Project Big Bang: Bankia Selects Contenders For Final Phase

26 June 2015 – Expansión

Bankia has launched the final phase of the sale of its remaining assets, worth €4,800 million. The process is expected to be completed in July. Blackstone, Apollo, Cerberus, Deutsche and Oaktree are amongst the investors that have been selected to proceed to the final round.

Bankia’s Project Big Bang is entering the final phase. In the last few days, the entity chaired by José Ignacio Goirigolzarri has announced the names of the investors that have passed the first round of non-binding offers. Around five funds have overcome the hurdle, including: Blackstone, Deutsche Bank, Apollo, Cerberus and Oaktree.

At stake is the largest sale of real estate assets – excluding debt operations – since the economic crisis hit: foreclosed residential assets, commercial premises and land worth €4,800 million.

From next week, the selected funds will deploy their real estate teams, and those of their consultants, to undertake a more accurate valuation of the reality. This is a highly complex project because Project Big Bang comprises 46,000 real estate assets scattered all over Spain. The funds and their advisors will select the broadest samples possible to try to obtain the most accurate valuation.

The investors are going to have to work against the clock, since the next date marked in the calendar is 31 July, when theoretically, they should submit their binding offers. According to financial sources, Bankia wants to settle the transaction as soon as possible so that it is not hampered by the political uncertainty that will only increase as the general election moves closer.

Dividing up the portfolio

Even so, the competitive auction is not expected to be finalised until after the summer, since following the receipt of the final offers, Bankia and its advisors – Credit Suisse and KPMG – will have to analyse them and prepare the documentation necessary to complete the sale.

According to various funds, all indications suggest that the Big Bang portfolio will end up being divided up, since Bankia and its advisors believe that they will maximise its value that way.

The foreclosed assets amounting to €4,800 million…are recorded on Bankia’s balance sheet at around €2,900 million. That would be the base price that Bankia would expect to receive, since a lower price would mean it would have to recognise new provisions.

The portfolio for sale mainly comprises residential assets (apartments, houses and garages) – 38,500 assets in total, covering 3.6 million square metres. Around 65% of the homes are located in Valencia, Cataluña and Madrid, and 5% of them are currently rented out. The residential portion of the portfolio is worth €3,300 million.

In addition, Bankia is selling 5,000 commercial assets (offices, shops, hotels, warehouses and industrial buildings) worth €1,100 million; and 2,600 plots of land – of which 65% may be developed – worth €400 million.

Of the candidates, it seems that Cerberus is the best positioned – it purchased Bankia Habitat – now Haya Real Estate – in 2013 and therefore, knows the portfolio first hand, according to financial sources.

Apollo is also expected to bid hard for the portfolio, through Altamira. After acquiring 85% of Santander’s real estate arm, Apollo has not yet acquired any significant asset portfolios to generate returns from its platform, although it was one of the asset managers chosen by Sareb to handle some of its portfolio.

Original story: Expansión (by Jorge Zuloaga)

Translation: Carmel Drake

Cerberus, Apollo & TPG To Bid For Bankia’s Remaining RE

17 June 2015 – El Confidencial

Bankia will receive non-binding offers for its final real estate portfolio this week. (…)

Cerberus, Apollo, Texas Pacific Group (TPG) and Oaktree are four of around ten candidates that have asked for information to submit their proposals for this portfolio, however, they are expected to demand a discount of close to 35%.

According to sources close to the transaction, Credit Suisse, the bank advising the deal, expect to receive the first non-binding offers for the final part of the property portfolio that still sits on Bankia’s balance sheet. Initial assessments indicate that the cheques will amount to around €2,500 million, which would represent a discount of 40% with respect to the €4,213 million gross valuation of the portfolio, reported in Bankia’s results for Q1.

However, the bank led by José Ignacio Goirigolzarri already recognised provisions, amounting to €1,308 million, against the initial figure at which the finished properties, assets under construction and land were valued when they were put on the market several years ago, and so the net value of the portfolio on the balance sheet is currently €2,905 million. The majority of that amount (€2,161 million) relates to funding to buy homes, i.e. from flats and homes foreclosed due to non-payment.

But, despite this recognition of losses by Bankia’s management team, the potential buyers consider that the value of this portfolio may be lower. According to their calculations, the portfolio is worth around €2,500 million, which would represent a discount of 40% on the original amount and an additional 14% below the price at which the public bank has the assets recorded on its balance sheet.

As such, if that were to be the final sale price, Bankia would have to recognise additional provisions amounting to €400 million. Nevertheless, sources close to the bank point out that these initial valuations are only an approximation, a reference for investors who are going to bid to purchase the portfolio, and in fact, bidders may have to offer a premium in order to win the auction.

Furthermore, the same sources indicate that Goirigolzarri is not going to accept any offers below the valuation performed by an independent advisor (€2,905 million net), since in his opinion, that valuation already reflects the drop in homes and property prices since the burst of the real estate bubble.

The situation may be read in two different ways. The first is that the portfolio comprises what is considered to be “absolute rubbish”, in which case the assets would be worth much less. The second is that, given the great interest from institutional funds to invest in property, one of them may approach the €3,000 million asking price that Bankia has set.

Sources close to the transaction say that the current owners of the portfolios sold by Santander – Apollo -, Bankia – Cerberus – , CaixaBank – TPG, plus other funds, such as Oaktree, Starwood, Goldman Sachs and Blackstone will submit bids this week. Loan Star, which recently purchased Kutxabank’s real estate arm for €1,900 million, has also requested the documentation, but sources say that it will not bid in the end.

Nevertheless, if the bids do not meet the figure expected by Bankia, the portfolio may be divided up to obtain the highest possible revenue from it. (…)

Original story: El Confidencial (by Augstín Marco)

Translation: Carmel Drake

Reale Finalises Purchase Of Sabadell’s HQ In Madrid

11 June 2015 – El Confidencial

The building at number 125, Calle Príncipe de Vergara, one of the most important thoroughfares in Madrid, is about to change hands. Sabadell opened a competitive process for the sale, which is about to come to an end, with Reale as the favourite to seal the deal.

The insurance company, which is being advised by Inmospace, has submitted a bid for more than €45 million, compared with the asking price of €40 million that was set at the beginning of the process. This figure virtually makes Realia the sure-fire winner in a deal that has attracted interest from up to eight bidders, according to sources close the deal.

The other interested parties include other insurance companies, such as Plus Ultra, although, unless there is a last minute surprise, Reale will end up signing the definitive agreement with Sabadell within the next two or three weeks.

This timetable matches the one being managed by the Catalan entity for its relocation to a new headquarters in Las Tablas, a process that will begin in July and will be carried out in several stages, in a phased way. Once completed, Reale will establish its new headquarters in Príncipe de Vergara.


Solvia transaction

Solvia, the real estate subsidiary of the Catalan entity, has led this whole process, which has not required any external advisors. It has culminated in the reorganisation of the properties and headquarters that the bank has carried out recently.

Last year, Sabadell was one of the major players in the real estate office market in Madrid, thanks to the sale of Vodafone’s new headquarters, an office complex measuring 50,000 m2, to the British fund London & Regional for €117 million and with the commitment of the telecommunications operator to continue as the tenant.

In parallel, the entity reached an agreement with Vodafone to acquire its former headquarters, located in the neighbourhood of Las Tablas, an area in which firms such as Telefónica, BBVA and FCC have also chosen to locate their headquarters. This move, which many industry experts viewed very positively, was also orchestrated by Solvia, the real estate company led by Javier García del Río.

With capacity for 1,500 people, all of Sabadell’s central services will move to this new headquarters in the North of Madrid, with exception of its territorial operations, which will remain in Calle Velázquez, and its private banking division, which will continue in Calle Serrano. The Presidency will also remain in Calle Serrano, which accommodates both the Chairman, Josep Oliu, and the CEO, Jaime Guardiola, when they are in the capital.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

The Banks Are Setting The Pace For The New Real Estate Era

4 May 2015 – ABC

Financial institutions still have 65,000 homes for sale and are developing land and housing projects.

The banks were the “stars” of the real estate crisis. And although they are now reneging on this business – “it is not our vocation”, say the senior directors in the sector – the same banks are forming the cornerstone of the recovery once more. The financial sector, ranging from banks to investment funds, is playing a leading role in the revival of the sale and purchase of homes. They are the financiers, marketers and even the developers. Currently, and after having recovered from the real estate “hangover”, the main (financial) institutions in our country still have more than 65,000 homes on their balances sheets, as well as other assets such as shops, garages and offices.

The banks are still the primary real estate companies in the country and their behaviour is determining the speed of transactions and, above all, the prices at which transactions are being closed. Sales made by the so-called bad bank, Sareb, have lost steam in 2015, although it continues to be a key player. According to a recent announcement by its Chairman, Jaime Echegoyen, the company that manages assets from the bank restructuring sold 2,800 properties during the first three months of this year, which represents around 26 units per day, versus the 32 properties it sold per day during the same period in 2014. “We are one of the top five players in the market”, said the senior executive.

Bad banks

On the other side of the majority of the sales made by the bad bank are the banks and “vulture” funds that go hand in hand with this business. CaixaBank leads the ranking of the financial entities, through its real estate company Servihabitat, which is controlled by the US fund TPG. The entity manages assets with a value of close to €60,000 million, after it was awarded some of the most substantial portfolios auctioned by Sareb and whereby gained strength. Next in the ranking is Haya Real Estate, the brand that Cerberus gave to Bankia Habitat after its purchase, which manages (assets worth) more than €52,000 million; and then Altamira (owned by the fund Apollo, which was purchased from Santander at the beginning of 2014) with €45,500 million (of AuM).

The real estate arm of Sabadell, Solvia, is also ranked among the top five most active (managers) in the market, despite having followed a different strategy from that of its peers. The bank chaired by José Oliu was the only one that did not sell its real estate arm to investment funds and its decision, to develop and make a profit for itself, has generated good results (so far). After the recent transfer of a portfolio from Sareb for €34,000 million, the managers of the company want Solvia to lead the process of consolidation that is expected to take place in the so-called “servicer” sector in the near future.

The funds seek out the “servicers”

The funds, which are experts in managing these types of assets, have found a stroke of luck in this business. However, to make it more profitable, they are looking for volume, i.e. to add more portfolios and benefit from scale. This explains the interest that many of these funds have shown in the auction processes held in recent months, including in Catalunya Banc’s portfolio of problematic mortgages, which was eventually awarded to Blackstone; (the US fund) also purchased the Catalan bank’s (real estate) platform (in a previous transaction).

Nevertheless, the experts consulted believe that it is still early days for talk of M&A activity and that no deals will take place until 2016, i.e. until the market is more saturated. Regardless, the consolidation of this new sales channel is already a reality. “The wholesale channel has consolidated as a divestment channel”, assured Francisco Gómez, the CEO of Banco Popular, last Friday, when he presented this group’s latest results.

New developers

Another way to “recover from the hangover” is through development. Banco Santander is a clear example of this: the entity chaired by Ana Botín is currently developing around 300 real estate developments across Spain. It is a formula for trying to recover the investments it made in land during the boom years. Santander is constructing on land that ended up on its balance sheet after non-payments by developers and against which the entity has had to make significant provisions. Sareb is also developing land and completing the unfinished developments acquired that it thinks may be profitable.

As the CEO of Santander, José Antonio Álvarez, explained at the presentation of the bank’s results, that to ensure that there is demand for developments, the entity is more selective in terms of the circumstances of a projects (it invests in) and it only begins construction once 30% of the properties have been sold (off-plan). Santander sold 2,500 real estate assets (during the 3 months to) March 2015, a reduction on the volumes recorded during the first quarter last year. Specifically, the entity sold 12,000 properties in 2014.

Other entities, such as BBVA and Popular, are also now selling foreclosed properties at prices that exceed the value at which they are accounted for on their (respective) balance sheets.

Original story: ABC (by María Cuesta and Moncho Veloso)

Translation: Carmel Drake

MoD Opens The Bidding For ‘Campamento’ Land

27 April 2015 – Expansión

Auction worth more than €200 million / The Government is launching an auction process to sell a plot of land measuring 1.5 million square metres in Madrid, where the Chinese millionaire Wang Jianlin wants to construct luxury homes, hotels and casinos.

The Spanish Government has decided to refloat the so-called Operación Campamento just seven months before the general election. Today, the Ministry of Defence, the main owner of the land in the area measuring more than 1.5 million square metres, has officially put the plot, measuring 1,550,576 square metres, up for sale on the real estate portal Admeet.

The land, located in the south-east of Madrid, is the preferred location of the Chinese tycoon Wang Jianlin, owner of the business conglomerate the Wanda Group, to construct a mega-project containing thousands of homes, a retail complex, theme parks and casinos.


Jianlin, who officially closed the purchase of 20% of Atlético de Madrid’s share capital in January, has been negotiating with the Town Hall and Community of Madrid for months, to identify a location for his residential and leisure complex in the capital. Previously, in June 2014, he bought Edificio España from Banco Santander for €265 million, which was his first transaction in the Spanish market.

In January, when he signed the deal to acquire a stake in the Madrid football club, Jianlin took the opportunity to reiterate his interest in acquiring the land that is now up for sale. The plot housed the Ministry of Defence’s barracks in Madrid for many years.

Wang Jianlin is willing to invest €3,000 million in this project. To do that, the first step will be to acquire the land. By law, this purchase must be made through a competitive process since it involves a public asset.

“The interested parties must participate in a transparent and competitive auction process, in accordance with state legislation for the sale of property”, says the advert.


The auction of the land by the Ministry of Defence will be led by Pedro Morenés. The plot measures around 1.132 million buildable square metres and the vast majority has been marked for residential use (986,710 square metres). Subsidised and non-subsidised housing may be built on the site.

Wanda’s goal is to construct up to 15,000 high-end homes, with prices of around €4,000 per square metre. Moreover, offices, retail spaces and leisure complexes may also be built on the site. Wang Jianlin wants to use this land to create a leisure complex, similar to the ones he has constructed in Asia. For the time being, the Ministry of Defence has only released information about the land, and has not set a date for the auction or specified a minimum price.

Minimum price

However, sources in the sector estimate that the Government may set the minimum price at just over €200 million, an amount that is expected to be surpassed both by Wang Jianlin’s bid, as well as by the bids made by other interested parties.

The seller has not revealed the auction date, which may be determined by the timings of the local and general elections due to be held in May and November, respectively. To date, the current President of the Community of Madrid, Ignacio González, has shown his willingness to collaborate with the Chinese businessman, following the decision by the US billionaire Sheldon Adelson to abandon the Eurovegas project in Alcorcón.

Original story: Expansión (by R. Ruiz)

Translation: Carmel Drake

BBVA’s Purchase Of Catalunya Banc Is “Unblocked”

16 April 2015 – El Mundo

Yesterday, the US fund Blackstone finalised its purchase of a portfolio of problematic assets from Catalunya Banc (which is known by its commercial name: ‘Catalunya Caixa’) for €4,123 million. This transaction unblocks the acquisition of that entity by BBVA, which now just needs to be approved by the EU’s competition authorities.

The Fund for Orderly Bank Restructuring (the FROB) confirmed yesterday that the transaction had been conducted through the transfer of the portfolio to an asset securitisation fund, with the support of the public body itself, which sits under the Ministry of the Economy.

Specifically, the FROB will subscribe to a bond issue amounting to €524.9 million, whilst Blackstone will contribute €3,598.4 million. As a result of this transaction, the US fund will acquire a portfolio of problematic loans amounting to almost €6,400 million. Last summer, the portfolio aroused (a great deal of) interest from several funds that specialise in the management of doubtful debts.

Boost to business

The completion of this sale was a necessary condition for BBVA’s purchase of Catalunya Banc to go ahead. BBVA won the competitive tender against Santander and CaixaBank.

The entity chaired by Francisco González offered €1,187 million for the ill-fated savings bank, although the final price will be lower once cumulative tax credits have been deducted and because a series of guarantees will take effect in the event that the assets acquired are impaired by more than expected.

This purchase has allowed BBVA to gain a significant presence in Catalunya, where it is now the second largest entity by market share (accounting for almost 30%), exceeded only by CaixaBank. The transaction has also allowed BBVA to boost its asset management business, by adding around €2,000 million of assets under management.

Just like in the case of Novagalicia, the tender for Catalunya Banc has received criticism from those who believe that the State has rushed to sell of both of the entities. The losses of the Catalan entity alone amounted to €11,500 million.

Original story: El Mundo (by J. G. Gallego)

Translation: 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

CTH Capital Awarded ‘Golf Hills Village’ Complex In Estepona

21 January 2015 – El Mundo

The complex has 152 homes, with a total surface area of 14,762 square metres.

It is a particularly attractive asset for international developers and investors.

The company CTH Capital has been awarded the residential complex Golf Hills Village through an auction organised by the property consultant BNP Paribas Real Estate. The property, located in Estepona, in the area known as Selwo, has 152 newly built homes. In total, the above ground surface area occupies 14,762 square metres.

“Transactions such as this one highlight the growing interest in the Spanish real estate sector from international investors. In this sense, the Costa del Sol has a clear advantage since it is a landmark tourist destination and also benefits from high quality infrastructure”, says CBRE, a company that advised CTH Capital in its purchase of the complex.

The auction was conducted through sealed bids in the presence of a notary and had the distinction of being the first in Spain of an asset under construction. Nevertheless, the building work at the complex is in the advanced phase, with more than 95% of the basic project now complete.

An attractive asset for international investors

“As we explained during the presentation of the auction, the characteristics of this asset made it particularly attractive for international developers and investors, which has been proven at the close”, says Irene Valbuena, Head of Auctions at BNP Paribas Real Estate. “Furthermore, the transaction confirms the interest of international investors in Spanish assets and shows how they are adopting value-added strategies to enter into our market, such as in this case, where the construction work still needs to be completed”.

CTH Capital is dedicated to the management and investment of real estate, and is based in London, UK. The company specialises in direct investments with a special focus on investments in hotels and second homes.

CTH Capital has made its investment under a joint venture with the property developer and constructor, JAMSA, which has more than 40 years of experience developing property in Spain and overseas (Dominican Republic, Florida, Romania).

Original story: El Mundo

Translation: Carmel Drake