“Anti-Eviction Law” Reveals that CaixaBank has 5,000+ Empty Homes in Valencia

7 October 2018 – Valencia Plaza

La Generalitat is pushing ahead with its count of empty homes in the hands of owners of large property portfolios in the Community of Valencia. Reporting of these types of assets is now mandatory under the Law for the Social Function of Housing – known as the Valencian “anti-eviction law”, – a text that was watered down by the Constitutional Court (CC) but in whose articles the Consell still retains the tools to demand the reporting of unoccupied assets and to impose fines in the event of a lack of collaboration.

The Valencian Government reactivated the count following the recent ruling from the CC. The most recent figure provided by the Conselleria de Vivienda amounts to 7,315 homes across the length and breadth of the Community: 45% in the province of Valencia, 38% in Castellón and the remaining 17% in Alicante. But the most striking fact comes from the analysis of the owners, given that a total of 5,270 homes are owned by the CaixaBank Group.

The bulk, according to data provided to this newspaper by the socialist Minister María José Salvador, corresponds to 5,065 empty homes reported by BuildingCenter, the company owned by CaixaBank “focused on the divestment of the portfolio of properties proceeding from the group”, according to the company’s own motto -. The remainder to arrive at the total of 5,270 units corresponds to 148 reported directly by Caixabank, 51 from Banco de Valencia, 5 from Credifimo and 1 from Gestión Fondos Credifimo.

Almost all of the homes owned by the group in the Community come from foreclosures made by the now extinct Banco de Valencia, which was awarded to La Caixa for €1 in 2012 under the framework of the bank restructuring. As a result, the data provided by CaixaBank to La Generalitat reveal that, six years later, the stock of assets proceeding from the extinct Valencian bank continues to be very bulky.

In addition to the empty homes reported by the CaixaBank group, the other properties to reach the total of 7,315 units are owned by Sareb (1,598 homes) and Grupo Santander (447), split into the companies Altamira Santander Real Estate (339), Banco Santander (67), Luri 6 SA (36) and Santander Consumer Finance (6) (…).

Register of uninhabited homes (…)

The law provides for the creation of the Register of Uninhabited Homes (…) so that all of the homes that are declared uninhabited by the administration can be grouped together and “housing solutions can be granted to those people who need them most”. The objective of the administration is to “mobilise the more than 500,000 empty homes that there are in the Community”, according to estimates.

Original story: Valencia Plaza (by Dani Valero)

Translation: Carmel Drake

Bankia Begins its Spring Cleaning in Earnest, Selling off Real Estate Assets

31 August 2018

The financial institution has so far lagged behind the other banks’ efforts to unload their portfolios of foreclosed real estate properties.

Since the end of 2014, after having transferred the worst of its assets to Sareb, Bankia has sold €4.2 billion defaulted loans to institutional investors. According to Moody’s, it is the banking institution which has sold off the most assets since then. However, the sales of much of the property inherited by many of Spain’s largest banks to investment funds has left Bankia behind in the clean-up process. The bank still has properties valued at €4.761 billion and another €10.809 billion euros in NPLs (developers and non-developers).

These assets account for roughly 8% of Bankia’s total assets. This percentage contrasts with BBVA, CaixaBank and Sabadell, whose sales have left their exposure at 4% or less, a level considered acceptable by the major rating agencies. They will lower their exposure to that of Bankinter’s in just a few months, which barely financed any developers during the credit boom.

Changed dynamics

BBVA sold a portfolio of 78,000 flats, stores and garages to Cerberus and €1 billion in delinquent loans to a Canadian fund this year. CaixaBank transferred its entire real estate portfolio to Lone Star -leaving out the Banco de Valencia – just holding on to its delinquent loans. Finally, Sabadell’s exposure will fall to just one billion euros of foreclosed properties.

Santander was the institution that began the change, with its sale last summer of most of the assets it inherited from Popular, within a few weeks of acquiring the bank.

Publicly, Bankia’s management has indicated that they will maintain their policy regarding sales of medium-sized portfolios (up to 500 million euros) so as not to generate losses for the bank. This way it may avoid the discounts of between 60% and 80% that the funds have been achieving when acquiring the large portfolios of real estate assets.

So far this year, Bankia sold a €290-million portfolio to Golden Tree, with two more in preparation, one worth €450 million and another €400 million. The merger with BMN added even more toxic assets to the bank’s balance sheet. 71% of the buildings are finished homes, which are more easily sold. Haya Real Estate (Cerberus) is in charge of marketing, with which the bank just renegotiated its contract after the merger with BMN. So far this year, the group has sold apartments and stores worth 309 million euros. The percentage of land in the portfolio is small, at 6.7%. “We were the first to sell portfolios. For the type of asset we have, we believe that the placement of medium-sized portfolios is what gives us the best result in terms of price, because that is where we find more interest and competition from interested buyers,” the CEO of Bankia explained.

As a result, in 2012, Bankia transferred its worst assets (in large part, delinquent loans to developers) to Sareb, the bad bank. It transferred assets worth €22.317 billion, of which €2.850 billion came from its parent BFA. For its part, BMN transferred assets valued at €5.819 billion to the public vehicle.

Sareb applied a 45% discount to the loans to developers, 63% to ongoing developments and 79.5% to land.

The flats and NPLs only generate expenses – payments of local taxes – and no income, therefore decreasing the banks’ profitability. That is why it is so important for the banks to get rid of the real estate as quickly as possible. In the case of BBVA, the bank could double its level of profitability in two years, according to Alantra. Something similar could occur with CaixaBank and Sabadell.

Bankinter’s healthy balance sheet is the reason why it has an ROE ratio (13%) that is much higher than that of its competitors.

An eventual sale of Bankia’s real estate holdings could also help boost its stock market price, to reduce the possible need for public aid, according to analysts.

The firm Keefe, Bruyette & Woods believes that Bankia will continue to have the second-worst ratio of unprofitable assets of Spain’s listed banks in 2019 and 2020, only behind Liberbank.

Santander Spain is in the middle of the group because while it cleaned up Popular, it has yet to follow through on Santander’s own, original exposure.

Original Story: ProOrbyt Expansión – R. Lander

Translation: Richard Turner

 

Aliseda Beats Sareb’s Sales In Levante & Sells Barcas 5 Building

19 June 2017 – Expansión

Aliseda, the real estate servicing company in which the funds Värde and Kennedy Wilson together hold a 51% stake and Banco Popular owns the remaining 49%, whose purpose is to sell the bank’s real estate assets, recorded revenues of €370 million last year in the Community of Valencia and Murcia, where its Levante division undertakes its activity.

Popular’s servicer – the name by which these firms are known in the sector – even exceeded the sales volumes of another major player born out of the real estate financial crisis, namely Sareb. That firm, which took over the toxic assets of Bankia and Banco de Valencia, amongst others, recorded revenues of €199 million in the Community of Valencia and Murcia, with the sale of almost 2,814 properties, compared to Aliseda’s 1,900.

One of the reasons for the larger sales volumes sold by the entity in which Popular holds a stake is due to the fact that 32% of the assets sold in the region were plots of land and 44% were finished properties. The plots of land sold included land next to PAU 5 in the San Juan de Alicante area and in Malilla in Valencia, which were purchased by Neinor.

Aliseda’s Regional Director, Vicente Brotons, commented that the area of San Juan de Alicante could be described as a “mini-bubble” given the strong demand there and he said that demand for land under management in Valencia and Alicante is recovering.

Although Aliseda’s vocation is the sale of land, it has just created a brand Averon for the construction of developments. Brotons explained that it is considering this option for some of the plots of land that it still owns. In Valencia capital, it owns plots of land in Patraix, Parque Central and Moreras.

Following Santander’s recent purchase of Popular, and with it all of its real estate assets, Aliseda’s future is one of the matters that still needs to be resolved.

Sale of Barcas 5 building

Last year, Aliseda sold two unique buildings in the centre of Valencia, one of which was the former Hostal Londres to the chain Casual.

The other was number 5 on Calle Barcas, which was sold to an investment group for its renovation and subsequent rental.

Aliseda’s stock in Valencia and Murcia comprises 16,000 properties worth €3,400 million.

Original story: Expansión (by A. C. A.)

Translation: Carmel Drake

Criteria Cuts Ties With Servihabit & Will Manage Its Own Properties

2 June 2017 – Expansión

Criteria Caixa has taken another step forward in the process to deconsolidate itself from CaixaBank. The holding company that owns stakes in subsidiaries of the La Caixa Banking Foundation (Fundación Bancaria La Caixa) has decided to internalise the management of its real estate assets, a function that until now have been performed by Servihabitat.

That servicer is owned in part (51%) by the US fund TPG and the remaining 49% stake is owned by CaixaBank. According to sources, Criteria will have to indemnify Servihabitat for the early termination of the contract with a payment amounting to €34.5 million.

The original agreement between the two companies was signed in 2014 and the contract still has six years left to run, given that it is due to terminate in 2023. The document included a clause to cover the possibility of an early termination in exchange for the payment of compensation, which has now been agreed by mutual agreement between the two parties.

The properties owned by Criteria account for around 7% of the total volume of the portfolio that Servihabitat has under management. The company also manages the properties foreclosed by CaixaBank, but its aim over the last few years has been to increase its client base by incorporating new portfolios onto its platform. The servicer took a giant leap when it was awarded the management of several portfolios by Sareb, comprising real estate assets from Novacaixagalicia, Liberbank and Banco de Valencia.

In 2016, the assets managed by Servihabitat increased by 4.8%, to reach 239,132 units, with a value of almost €50,000 million. The company recorded turnover of €285 million, up by 14.8%, thanks to the sale of homes worth €1,645 million, up by 11%.

Portfolio of €2,842 million

Criteria, which is chaired by Isidro Fainé, considers the decision to move to directly managing its own real estate assets, worth €2,842 million, to be strategic. Of the total amount €515 million – 18% of the total – are assets allocated for sale; €1,021 (36%) correspond to the land portfolio – noteworthy plots include those adjoining Port Aventura park –; and €728 million (26%) relate to rental properties. Finally, another €578 million (20%) constitute assets allocated to La Caixa Banking Foundation’s affordable housing programs.

Original story: Expansión (by S. Saborit)

Translation: Carmel Drake

Sareb Has Returned €1,000M Assets To Banks

24 June 2016 – Expansión

In recent years, Sareb has found itself with an unexpected line of business as it works to slim down its balance sheet: it has been returning certain assets to the entities that transferred them to it initally. The company chaired by Jaime Echegoyen (pictured above) has returned more than €1,000 million in real estate assets and loans linked to the property sector to groups that transferred it the assets in the first place.

Those €1,000 million represent 2% of Sareb’s balance sheet upon creation – €50,781 million – and 13.5% of the total reduction in its asset value since 2012.

The assets have been returned due to information or appraisal deficiencies made by the transferring entities, at the time of transfer, between 2012 and 2013. Thus, some assets were transferred to Sareb with values that exceeded their real values and other should not have been transferred to the company at all, as they did not meet the requirements.

Financial sources consulted indicated that some personal loans were transferred to Sareb, which had nothing to do with the purpose of the company.

According to Sareb’s annual reports, corrections are made to asset purchase deeds “for the purposes of identifying the improper categorisation of assets, changes in the perimeter and errors or variations in the estimated valuation on the transfer date”.

Bond returns

With these properties and loans, the entities have returned €1,000 million in bonds that they received in exchange for their assets. (…).

Sareb was created at the end of 2012 from the assets of all of the entities that received public aid during the European bank rescue. Firstly, the banks controlled by the Frob – Bankia, Catalunya Banc, Banco de Valencia, NCG Banco and Banco Gallego – transferred their properties and developer loans, and then those entities that had received aid but not been nationalised –Liberbank, Caja 3 and Banco Ceiss, together with BMN– transferred their assets.

Of all of these entities, Catalunya Banc has received the most assets (in return) from Sareb over the last three and a half years. The entity absorbed by BBVA has now been returned €365 million in total, mainly between 2013 and 2014. CB is followed in the ranking by NCG Banco – now Abanca – with €182 million; Bankia with €168 million; and Banco de Valencia – purchased by CaixaBank – with €161 million.

By year, the most active period in terms of property and loan “adjustments” was 2014, when Sareb returned almost €550 million worth of assets to the entities. But the real estate company is still finding problems with the homes and loans that it was transferred, and this year it has already sent back assets worth almost €60 million to Liberbank, Bankia, Caja 3 and Banco Ceiss. (…).

A new tool

Recently, Sareb launched a new internal tool to help it handle all of the assets that it has on its balance sheet and expedite their transfer. It is called Atlas and it performs more than 300,000 valuations each year, automatically, cross checking market data with socio-economic indicators, such as rental income and population size in each place. (…).

Original story: Expansión (by J. Zuloaga)

Translation: Carmel Drake

Phoenix Buys Hotel Intercontinental In Torre Pacheco

18 January 2016 – La Opinión de Murcia

A Chilean group has acquired the five-star Hotel Intercontinental La Torre from Polaris World, the property developer from Balsicas, which filed for liquidation following the suspension of payments that ended with the transfer of the majority of the homes that it had constructed in urbanisations in Murcia to Sareb.

The new owner of the property, considered the jewel in the crown of the company created by Pedro García Meroño and Facundo Armero, is the company Phoenix, which already owns a luxury resort in Marbella called La Quinta. The so-called bad bank is also negotiating sales operations with a Spanish chain, which, if they materialise, may result in the sale of other assets by the property developer.

The Chilean group Phoenix is a business conglomerate backed by family capital, headquartered in Santiago de Chile. It holds investments in the real estate, tourism, renewable energy and finance sectors. One of its most high profile projects is Haciendas Talinay, a megaproject involving real estate and tourism developments located to the north of Santiago, in the IV Region of Chile, covering a surface area of 25,000 hectares, along 23 km of the Pacific Ocean coast.

Besides the Hotel Intercontinental La Torre, the Chilean group has acquired a retail centre containing a number of restaurants.

Polaris had constructed another five star hotel in Torre Pacheco called Intercontinental Mar Menor, which has 64 rooms.

The majority of Polaris’s urbanisations that have golf courses were transferred to the company IRM, which was constituted by the banks that had financed the company’s expansion until the burst of the real estate bubble halted its plans in their tracks….However, most of Polaris’s assets ended up in the hands of Sareb, which is now negotiating other operations. Sareb’s President, Jaime Echegoyen, declared in Murcia last May that he expected to see options to sell homes constructed by the property developer from Balsicas “in a piecemeal fashion”. (…).

The purchase of the Hotel Intercontinental, which has been closed to the public since 2013, is considered as an example of the interest that investor groups and tour operators have in Murcia. It is hoped that the operation will represent a new start for the region, which has endured severe economic hardship in recent years, since the crisis put a stop to the ambitious tourism projects of the boom years (…). CAM and Banco de Valencia both become major creditors of Polaris World, which ended up transferring the hole caused by debts with Polaris, which reportedly amounted to around €900 million, to Bankia.

Meanwhile, legal investigations that are being undertaken, following the collapse of CAM and Bancaja, have identified irregularities in terms of the granting of loans to the company from Balsicas.

Original story: La Opinión de Murcia

Translation: Carmel Drake

Sareb Owns One Third Of Spain’s Problem Banking Assets

17 September 2015 – Expansión

Sareb is playing a key role in the clean up of Spain’s financial sector. According to a study conducted by the consultancy RR de Acuña y Asociados, proof of that is the fact that it now owns one third of the sector’s problem assets.

The firm calculates that the Spanish banking system’s exposure to problem real estate assets amounts to €259,049 million in gross terms, plus a further €32,337 million in doubtful mortgage debt.

According to the study, which is based on the latest available figures, Sareb has loans and real estate assets worth €44,263 million, which in gross terms – before they were transferred – would have been worth €94,750 million.

RR de Acuña y Asociados also highlights that the transfer of assets from entities with public aid to Sareb meant that the first (entities) recorded extraordinary valuation adjustments of €12,700 million. The assets transferred by Bankia, Catalunya Banc, NCG Banco – now Abanca -, Banco de Valencia, BMN, Ceiss, Liberbank and Caja 3 had an initial appraisal value of €106,970 million. Excluding provisions, RR de Acuña y Asociados has identified a mismatch of €12,694 million between the transfer value to Sareb, which the entities must have borne themselves.

Forecast

Although the volume of problematic banking assets has stopped increasing over the last few years, the consultancy warns that it will take time for the entities to digest the leftover real estate assets: “Although the trend in the volume of doubtful assets is stable and is even recording some small downward variations, if we take into consideration the precarious financial situation of the property development and real estate construction companies, all indicators show that the level of exposed assets will continue to behave in the same way, for the next two years at least”, says the report. This means “a decrease in the volume of loans and an increase in the volume of real estate assets”.

As such, the real estate firm observes “an over-supply”, which means that it is “unlikely that house prices will begin to increase in the coming years”.

Meanwhile, yesterday, Sareb announced the repayment of a senior debt tranche amounting to €47.3 million after amending the asset transfer contract it holds with Catalunya Banc.

The asset transfer agreement between the two entities established that either of the parties could make adjustments to regulate the transfer completed in 2012, for a period of 36 months following its signing.

Original story: Expansión (by J.Z. and J.M.L.)

Translation: Carmel Drake

Project Silk: Sareb Puts €1,000M Debt Portfolio Up For Sale

12 August 2015 – Expansión

Sareb is getting ready to increase its revenues during the last few months of the year. The first half of 2015 saw a slow down in the bad bank’s property sales, as it focused on migrating assets across to new managers. However, the company chaired by Jaime Echegoyen (pictured above) is now going to concentrate on selling portfolios to large funds.

In this context, Sareb is currently preparing its largest transaction to date: Project Silk, comprising small unpaid loans to property developers, amounting to €1,000 million in total.

The project is being led by Haya Real Estate, the real estate manager heir of Bankia Habitat. The firm, which is owned by Cerberus, is responsible for administering the loans transferred by the group chaired by José Ignacio Goirigolzarri.

Initially, property developers will be offered the option to buy up their own debt. Then, any loans that have not been sold will be packaged up and sold in a competitive tender process, to be managed by N+1.

At the end of 2014, the company chaired by Echegoyen held assets amounting to €44,263 million, of which three quarters related to loans.

Revenue drivers

Sales to institutional investors are going to be key for Sareb in 2015, given the slowdown in terms of house sales. Since the end of last year, the company has been focusing its efforts on the process to migrate assets from the former managers – i.e. the entities that transferred €50,000 million worth of problem homes and loans – to the four chosen firms: Haya Real Estate, Solvia, Servihabitat and Altamira.

This migration is due to be completed at the end of the year. Meanwhile, Sareb sold 5,400 homes during the first half of 2015, i.e. one third fewer than during the same period in 2014.

In this context, it is critical that the bad bank increases its revenues from the institutional channel, since its main objective is still the repayment of its debt; and it has set itself the goal of repaying €3,000 million at the end of this year. Currently, the company still needs to return c. €45,000 million of bonds guaranteed by the State.

Sareb has at least two other portfolios, besides Project Silk, up for sale at the moment. Project Birdie is in the most advanced stage of the three – whereby the bad bank wants to sell assets inherited from Polaris. That portfolio comprises three golf courses, two five-star hotels and several residential complexes in Murcia, with a nominal value of €500 million. Sareb inherited them from loans to property developers granted by Banco de Valencia and Bankia.

In addition, the company has launched the sale of a €180 million debt portfolio, secured mainly by land, as part of Project Vega, according to Idealista News.

Many expect Sareb to put new portfolios up for sale after the summer, just like it has done in previous years. During 2014, the company transferred 11 large portfolios for €1,115 million, which accounted for 20% of its revenues. That figure is expected to be higher in 2015. (…).

Upcoming challenges

In addition to its objective of increasing revenues, Sareb faces several other challenges between now and the end of the year, including: completing the migrations to the new managers and adapting to the new accounting circular that the Bank of Spain is preparing for the company.

Original story: Expansión (by Jorge Zuloaga)

Translation: Carmel Drake

Servihabitat: Sales Of €212M For Spain’s Largest Servicer

18 March 2015 – Expansión

Servihabitat increased its real estate sales by 38.8% in 2014, selling 21,163 assets in total. The real estate company, which is controlled by the fund TPG (51%) and part-owned by Caixabank (49%) also signed 14,873 lease agreements, and so, in total, it successfully marketed 36,036 units.

Thanks to these transactions, the platform led by Julián Cabanillas generated turnover of €212.64 million, which represents an increase of 24.9%. “We are very pleased with the results obtained in a particularly difficult year”, said Cabanillas, the CEO (of Servihabitat) yesterday.

When it was founded, Servihabitat was dedicated solely to the sale of property that had been repossessed by the La Caixa group. Nevertheless, it has now adopted a multi-client strategy and it was one of the real estate companies to be awarded the management of some of Sareb’s assets, which are now being migrated across. Specifically, it took over the management of 33,000 properties and loans from Novacaixagalicia, Liberbank and Banco de Valencia worth €9,200 million. In this way, Servihabitat’s portfolio has grown by 26% and now includes 194,156 units. According to market sources, this volume of properties is worth around €59,000 million, which makes Servihabitat the largest servicer in the sector with a market share (by value) of 22%, ahead of Haya Real Estate, Altamira, Solvia, Anida and Aliseda.

44,207 properties in the entity’s portfolio are currently rented out, which represents an increase of 47%.

Original story: Expansión (by S. Saborit)

Translation: Carmel Drake

Sareb Continues To Review Its Asset Transfer Prices

12 March 2015 – Expansión

‘Sareb got married in a rush, without preparing a gift list, and after the ceremony it began to realise what the gift boxes it had come home with actually contained’. Shortly after the creation of the bad bank, one of its senior executives used this metaphor to explain the need to review the assets that the entity had received from the former savings banks.

In order to meet the deadlines set by Brussels for the financial bailout, Bankia, Novagalicia, Catalunya Banc, Banco de Valencia, Banco Gallego, Banco Mare Nostrum, Liberbank, Cajatres and Ceiss transferred a huge volume of properties and developer loans (to Sareb) in a mad rush.

On the basis of valuation reports performed by independent experts, the Bank of Spain set the price that Sareb paid for the assets: €50,781 million in total, in bonds guaranteed by the State. But Sareb reserved the right to review these transfer prices, in an operation known as the “correction of hidden flaws”, to make up for errors in both valuation and scope (perimeter) – assets that did not fall within the perimeter in the end and assets that should not have fallen inside the perimeter – and to make a claim for the difference.

One of the peculiarities of the transfer review mechanism is that the bad bank only allows for corrections in its favour. After reporting the errors detected to the former savings banks and evaluating the claims, Sareb corrects the differences by repaying the bonds it used to pay for them.

To date, the bad bank has already recovered €640 million of the amount it paid to the entities in relation to both valuation and scope (perimeter) errors. The entity most affected to date has been Catalunya Banc, with €318 million (of corrections), followed by Novagalicia (€182 million) and Bankia (€127 million).

But this total amount is expected to rise, because the company chaired by Jaime Echegoyen has reserved its right to review prices for up to 36 months, a period that will expire at the end of 2015 for the entities classified in Group 1 (Bankia, Novagalicia, Catalunya Banc and Banco Valencia) and in February 2016 for the entities in Group 2 (BMN, Liberbank, Ceiss and Cajatres).

Nevertheless, Sareb does not expect to work up until the deadlines in every case. It has already closed an agreement to finalise the review of the price paid for the assets transferred from Novagalicia, Catalunya Banc, Banco de Valencia and Ceiss. Now its investigation will focus on the properties and loans transferred from Bankia, Liberbank, and BMN; it still needs to sign an agreement to finalise the review with Banco Gallego or Cajatres.

Moreover, Sareb reserves the right to review for scope errors until the end of the remaining life of the (corresponding) asset(s), for those assets it paid for but which were never transferred or those that were transferred when they should not have been, such as any consumer loans.

The experts at the asset management company are basing their detailed analysis on the audit that was conducted by a consortium of thirteen companies, coordinated by the law firm Clifford Chance, but they will go into more detail for certain samples.

Original story: Expansión (by Alicia Crespo)

Translation: Carmel Drake