Sareb Renews its Management Contract with Haya for its Rental Assets

9 January 2020 – La Vanguardia

Haya Real Estate has succeeded in renewing its contract for the management of Sareb’s rental assets for another two years. The bad bank’s rental portfolio contains 3,300 assets in total, of which 1,800 are homes. The remainder are parking spaces, commercial premises and storage rooms.

This announcement follows Haya’s successful renewal in October 2019 of its contract with Sareb to manage a share of the bad bank’s real estate assets, worth €8.4 billion in total.

In both cases, the renewals include changes to the distribution of tasks as a result of Sareb’s new business strategy. The latest revised agreement means that Haya will continue to market and manage the bad bank’s rental assets, which are located all over the country.

Original story: La Vanguardia 

Translation/Summary: Carmel Drake

TPG Reaches Deal on Preferential Access to €175 Million of Sareb’s Assets

20 August 2019

TPG, which recently acquired Témpore Properties, has signed an agreement with Sareb maintaining its partnership with the state company.  Témpore will thus maintain a right of refusal for over 175 million euros in assets owned by the Sareb.

Original Story: La Información – Lucía Gómez

Adaptation/Translation: Richard D. K. Turner

Sareb Opens Bidding to Other Servicers After Low Bids from Haya, Solvia, Altamira and Servihabitat

30 July 2019

Sareb has notified the four servicers that manage its €34 billion in real estate loans and assets that it will open up bidding on its management contracts to other potential bidders, after having received a round of offers that it considered insufficient. Haya Real Estate (Cerberus), Servihabitat (Lone Star), Solvia (Intrum) and Altamira (doValue) have been servicing the bad bank’s assets until now. Sareb mandated DC Advisory to manage the process as the bank looks to reduce the size of the commissions it has been paying to the four firms.

DC Advisory and Sareb have reportedly been in contact with smaller, specialised firms such as Hipoges, Finsolutia and Copernicus. The decision is a message to the four current servicers, letting them know that they may lose out on future contracts unless they improve their bids. Sareb is considering dividing some sections of its portfolio by geographical location, reducing the number of managers in each and streamlining its operations.

The process – known as the Project Esparta – sent shudders through the servicing sector and was a factor in the postponement of Haya Real Estate’s IPO last year.  Haya currently has the largest mandate, servicing 37% of the bad bank’s assets (2014). Altamira, in turn, manages 29%, while Servihabitat has 19% and Solvia 15%.

Original Story: El Confidencial – Jorge Zuloaga

Adaptation/Translation: Richard D. Turner

Árqura Homes: Sareb Launches a Property Developer to Build 17,000 Homes

11 June 2019 – Europa Press

Sareb has constituted its own property developer, Árqura Homes, through which it plans to build and sell 17,000 new homes over the next decade with an investment of €2.2 billion. The new entity looks set to rival the country’s main listed property developers on the basis of its land portfolio and investment plans.

Árqura has been constituted following the transfer of land and developments underway worth €811 million. 56% of its portfolio corresponds to just over 2 million m2 of land, 41% corresponds to developments in progress and the remaining 3% are developments that have been suspended.

The bad bank led by Jaime Echegoyen (pictured above) is going to team up with Värde for this initiative, which will hold 10% of Árqura’s share capital. Moreover, Aelca, a real estate company controlled by the US fund, will be responsible for the management and marketing of the new homes.

This operation represents Sareb’s second foray into the real estate market through the launch of its own firm after it launched the Socimi Témpore at the end of 2017. That firm became the third largest rental home company in the country and is currently on the verge of being sold to the fund TPG.

In the case of Árqura, it hopes to reach its cruising speed in terms of development between 2021 and 2022 and of homes deliveries between 2023 and 2024. Its homes will be distributed across 15 regions, although more than half (58%) will be concentrated in the most sought-after regions of the Community of Madrid, Cataluña and Andalucía.

Original story: Europa Press

Translation/Summary: Carmel Drake

The FROB Recorded a €382M Provision Against its Stake in Sareb in 2018

20 May 2019 – El Confidencial

The Spanish Fund for Orderly Banking Restructuring (FROB) presented its accounts for 2018 this week revealing that it decided to recognise a €382 million provision against its stake in Sareb last year.

In this way, the FROB has now written off 92.3% of its initial investment in the entity chaired by Jaime Echegoyen (pictured above), up from 75% in 2017. If the rest of the investor entities, namely all of the large Spanish banks with the exception of BBVA, do the same, then they will have to recognise losses of around €450 million.

In absolute terms, the FROB’s stake in Sareb is now worth €169 million compared with its initial investment of €2.192 billion. The FROB is Sareb’s largest shareholder with a 45.9% stake, followed by Santander (22.3%), CaixaBank (12.2%), Sabadell (6.6%) and Kutxabank (2.5%).

As the bad bank’s largest shareholder, the FROB typically sets the tone of the provisions for the other entities. Last year, after the FROB increased its cumulative provision to 75%, other shareholders such as CaixaBank and Sabadell recognised extraordinary provisions in their accounts for Q2. This year, the average provisioning rate is expected to increase from around 70% to 90%.

Sareb closed 2018 with losses of €878 million (up by 55%) due to the strong competition in the institutional market and the real estate crisis that still affects much of the country. The bad bank sold 21,152 properties last year and its income from property management soared by 19% to €1.4 billion, but its income from the loan portfolio fell by 16% to €2.2 billion and so total income fell by 5% to €3.7 billion.

The outlook for the bad bank for the next few years is not great and many experts forecast that not even a single euro will be recovered from Sareb.

Original story: El Confidencial (by Jorge Zuloaga)

Translation/Summary: Carmel Drake

Sareb Launches Project Esparta to Shake Up its Servicer Arrangements

17 May 2019 – Cinco Días

Sareb has launched a new operation called Project Esparta, through which it is seeking to turn its existing strategy on its head.

The bad bank’s aims with this initiative are multiple: to create sub-portfolios into which to classify its assets; to renegotiate the contracts with its servicers to recover the services transferred to them; to delay sales and assume the stock of assets to generate added value; to create regional centres; and to equip itself with its own technological infrastructure. The overall objective is to professionalise sales and enhance the value of its assets.

As a result, Sareb is going to start renegotiating the contracts that it has with Haya, Altamira, Solvia and Servihabitat to recover some of the activities assigned to those servicers. Haya’s contract is due to expire on 31 December 2019 and according to the bad bank, it may be renewed in part or in whole, or the portfolio under management may be put up for tender. The contracts with Altamira, Solvia and Servihabitat are due to terminate in 2021.

Haya was hoping to make its stock market debut this year, but it will have to put those plans on hold until its future with Sareb is resolved.

Original story: Cinco Días (by Ricardo Sobrino)

Translation/Summary: Carmel Drake

Sareb’s Losses Plummeted by 55% in 2018 to -€878M

28 March 2019 – Cinco Días

Sareb recorded losses of €878 million in 2018, which were 55% greater than those registered in the previous year. Moreover, the bad bank forecasts a similar result for this year.

Despite the disappointing results, Sareb ended 2018 with own funds of €2.6 billion, which represents a sufficient volume to not have to request any capital increase from its shareholders, which include most of Spain’s major banks and the FROB.

The President of the bad bank, Jaime Echegoyen, observed that his company is committed to the divestment of the problem assets that it acquired from the struggling banks during the crisis, and to maximise its returns. Sareb is competing against many of the banks, which are now selling large portfolios of real estate assets at significant discounts. Nevertheless, it is reluctant to match those discounts given that its cost of managing the assets is lower than the discounts being asked for.

Instead, Sareb has opted to transform the assets it owns by finishing suspended developments and building new homes on the land that it owns. Within the coming days, the company is expected to close an agreement with a property developer, which will build new assets on some of its land.

At the end of 2018, the bad bank recorded total revenues of €3.65 billion, down by 5% YoY. It sold 21,152 units during the year, up by 12% YoY. But, it continued to incur significant expenses – its financial costs alone amounted to €658 million, whilst its operating expenses amounted to €697 million, resulting in the aforementioned losses.

Since its creation in 2012, Sareb has now reduced its global portfolio by one third (€16.5 billion) and repaid 30% of the debt that it issued to pay for the assets in the first place (€15 billion).

Original story: Cinco Días (by Ángeles Gonzalo Alconada)

Translation/Summary: Carmel Drake

TPG, Round Capital & Ares Enter Final Round of Bidding for Témpore

12 March 2019 – El Independiente

Sareb has reactivated the sale of its Socimi Témpore Properties and the funds TPG, Round Capital and Ares are some of the candidates in the final round of bidding.

The bad bank was close to signing the transaction last year but called it off due to a lack of transparency. Then, it was the US investment fund TPG, shareholder of companies such as Spotify, Airbnb and Burger King, who was the likely buyer of Témpore, which manages 2,249 residential homes worth €338 million.

Now, TPG is back in the final round of the new process, this time against two opponents. The real estate fund Round Hill already has a presence in Spain – just a few weeks ago it launched a joint venture with the fund KKR and the logistics firm Pulsar Properties to buy logistics platforms. Meanwhile, the US fund Ares has also starred in several transactions in Spain, particularly in conjunction with the Dutch real estate firm Redevco.

Témpore closed 2018 with a loss of €384,394, but is forecast to generate profits from 2020. Its portfolio of residential assets, which is managed by Azora, generated rental income of €7.3 million last year. Moreover, 80% of its assets are located in the metropolitan areas of major capitals and the rest are in areas with significant rental demand, such as Valencia, Sevilla, Zaragoza, Málaga and Almería.

Original story: El Independiente (by Ana Antón)

Translation: Carmel Drake

Sareb Searches for an Ally to Develop Land Worth €2.5bn

3 January 2019 – Eje Prime

The bad bank is looking for a partner to increase its profitability through the development of its land. Sareb owns plots throughout Spain worth €5 billion, but almost half (€2.4 billion), lack building permits. For this reason, the company is combing the market to reach agreements with companies that specialise in converting plots into buildable sites.

The company is thus planning to turn the tide in its strategy for the management of its portfolio when the contracts that it has signed with several Spanish real estate servicers come to end, which they will do soon, according to El Economista.

At the end of the first half of 2018, Sareb’s buildable land had a value of €2.15 billion. The rest of the portfolio owned by the publicly owned company comprises rural plots, worth €450 million.

Sareb, with €36 billion on its balance sheet, is also working on the creation of a fund with a residential property developer in which it will own a large stake. By way of consideration (payment for that stake), the bad bank will grant land worth €800 million for the development of new homes. Aelca is currently the favourite in the running to be awarded that contract.

Original story: Eje Prime

Translation: Carmel Drake

Sareb Sells its Socimi & its 3,300-Asset Portfolio to TPG

4 December 2018 – El Independiente

Sareb, the Company for the Management of Assets proceeding from the Restructuring of the Banking System, is closing the final details of the sale of its Socimi Tempore Properties to the private equity fund TPG.

The company, which is in the middle of a non-monetary capital increase amounting to €150 million and which will soon manage 3,300 real estate assets worth €325 million, received several offers at the end of November, including from the fund Apollo. In the end, the proposal from TPG has proved victorious, according to sources speaking to El Independiente.

The US group TPG, which has USD 94 billion in assets under management, is the shareholder of companies such as Spotify, Airbnb, Burger King, Lenovo, Ducati, Saxo Bank and Grohe, amongst others.

The so-called bad bank, in which the State holds a 45% stake, hopes to close this operation before the end of the year, in order to improve the appearance of its accounts, which will again feature losses.

The Tempore portfolio sold by Sareb is concentrated (80%) in the metropolitan areas of the major capitals, with the remainder located in regions with significant demand in the rental market, such as Valencia, Sevilla, Zaragoza, Málaga and Almería.

Azora is responsible for the management of the portfolio – it performs the administration and marketing activities for the assets directly. The company is led by the Director of Rentals at Sareb, Nicolás Díaz Saldaña. Before his arrival at Sareb, Saldaña was at the helm of the international department at Metrovacesa during the most complicated period of the real estate crisis.

Sareb is selling its Socimi at a time when these types of companies are in the Government’s spotlight, in light of the insistence of Podemos to toughen up the beneficial tax regime that has facilitated the expansion of the vehicles in recent years.

The Bank of Spain has also started to monitor the Socimis as a potential focus of instability for the financial sector and links the rise of these vehicles to the sharp increases in the prices of offices and commercial premises.

Original story: El Independiente (by Ana Antón)

Translation: Carmel Drake