santander in August, involving the sale of €30,000 million in property to Blackstone, marked a before and after in the formula for the financial sector to get rid of its real estate deadweight.

That operation significantly boosted the total amount transacted in these types of portfolio sale operations this year. Taking into account those operations that already have been closed, as well as those that are currently underway, the transaction volume in 2017 will comfortably exceed €52,000 million. That figure contrasts with the volume recorded in 2016 (€22,000 million), even though this year (2017) was expected to be more modest in terms of transactions.

The new international accounting standard IFRS 9, which will enter into force in January, and which will toughen provisions for real estate portfolios, as well as the pressure from the Bank of Spain and, above all, the European Central Bank (ECB) for the sector to accelerate the sale of its NPL assets, have served as a trigger for the banks to accelerate the sale of their foreclosed land and properties.

The heads of Spain’s largest banks (Santander, BBVA, CaixaBank, Bankia and Sabadell) have said, during the recent presentations of their results for the first nine months of the year, that their objective is that property will no longer weigh down on their income statements by the end of 2018 and, in some cases, by a year later, at most (…).

By way of example, Bankia has two very different financial operations underway, but international funds are the interested investors in both cases. One involves the upcoming sale of between 7% and 9% of the entity’s share capital, a placement that is expected to be carried out during the month of November and whose buyers will be institutional investors.

The other operation will involve the sale of several real estate portfolios. One of those, for €100 million, goes by the name Jets; and another, amounting to almost €2,000 million, is known as Giant, comprises property from Bankia’s own balance sheet and maybe some from BMN, the entity that it will integrate into its perimeter at the end of the year (…).

CaixaBank, with around €18,000 million in at-risk assets, of which €10,000 million are NPLs, may also star in a similar operation to the deal closed by Santander with Blackstone within the next few months, according to two experts.

For the time being, all of the consultancy firms and investment banks agree that (with the exception of the sales processes already underway) the trend is to carry out much fewer placements of small portfolios and “to undertake a few, large sales instead”.

These same sources also agree that the investment funds (Apollo, Oaktree, Bain, Cerberus, Blackstone, Lone Star, Castlelake, Värde Partners, Lindorff, TPG and Goldman Sachs, amongst the most active) “are in a hurry to buy and the banks are in a hurry to sell”.

One of the large banks that has shown reluctance to sell its real estate assets until now, despite its bulky portfolio of foreclosed assets, has been BBVA. It has carried out some operations (refer to the table above) but it has been, together with Sabadell, the only entity that has not sold its real estate platform.

Nevertheless, the bank chaired by Francisco González has been holding exclusive negotiations with Cerberus for months regarding the sale of part of Anida (in an operation known as Sena). Specifically, it is interested in 20% of Anida Grupo Inmobiliario SL, which is equivalent to around €1,200 million, an operation for which it would pay approximately €300 million.

But several sources say that the bank is rethinking its sales strategy and in 2018, will be willing to put a much larger portfolio up for sale and whereby tackle an operation similar to the one closed by Santander, but this time with Anida as the protagonist.

Sources at investment banks and managers add that the upcoming regulatory changes affecting securitisations in Europe will also help to boost the sale of packages of property portfolios amongst investors (…).

Original story: Cinco Días (by Ángeles Gonzalo Alconada)

Translation: Carmel Drake

Colau Buys Residential Building From Renta Corporación For Social Housing

23 October 2017 – Expansión

Ada Colau is pushing ahead with her mission to recover residential buildings for the citizens of Barcelona. Her most recent battle has seen her conquer Renta Corporación, one of the traditional real estate companies dedicated to the purchase of old buildings in El Eixample and the subsequent rescission of contracts with tenants, with the aim of renovating and selling the properties. The Town Hall has exerted its right of first refusal for the building located at number 394 on Calle Còrsega in Barcelona, between Bruc and Girona, for which it has paid €5.85 million.

For its purchase of the building, Ada Colau’s Government has argued that the operation comes in response to “extraordinary and urgent measures to mobilise homes resulting from mortgage foreclosure processes”, together with “measures to protect the right to housing for people at risk of social exclusion”.

The Town Hall’s intention is to hand over the building, free of charges, to Patronat Municipal d’Habitatge so that it can be used as homes for social purposes.

The right of first refusal and withdrawal is a practice included in the Housing Law that the Parlament approved in 2007, although its use had been rare until now. It received a boost following the election of Ada Colau as mayor of the Catalan capital in June 2015.

The most recent balance reported by the municipal government includes the first year and a half of the mandate. In that regard, the Town Hall applied the right of first refusal and withdrawal in 87 of the 154 homes that it acquired.

Those figures have increased this year with several operations in that vein. The most significant deals have taken place at number 7, 9 and 11 on Calle Lancaster and number 37 on Calle Leiva.

In the first case, the Town Hall spent €5.65 million buying 41 homes spread over three blocks. In the second case, it paid €2.75 million to Anida – a subsidiary of BBVA – to avoid the sale of the block to a fund.

The municipal government also exercised its right of first refusal and withdrawal this summer to buy three plots of land on the former La Escocesa factory premises, in Poblenou, for €10.11 million. The hundreds of luxury homes that were planned for those plots are no longer going to be built, with social housing properties and facilities now planned for the site instead.

The housing plan that the plenary approved at the beginning of the year includes modalities that go beyond constructing new blocks for rent-protected and social housing homes. They include continuing with the acquisition of homes from financial institutions or their transfer for a period of time, buying blocks in neighbourhoods where the urban fabric is consolidated – such as in Calle Còrsega – and exploring co-housing: the transfer of homes at below-market prices for between 50 and 100 years.

Original story: Expansión (by M. Anglés and D. Casals)

Translation: Carmel Drake