Spain’s Housing Construction Boom Comes from Minnesota


17 August 2017

  • US vulture funds lead bets in the residential market
  • Blackstone becomes a huge property owner after buying 51% of Popular’s real estate assets

7,000 kilometres away from Madrid, in the US city of Minneapolis, Minnesota, decisions have been taken that have affected the recovery of the housing construction sector in Spain. The firms Värde Partners and Castlelake – known as opportunist, or vulture funds – had the opportunity to enter a depressed real estate market in the face of a foreseeable recovery. But they are not the only big U.S. investors who risked buying at bargain prices and restarted the bull market. Who is behind these companies?

One of the most active is Värde Partners, a Minneapolis-based company created in 1993, which began to buy troubled assets in Spain during the worst years of the financial crisis, at the beginning of this decade. The highlight of Värde’s participation in the Spanish market was its acquisition of Grupo Empresarial San José’s residential development business, to whose portfolio it added the land that it had been purchasing.

With that basis, Värde created the real estate company Dospuntos, one of the several firms created by the American investment funds to free up construction projects that had been paralyzed since the 2007 property market crisis. After that deal, it returned to the market at the beginning of 2017 when it bought the Spanish real estate developer Via Célere from Juan Antonio Gómez-Pintado, who was chosen to lead the newly merged company as its chief executive, and whose objective is a listing on the stock market early next year.

In parallel, Värde acquired 75% of the recently started developer Aelca from the Avintia group, which strengthened its position in housing construction. Aelca already had plans to start works on 1,900 new homes, adding to Via Célere’s 1,700 homes.

The fund has invested $50 billion since its inception and its chief executive is Marcia L. Page, a veteran alternative asset manager. Tim Mooney, responsible for Värde’s real estate business, has designed Värde’s investment strategy in Spain, which also includes the purchase of part of the property business of Procisa, which constituted the company La Finca Global Assets. In addition, Värde, together with the investment fund Kennedy Wilson, bought a majority stake in Aliseda, Banco Popular’s banking platform, that it resold recently after Santander acquired the bank.

The other Minnesotan investment fund behind the new construction boom is Castlelake, which has a total of $10 billion in assets under management around the world. It was created in 2005 and specializes in investments in troubled companies, distressed debt and mortgage loans in complicated situations. Castlelake has been buying land in Spain since 2012 and created the real estate company Aedas Homes, which is expected to go public this fall. The Minneapolis firm was created by Rory O’Neill, a manager from another similar fund called CarVal Investors, and Evan Carruthers, who serves as managing partner.

As an aside, this fund is also specialized in the purchase and management of aircraft for leasing. It has a fleet of 400 aircraft, comparable to the giant IAG, which has 530 aircraft, and 835 engines for the aircraft. The European team at Castlelake, which leads the real estate investment strategy in Spain, is located in London and led by Eduardo D’Alessandro.

Its real estate developer Aedas Homes has some of the old team from Vallehermoso and plans to begin construction on around 1,700 homes sometime in 2017.

The vulture fund which was the fastest to make its bet on the Spanish real estate market is Lone Star. The fund, based in Dallas, and whose name refers to the one star on the Texas state flag, bought the real estate developer Neinor from Kutxabank for €930 million.  Lone Star proceeded to inject new land into the developer’s portfolio and restarted its residential construction business.

Lone Star then launched an ambitious plan to turn the renamed Neinor Homes into the country’s largest real estate companies, practically the only one with plans for developments throughout Spain, a far cry from the small regional developers that survived the crisis.

In addition, it was ahead of other companies on their way to a market listing, when it debuted last March, in what became the first initial public offering of a real estate developer in the Spanish market in a decade. That move also allowed Lone Star to divest 60.1% of the capital of a company that was valued by the market at €1.3 billion.

Neinor is expected to be another of the market’s leading developers to head to the stock exchange, together with Aedas, Vía Célere and Metrovacesa, controlled by Santander (61% of capital) and which is already studying a possible IPO.

Lone Star, which in Spain is run by the Argentine Juan Pepa, was created 22 years ago in Dallas, founded by fund manager John P. Grayken. That firm has launched 17 investment vehicles in which it has bought troubled assets and debt in much of the world.


The Blackstone fund, the largest real estate owner in the world, has created a housing giant in Spain from foreclosed properties and the purchase of toxic assets from banks. Its latest move was the acquisition of 51% of a joint venture, for 5 billion euros, which will manage 30-billion euros in property assets acquired from Banco Popular, making it the largest real estate company in the country, ahead of Sareb.

Blackstone was created in New York in 1985 and currently manages assets worth $370 billion. In Spain, it created Anticipa, a platform that manages assets acquired from banks, which already has 12,000 homes for rent. To manage them, it formed the socimi Albirana Propertis, which is listed on the Alternative Stock Market. It also owns Fidere, another socimi that manages the portfolio that the asset management company bought from the Municipal Housing Company (EMV) of Madrid.

In the field of bank servicing, which appeared as banks were looking to divest their problematic real estate assets, other funds have also been active, although some have already sold off, such as Kennedy Wilson and Värde with Aliseda. TPG remains in Servihabitat, the platform linked to Caixabank. The Californian vulture fund entered the market in 2013. That year, Santander also sold its platform Altamira to the New York-based Apollo fund.

Original Story: El País/Cinco Dias – Alfonso Simón Ruiz

Translation: Richard Turner

BofA In Final Talks To Buy Hotel Loans From Bankia

27 May 2015 – Bloomberg

Bank of America Corp. is in final talks to buy loans with a nominal value of c. €400 million ($436 million) from Bankia SA, backed by hotels in Spain, said two sources close to the transaction.The loan package, called Castle, will likely be sold for less than the nominal value of the borrowings, said the sources, who asked not to be identified because the information is not public. They declined to elaborate on the size of the discount.

A spokesman for Bankia, Spain’s fourth-largest bank, declined to comment. An external spokeswoman for Bank of America in Madrid was not immediately able to comment.

Investors are targeting hotels in Spain as the economy recovers and the euro’s slide against a basket of currencies that include the pound encourages more foreigners to visit the country. A record 65 million tourists came to Spain last year, with the largest share, 15 million, coming from the U.K. In the first two months of 2015, spending by visitors rose an annual 8 percent to €6.6 billion.

European banks and asset managers plan to sell or restructure €70 billion of riskier real estate as they try to clean up their balance sheets, Cushman & Wakefield Inc. said in an April report. The region’s lenders, asset managers and bad banks such as Spain’s Sareb sold €12 billion of loans tied to property during the first three months of the year, Cushman & Wakefield estimates.

Original story: Bloomberg (by Sharon R Smyth)

Edited by: Carmel Drake

RE Managers Ranking: Solvia & Anida Vie With Vulture Funds

25 February 2015 – El Confidencial

Banco Sabadell and its real estate arm Solvia have infiltrated the top ranking of (Spain’s) real estate managers, which mainly includes vulture funds. These funds now have (assets under management amounting to) €278,000 million.

The international funds have consolidated their position as the new players in the real estate sector after Sareb’s latest auction. In fact, together, the so-called vulture funds control a portfolio of assets amounting to more than €278,000 million, including land; properties; and mortgage and developer debt. There are some important exceptions (in the ranking), such as Solvia (Banco Sabadell) and Anida (BBVA), but the top positions are held by institutional investors such as TPG (Servihabitat), Cerberus (Haya Real Estate) and Apollo (Altamira), who monopolise the sector.

Following the bid for Sareb’s assets, the largest manager or servicer is Servihabitat, owned by Caixabank (51%) and the US fund TPG (49%). In total, the company manages €58,698 million, having taken on €19,725 million from Sareb. The entity was already ranked first or second-place, depending on whether the loans in its portfolio were included in the calculations, rather than just the properties.

Since the start of the year, Servihabitat has controlled 21% of the assets of the so-called servicers, including properties and loans. Following the auction, it now also manages assets of Nova Caixa Galicia, Liberbank and Banco de Valencia. This hegemony has been thanks to Sareb’s most recent auction, which was held less than two months ago, which awarded portfolios amounting to €41,200 million. The assets (awarded in that auction) have been managed by the winning companies since 1 January 2015.

The main upset (in the rankings) has been Banco Sabadell and its real estate arm Solvia, which has infiltrated the ranking of the top property managers in Spain. The bank was one of the few that did not sell its real estate portfolio to the vulture funds, like most of its competitors did, and as a result, it has become the fourth largest entity in the (servicing) sector, a surprise gate-crasher to the party, with assets of €39,765 million. Of this amount, €17,187 million came from the most recent auction, in the form of assets that came from Bankia. 43% of the assets that Solvia now manages came from Sareb. It has a 13% share of that market.

Off the podium

In this sense, another important development is that of Apollo. Previously it was the sixth largest player. Now, following the auction and its purchase of Altamira from Banco Santander for €700 million at the end of 2013, it has risen to third place. This bronze medal position reflects the fact that Altamira-Apollo now manages €46,566 million. It has acquired more than half of its property and loan (€26,056 million) from Sareb. The entity has a 17% share of Sareb’s market.

These increases have been achieved at the expense of another operator, Anida, which has dropped down the rankings to fifth place. Anida is the real estate arm of BBVA and has more than €25,000 million assets under management. It is one of only a handful of companies of this type, which, like Solvia, has not allowed foreign funds to participate in its capital. Neither Anida nor Aliseda, which was sold by Banco Popular to Värde Partners and Kennedy Wilson for €815 million, participated in the most recent auction and so they lost size in a business where critical mass is fundamental.

Haya Real Estate, owned by Cerberus, is still the entity that depends most heavily on the Sareb. It controls assets that mainly come from Bankia and so 65% of its portfolio depends on the Sareb contract, much more than Altamira (55%) and Solvia (43%).

By contrast, from all of the large players, Servihabitat is the one that is least dependent on the bad bank, despite having won some of the lots it has auctioned, since it already had a significant asset base. It depends on Sareb for 33% of its portfolio only, which means, on paper, that it should have a higher operating management margin than its closest competitors.

Original story: El Confidencial (by Marcos Lamelas)

Translation: Carmel Drake