Tag: Apollo

Vulture Funds Manage Half of the Banks´ Property

If you have ever wondered of buying property from a bank in upcoming years, the odds are high that the operation will be finalized by a foreign fund called Apollo, TPG or Kennedy Wilson. The international investors already manage 52% of the awarded banking assets after the recent purchases of the two real estate companies: Altamira from Santander Bank and Aliseda from Popular. And it points just the tip of the iceberg.

In the contrary to the recession of 90s, the banks cannot wait to get rid of the real estate ballast and focus on their traditional work: granting credits and taking deposits in.

Inside the strategy, five entities (six if Banesto taken into account) transferred the management of their property to the third-parties: Santander by selling 85% of Altamira to Apollo for 664 millon Euros (with 550 million capital gain); Popular, handing control over Aliseda (valued at 815 million Euros) to Värde Partners and Kennedy Wilson for 415 millons; CaixaBank that sold 51% of ServiHabitat to TPG for up to 189 millons; Bankia that transferred its real estate company to Cerberus for about 90 millons; and Catalunya Banc that did the same, selling to Kennedy and Värde property valued at 60 millon Euros.

(…) In the next 10 years the funds will be responsible for administration and commercialization of 82.000 properties dumped into banks during the recession, valued at 20.000 million Euros.

Positioning

Answering the question “what´s in it for the foreign funds?”: their aim is to become super real estate companies and sell their business once Spain recovers from the crisis. Thus, not only are they interested in banks´platforms but also they are acquiring debt of the large companies of the sector: for instance Realia, Colonial or Metrovacesa.

Vulture funds usually invest for five to ten years, planning to sell when the real estate sector revives. (…) In Spain a race among the funds may be observed, running for positioning themselves as benchmark real estate managers. (…)

At the moment the most successful competitor is the consortium of Kennedy Wilson and Värde Partners, managing 25.000 million Euros in assets and loans. TPG, Apollo and Cerberus follow the funds at a distance.

Pending Transactions

(…) Sabadell gave clues of selling Solvia, the biggest real estate company after absorbing CAM. BBVA has not shown any inclination to get rid of Anida. Another real estate company bound to change the owner soon is the one of NCG, that has been already put on sale few months ago.

Source: Expansión

Santander Will Receive 550 Million Euros for Sale of 85% of Altamira to Apollo

Santander will close in the forthcoming days the sale of one of the biggest real estate platforms in Spain. The entity chaired by Emilio Botín will earn around 550 million Euros for transferring 85% of its branch associated with the real estate, Altamira, to the U.S. fund  Apollo Global Management, according to the sources close to the operation.

When Santander and Apollo put their signatures of the document, the operation will become the one of the greatest in terms of money involved, just after the Popular Bank´s handing Aliseda to two U.S. funds for 415 million Euros. Still the entity chaired by Ángel Ron holds huge percentage of its real estate subsidary, 49% on basis of the agreement between him and Värde Partners and Kennedy Wilson.

The pact between Santander and Apollo involves transfer of Altamira´s staff – about 500 people – and a 10-year management contract. According to it, the U.S. fund will be obliged to manage and sell the property awarded to Santander and its non-performing loans. (…)

Apollo will not disburse all in cash but it will pay with help of the consortium of banks´financing. Santander itself belongs to the consortium.

The director of the U.S. fund Leon Black had already announced in an interview for Expansión that he would invest 1.000 million Euros in Spain between 2013 and 2015. Apart from Altamira it acquired Evo from NCG for 60 millions and Finanmadrid from Bankia for 1.6 million Euros. (…)

Apollo took part in the auction of Altamira, known as the Bison Project, together with 3 other main funds investing in Spain: Cerberus, Centerbridge and Starwood.

The transaction gives Santander a chance to earn great captial gains in a single year which previously brought it some losses. (…)

Santander reduced the weight of the real estate company´s balance last year, changing it from 15.450 millons to 11.420 millions between September 2012 and September 2013, according to the entity´s data.

Source: Expansión

Santander sells its real estate company Altamira to the Apollo fund for nearly 700 million Euros.

The financing matters are still pending but, if nothing goes wrong, the investment fund Apollo will close the most important acquisition in Spain. The firm with headquarters in New York  has won  the  auction on Altamira Real Estate, the real estate division of  Banco Santander, committing to pay nearly 700 million Euros. Official sources have declined any comments, as the final price is still subject to finance matters.

After a process of less than three months, Santander is again the first institution to get rid of its real estate business (development and management of assets). The existing interest in the market encouraged the bank presided over by Emilio Botín to hire PwC to manage the sale  after  the  summer. As  in  other  auctions  of  financial or  real  estate  assets,  those interested in the operation were the same great investors.

At the end, Apollo signed last Friday the letter of intentions which grants exclusivity over the other contestant, Centerbridge (owner of Aktua, the former recovery company from Banesto), in order to finalize the investment. The funds like Cerberus (Bankia Habitat) and Starwood did not reach the final stage, as they were worse than the main offers, after including  real  estate  assets,  as  well  as  the  management  contract  of  the  properties, operative structure and staff included.

Should this operation be completed, Apollo would become one of the most active investors in the market. At the beginning of the crisis, the NY firm landed in our country with the acquisition of  different portfolios of  consumer credits from  Bank of  America. Later, its managers succeeded in the acquisition of EVO Bank, the banking business of Novagalicia Banco developed under that brand outside Galicia, Asturias and Leon, for an amount around 60 million Euros.

Right now, the type of assets is rather different. Altamira Real Estate is one of the biggest real estate companies in the market. In April 2012, the institution with headquarters in Boadilla del Monte merged its subsidiary with Mesena, the specialized unit from Banesto, creating a giant that manages properties (under construction or finished) with a value of more than 3500 million Euros. (…)

Once this was carried out, it was necessary to enhance the commercial capacity of the subsidiary. For this reason, Santander extended the auction campaign until the end of the year, through Altamira´s web, for a catalogue of 5000 properties, garage spaces, storage rooms or  offices. This aggressive selling strategy has made it  possible to  sell 11800 properties during the first nine months of the year.

 

Source: El Confidencial

The vulture funds that fly over the Spanish construction sector.

There is a business in the bruised Spanish real estate sector. In the last few months, the real estate subsidiaries of the nationalized savings banks, some of the assets that have been transferred to Sareb and “packages” of properties of those banks that have not been rescued will change hands. The buyers will be ten foreign companies, known as vulture funds, specialized in acquiring real estate bargains, as they have done in other countries.

Their names, Apollo, Cerberus, Lone Star, Lindorff…..where do they come from? Who are they? What will they do with the properties they sell? Most of them have a U.S. and British capital and are related to businessmen who are more or less known in Spain, such as the tycoon Donald Trump, the former vice president of U.S.A. Dan Quayle, the former Secretary of the Treasury of U.S.A., John W. Snow or the Mexican Carlos Slim.

The game is on. In November one of them, Centerbridge took the first step and acquired the awarded properties from Banesto (mostly second hand ones). Now it´s the turn of La Caixa, who appointed an investment bank for the sale of Servihabitat; Bankia has just received offers for its subsidiary Bankia Habitat. Catalunya Banc also studies who will get its real estate subsidiary Catalunya Caixa Inmobiliaria, and Novagalicia Banco has also ten offers on the table.

These are the vulture funds who aspire to dominate the Spanish real estate market in the next few years:

Apollo Global Management

The U.S. company is one of the main investment businesses on a global scale specialized in operations related to the acquisition of credits, real estate investments and the “private equity”. It was founded in 1990 by the Jewish businessman Leon Black, who acquired in 2012 one of the four versions of “The cry”, by Munch, for nearly 120 million Dollars (92 million Euros), the firm also has a subsidiary focused on the real estate operations.

In Spain, the Apollo group acquired the platform Finanmadrid from Bankia for 1,6 million Euros. The real estate subsidiary of this company, Apollo Real Estate is one of the main candidates to acquire CX Inmobiliaria from Catalunya Bank.

Cerberus Capital Management L.P.

With its headquarters in New York, Cerberus is one of the main investment companies in the world. It is presided over by two heavy weights U.S. Republicans: The former vice president in the USA during the presidency of George Bush Sr., Dan Quayle, and the Secretary of the Treasury between 2003 and 2006 during the presidency of George W. Bush, John W. Snow.

The acquisition of default credits from Banco Santander for 350 million Euros in April 2012 is the most important operation in Spain until now. The company has been positioning itself as one of the funds with more relevance in the acquisition of default assets, having acquired several packages of credits and properties from Bankia. Cerberus hired the son of former president José María Aznar at the beginning of the year with the intention of receiving counseling on the possible acquisition of assets from the “bad bank”.

Lone Star Funds

The Texan investment funds Lone Star are another of the potential buyers of assets of the Spanish “bad banks”. In 2012, the company acquired default credits of the Banco Santander for 150 million Euros and at the end of that year opened its own platform for credit recovery with the former manager of Apollo in Spain, Luis Cebrián.

These investment funds manage a total business volume focused on making capital added obligations more profitable with a volume of 33 bilion American dollars (25352 million Euros). One of its more important operations was the acquisition of 90,8% of the shares of the semipublic bank IBK which was affected by the subprime crisis.

D.E. Shaw & Co

Founded in 1998 by the scientist specialized in computer studies David E. Shaw, this investment and technological development company has its headquarters in New York. According to the figures of the company in April 2013, the company has an investment capital of 30 billion dollars (25.345 million Euros) and branches in the United States, Europe and Asia.

In the United States, this company is one of the main economic agents specialized in investment funds of security of mortgages that do not have the backing of the government. D.E. Shaw is also one of the main investors in pension funds in the city of New York.

Lindorff

The Norwegian company Lindorff is present in 11 European countries and has a business core specialized in the collection of debts. This company owns the companies Aitor and Investor AB at 50% each.

Lindorff has already carried out several businesses with Spanish financial institutions. We can highlight the acquisition of the platform of recovery management Reintegra from Banco Santander and the bid they are currently carrying out for the acquisition of default credits of NCG.

Aktiv Kapital

This Norwegian company  specialized in the acquisition of toxic assets at bargain prices was founded in 1991 in Oslo and currently operates in eight European countries and in Canada.

Aktiv Kapital has worked with the group BFA-Bankia in two occasions in 2012. It acquired around 100.000 default credits for consumers and another portfolio related to default credits in the car industry made of 16000 agreements and valued at 126 million Euros.

Oaktree Capital Group LLC

Founded in 1995, the company Oaktree has a staff of 600 employees mainly made of financial executives. It is among the 25 main investment management companies specialized in alternative assets such as the venture capital. It also has a real estate subsidiary called Oak Tree Reality that operates in the U.S. Its president, Howard S. Marks is considered one of the main authorities in Wall Street and according to the Forbes magazine is one of the richest financiers in the world.

In Spain, Oaktree is the main individual creditor of the company Panrico thanks to the acquisition of 20% of its debt and is the main shareholder from the company Campofrío.

TPG

TPG, previously Texas Pacific Group is one of the main financial investment groups in the world with its headquarters in California and Texas. Its business activity ranges from telecommunications to travel, the technological and industrial sectors, health services and banks.

One of their main operations was the rescue of Bradford and Bingley, the greatest mortgage bank in the United Kingdom, after the acquisition of 20% of its capital. This group also negotiated with the owners of Iberia in order to take on the control of the company.

WL Ross & Co. LLC

Lead by the millionaire Wilbur Ross, WL Ross & Co. LLC is an investment company specialized in taking over companies with financial problems with the aim of restructuring them. Energy, financial services, health services, heavy materials and transport are the main areas where this tycoon develops his business, with a fortune around 2,6 billion Dollars (1996 million Euros) according to the Forbes magazine.

This American millionaire who declares “his love for mortgages” which bring him a lucrative business in the States has winked at the “bad bank” and declares that Spain “is, in many ways, a very interesting country”.

Fortress Investment Group LLC

Founded in 1998, this company specialized in investments develops its activity in different sectors that range from the real estate sector, with a subsidiary specialized in castles, to the financial sector, energy or infrastructures.

In 2012, Fortress acquired a package of aprox. 1000 million Euros in default credits from Santander, most of which were consumer credits.

Centerbridge Partners

Centerbridge is a multistrategic investment company with more than 15 billion dollars (11523 million Euros in assets. Its headquarters are in New York and it has branches in London.

Centerbridge Partners acquired at the end of 2012 Aktúa, the subsidiary from Banesto specialized in management and recovery of credit portfolios, for around 100 million Euros.

Donald Trump

The eccentric millionaire Donald Trump is another candidate to acquire a great number of Spanish properties. Its name sounds among the potential investors that could arrive to our country after he declared in 2012 that in Spain “they were giving land for nothing” and that as “country was ill, it was the time to take advantage of that”.

Carlos Slim

The richest man on earth for the fourth year in a row according to Forbes magazine, bought through its Mexican real estate subsidiary, Carso, properties from Caixabank for 428,2 million Euros.

The 439 properties acquired by Slim are intended for bank branches and the operation was a “sale and lease back” as after the sale, a long term lease with a purchase option was signed, which allows Caixabank to continue using the sold branches.

Otto Group/EOS Group

The German group Otto with more than 50000 employees and presence in Europe, America and Asia is one of the firm candidates to take a big piece of the Spanish real estate market.

Through its subsidiary EOS Group, Otto acquired at the beginning of 2013 the recovery business from Banco Popular for ten years and 135 million Euros.

Source: El Mundo

Bankia sells Finanmadrid and a portfolio of 870 million Euros to Apollo.

Bankia continues with its disinvestments. The bank presided over by José Ignacio Goirigolzarri closed the sale of its consumer credit subsidiary, Finanmadrid, and a portfolio of credits of 870 million Euros to the fund Apollo.

This is the biggest operation ever by an American investor in Spain. This agreement, advised by Arcano and Linklaters, includes the transfer of 124 employees who make up the platform of Finanmadrid. Bankia is also working on the reduction of its staff with the transfer of employees.

The bank is also studying the sale of the platform Bankia Habitat, with 500 employees. The institution valued the the sale of Finanmadrid in 1,6 million Euros, although this amount only includes the transfer of the platform and not the credit portfolio, according to financial sources.

The package of credits would be made of nearly 700 million Euros in up-to-date loans, and another 170 million Euros in default loans. These last ones will be paid with discounts of 95%. Meanwhile, the existing credit is bought with an average discount of 20%. If these figures are maintained, the price of the operation as a whole (platform plus credits) would reach more than 500 million Euros.

This disinvestment is one of the commitments reached by Bankia with Brussels. The operation will generate a positive impact on the group´s capital of 10 million Euros. For Apollo, it will mean the reinforcement of its presence in Spain and the chance to become a competitor within the segment of consumer credits.

Source: Expansión

Fortress, Appollo and other funds wish for the business liquidated by the nationalized institutions.

Credit portfolios, recovery businesses, real estate divisions and now, the business in liquidation. The restructuring imposed by Brussels to the nationalized institutions – Bankia, NCG Banco and Catalunya Banc – has turned out to be a substantial business for foreign funds and banks. Some of these investors have met in the last few weeks showing an interest in the business being liquidated: credits, branches and staff.

If there are no last minute changes, the first serious offers will arrive in the next few weeks. A public tender cannot be dismissed in view of the growing interest.

These are potential operations that offer great advantages for both parties. The nationalized institutions can maintain part of their staff, avoid the economic and social cost of layoffs. The funds have the opportunity of acquiring credits and commercial and recovery teams at bargain prices, as well as some agreements on the provision of services.

The three bigger nationalized institutions are obliged by Brussels to reduce the credit volume in nearly 100.000 million Euros in the next few years (until 2017); its staff in more than 8000 workers; and its commercial network in more than 2000 branches. These cuts provide a business that the funds do not want to lose.

The reductions which interest the foreign investors most are the ones to be carried out in the expansion areas, entered by the savings banks in the last years of the real estate boom.

In the case of NCG Banco, the Galician institution has around 200 branches far away from the area considered strategic by Brussels. Nearly 120 of these belong to EVO Banco and would not be included in the type of operations sought by funds and 60 are included in the Management Unit of Single Assets (MUSA). The Galician group has received a lot of interest on this unit, which would also include 60 branches, 900 professionals and credits for 20.000 million Euros. Nevertheless, sources from the institution declare that their initial priority is to sell EVO Banco. Out of these 20.000 million Euros, half of them would be healthy credits and the other half default credits.

Some funds prefer to concentrate on the recovery teams and the default credit portfolios. They would then continue providing a recovery service to NCG Banco and they would acquire some of the default credit portfolios included in the unit MUSA.

Other funds are preparing offers for those healthy credits awarded outside the strategic region of NCG: Galicia, Leon and Asturias. Should these operations be closed, the acquirer would be in charge of managing the current credits, but would not grant further loans or deposits.

Along with NCG Banco, the funds and financial institutions are studying the possibility of acquiring part of the commercial network of Catalunya Banc. Brussels imposed the closure of 400 branches, 35% of all it had at the end of 2011. It also has the obligation of closing any business outside Catalonia and part of the one within the region, mainly in the provinces of Lerida and Gerona, according to financial sources.

Bankia has already closed the sale of non strategic assets. It has been done partly to save jobs, such as with the sale of Finanmadrid to Appollo, with the transfer of 124 people, or with Bankia Habitat, on sale with a staff of 500 employees. The troika has allowed Bankia to maintain part of its network in its natural area of influence. It was national since the very beginning, and therefore it will not need to leave any region. But Bankia still has to close 1100 branches and get rid of 4500 employees. The institution already has requests for early retirement buyouts for 3000 employees.

Source: Expansión