Sabadell Acknowledges to Goldmans that it is planning to Sell Solvia

1 October 2018 – Bolsamania

The sale of Solvia is on the table. Or, at least, that is what Sabadell has said to Goldman Sachs. Representatives from the two entities held a meeting last week in which Sabadell reiterated its forecast that it would save €150 million per year from the sale of its doubtful assets, including the sale of the servicer.

“The company reiterated its aim to save €150 million per year from the sale of its doubtful exposure, which it is hoped will offset the negative dynamics in the United Kingdom”, said the US entity in a report drafted after the meeting with Sabadell and with other entities, which was published last week.

The document also indicates that “the managers (of Sabadell) highlighted that this aim assumes the sale of Solvia”. The US entity is considering two scenarios, both the sale of Solvia and its continuation within the Banco Sabadell group. According to explanations from Goldman Sachs, the potential sale of the servicer could be good for the bank’s capital and would not dilute its profits.

Alternatively, if the company decides to hold onto Solvia, the entity’s profits would be higher than forecast given that Sabadell would continue to receive the profits of €40 million that Solvia contributes to it, indicates Goldman Sachs in its report.

A spokesman for the entity explains that, in any case, Solvia has never been a core business for Sabadell, in other words, it has never formed part of its main focus. On occasion, in fact, the bank’s CEO, Jaime Guardiola, has explained that “its business” is banking and not real estate. In any case, the spokesperson indicates that the day that a good opportunity presents itself, the bank will assign Solvia “a valuation”.

Sale or stock market debut

The sale is one of the possibilities that Sabadell is considering for Solvia, but it is not the only one. Sources in the sector consulted by Bolsamanía explain that the bank has already received some offers for the real estate asset management company, although it has not ruled out any of them yet.

Another option that the entity would have if it decides to divest the servicer would be to list it on the stock market, a possibility that the market has speculated about on several occasions over the last few years. Nevertheless, the same spokesperson for Sabadell explained that currently there is more “appetite” to buy the “servicer” than to invest in it in the event that it were to debut on the stock market.

In any case, the only fixed plans for Solvia, for the time being, are to remain under the ownership of Sabadell, given that the company is responsible for exclusively managing the assets that the bank is going to transfer to Cerberus Capital Management following its agreement in the summer.

Sabadell will transfer the majority of its real estate exposure to that fund, comprising assets with a combined gross book value of around €9.1 billion (€3.9 billion net). The operation is structured around the sale of the Challenger and Coliseum portfolios to several newly-created companies, which the fund will control (80%) and in which the bank will own the remaining stake (20%).

The last servicer

Solvia is the last bank servicer that is still owned by the entity that created it. Although Sabadell has transferred most of its property to Cerberus, it has held onto its servicer, unlike the other large banks, which have transferred their asset management companies to the different funds to which they have agreed to sell the assets managed (…).

Sabadell launched Solvia Gestión Inmobiliaria ten years ago, in 2008, and retains ownership over it today, with a workforce comprising around 800 employees and with assets under management of more than €30 billion, as well as €3.2 billion in loans managed.

Original story: Bolsamania (by Elena Lozano)

Translation: Carmel Drake

German Fund Deka Puts Ballonti Shopping Centre (Vizcaya) Up For Sale

26 February 2018 – Expansión

Deka wants to make some cash and has hung the “for sale” sign up over the Ballonti shopping centre, located in the municipality of Portugalete (Vizcaya). The German fund, which acquired the asset in 2010, at the height of the economic crisis, has decided now, eight years later, to put it up for sale and has engaged the consultancy firm CBRE to manage the process, according to reports from market sources speaking to Expansión.

The German group purchased the shopping centre from Eroski for €116 million and the current valuation could reach €150 million, in such a way that Deka could obtain significant capital gains from the sale.

In any case, sources in the sector consider that the timing of the operation will depend on the evolution of the sales process involving a portfolio of three shopping centres by Sonae and CBRE Global Investors, which is expected to come onto the market within the next few days. That portfolio of assets, which includes the Gran Casa shopping centre (Zaragoza), the Valle Real shopping centre (Cantabria) and the Max Center (Barakaldo), may be sold for around €500 million.

Ballonti, inaugurated in 2008, has a surface area of more than 50,000 m2 spread over two floors, and its tenants include Primark, H&M, Springfield, Bershka, Pull & Bear, Stradivarius, Lefties and Women’s Secret. Moreover, the shopping centre is home to a large Eroski hypermarket spanning a surface area of more than 13,000 m2.

The retail space includes an upper floor dedicated to leisure with a cinema, an adventure park, a gym and a restaurant area with brands such as Burger King, Foster’s Hollywood, 100 Montaditos, Krunch, Mr Wok, Café and Bodega Ballonti.

Investor appetite

After the significant investment drive in shopping centres last year, which ended with a transaction volume of around €2.7 billion, thanks to record operations such as the purchase of Xanadú, in Arroyomolinos (Madrid) for €530 million, investor appetite is expected to be maintained this year.

According to data from the Spanish Association of Shopping Centres and Retail Parks (AECC), last year, 29 transactions were closed involving 36 assets for €2.7 billion, which represents growth of 35% with respect to the previous year.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Voyager: Sabadell Launches Sale Of €1,000M NPL Portfolio

2 August 2017 – Expansión

Banco Sabadell is accelerating the sale of the non-performing assets accumulated on its balance sheet during the crisis. In just three years, the entity chaired by Josep Oliu has managed to cut its doubtful loan balance in half, which means that it has divested non-performing loans amounting to almost €9,000 million since 2014. In this way, in June of that year, the bank held €17,386 million in problem assets on its balance sheet, compared to the current figure of €8,541 million, according to the accounts published last Friday.

This effort has been made possible by the fact that Sabadell has been one of the most active entities in the sale of debt portfolios in recent years (…). In the last few months alone, it has managed to divest almost €2,000 million through the sale of Projects Normandy and Gregal (…). In addition, the bank has just engaged Deloitte to sound out the market as to whether an appetite exists for another €1,000 million portfolio, known as Voyager.

Gregal and Normandy

Project Gregal contained non-performing loans amounting to around €800 million and was segmented into three sub-portfolios. The last one was sold this week to the fund Grove Capital Management, which has taken over a batch of doubtful loans granted to SMEs. The other two Gregal packages were awarded to D.E. Shaw and Lindorff (…).

On the other hand, at the end of July, the bank managed to definitively close the sale of the Normandy portfolio (€950 million) to Oaktree. That portfolio comprised loans linked to real estate developments and so the amount paid was much higher and is reported to have amounted to around €300 million, which would represent a discount of around 70% (…).

Original story: Expansión (by Sergi Saborit)

Translation: Carmel Drake

SIMA’s Director Confirms That The RE Recovery Is Underway

10 May 2016 – Fotocasa

The Director of Madrid’s Real Estate Fair (SIMA), Eloy Bohúa, praised the “good” impressions in the real estate sector at the start of the 18th Fair, which he considers will serve as “confirmation of the recovery”.

With more than 200 exhibitors, 25% more than last year; a larger surface area, up by 30%; and more diverse international presence, with exhibitors from 12 countries, SIMA began with a “good prospects”, boosted by positive feelings at the Investment Forum, the pre-cursor to the fair, which more than 300 people attended. (…).

Bohúa explained that 2015 was the year of recovery, although the first signs of recovery were actually seen in Autumn 2014. He expects the “confirmation” of the recovery to be seen this year, but said that “we must be cautious and ensure that the sector does not repeat the same mistakes of the past”, something that “is present in everyone’s minds”.

During the opening of SIMA 2016, the acting Ministry of Development, Ana Pastor, observed that the real estate fair was “busier than ever”, and noted that data in the real estate sector “is continuously improving”.

In this vein, she said that growth in the sector amounted to 4.5% in 2015 and that 50,000 jobs were created in the sector last year (…).

This recovery was reflected at SIMA in data such as the supply of properties at the fair, which this year depended less on the Community of Madrid than in previous years. Whilst in recent years, it was customary for the supply in Madrid to account for 60% of the total supply at the fair, this year that figure amounted to less than 50%.

In addition, for the first time since the burst of the real estate bubble, the supply of off-plan projects for sale at SIMA exceeded the number of turn-key products, in such a way that the proportion of new projects to property developments (stock) this year was 60%:40%.

68% of the developments marketed at the fair relate to primary residences, of which 83% are unsubsidised and 17% have some kind of protection/subsidy; the remainder are holiday homes.

Markets operating at different speeds

In terms of the stock left in Spain, Bohúa explained that it is different in major capitals, where the recovery first started, given that there “sales are growing”, and the stock “is being drained off very quickly”. By way of example, he said that he estimates that around 5,000 new homes are left, which means the stock will run out within eight months.

And in the major capitals, there is “minimal stock that is not significant in terms of the market”, which is why Bohúa thinks that “now is the time to start new projects in response to a thriving demand”.

Other areas of the Peninsula are experiencing a different situation – particularly where the recovery is happening “more gradually”, i.e. in smaller population nuclei. In the holiday home segment, there is “a lot of activity and a great deal of interest from buyers and investors” in certain areas, such as along the Costa Blanca and the Costa del Sol, but again “the stock is not being absorbed at the same speed along the entire coast”, which means there the markets are operating “at different speeds”.

Investor appetite continues despite uncertainty

Regarding the possibility that the political uncertainty may affect real estate investments and purchase decisions, Bohúa acknowledges that uncertainty affects all economic sectors and “we are seeing slow downs and delays in decision making, but that is only natural because investors want certainty”.

Nevertheless, he said that investor appetite is “still high”. (…).

“There is no risk of investors fleeing from Spain because the fundamentals of the Spanish economy are in place”, he said. (…).

Original story: Fotocasa

Translation: Carmel Drake

Overseas Funds On The Hunt For Holiday Hotels

26 March 2015 – Expansión

Socimis (‘socidedades cotizadas de inversión inmobiliaria’ or listed real estate investment trusts) and the appetite of overseas investment funds are driving the professionalization of the hotel sector in Spain, to separate the ownership of properties from the management of establishments, in line with the Anglo-Saxon model.

That is one of the conclusions to come out of a conference held in Madrid yesterday about the evolution of the hotel sector over the last decade. The conference was organised by Magma Hospitality Consulting and the Intercontinental Hotels Group (IHG), the largest hotel group in the world by size.

Liquidity

“Socimis are an essential tool that Spain has needed for a long time, to provide liquidity to a portfolio of assets, respond to generational renewal and professionalize management”, said Luis Migual Martín, Investment Director at Azora.

This company launched a Socimi (Hispania), which formed an alliance with Barceló at the start of the year to create the first listed investment vehicle specialising in the hotel sector (Bay Hotels), which has assets of more than €420 million.

For his part, Alejandro Hernández Puértolas, CEO at HI Partners, the hotel fund driven by SolviaBanco Sabadell’s real estate arm – added that “the Socimis could bring together assets in Spain amounting to €8,000 million”. In the USA, the REITS – equivalent to Socimis – that specialise in the hotel sector have (assets under management amounting) to more than €70,000 million.

Nevertheless, there is still room for improvement. For Martín “there needs to be a change to the current legislation to reflect the management model, which now falls outside of (the scope of) the Socimis”. Arturo Díaz, CEO of Business Development at Renta Corporación, added that “other instruments will be created besides the Socimis”.

In the case of international funds, the focus has shifted from the city to the beach. “Institutional investors are starting to get involved into the vacation segment. The main difficulty is obtaining a portfolio of assets, but the appetite is there”, said Díaz, who called for restraint when it comes to changing the use of office buildings and homes into hotels.

Original story: Expansión (by Y. Blanco)

Translation: Carmel Drake