Sareb Gets Tough & Demands €9bn through c.3,800 Creditor Bankruptcies

26 March 2018 – Voz Pópuli

Spain’s bad bank Sareb has run out of patience. After spending more than four years negotiating extrajudicial agreements with debtors and putting into order its presence in thousands of real estate bankruptcies in Spain, the semi-public body is getting tough. “When you have been negotiating with a debtor for years and you know he’s not going to pay you…he doesn’t want to pay you, you are left with no other option than to go to court”, says the President of Sareb, Jaime Echegoyen.

Sareb is present in approximately 3,800 real estate bankruptcies, declared since 2008, when the property bubble burst and the Spanish economy entered the worst crisis of its young democracy. According to sources at the organisation, Sareb is demanding a total debt of €9 billion through these bankruptcy proceedings.

The company has a portfolio of loans worth €26 billion and is present in 12,200 legal processes in total, all of which involve loans to property developers (there are no mortgages to individuals). Of that total amount, 7,500 are for mortgages and 3,800 are creditor bankruptcies.

“We cannot give our blessing to people who don’t pay”, warns Echegoyen, who presented Sareb’s results for 2017 last Friday. The company has started a legal offensive on two fronts to accelerate the sale of its loan portfolio: it will boost the bankruptcy processes in which it is present as a creditor; and it will go to court to request payments from those companies that still have not responded to the debt demanded.

“We have spoken with the debtors and we will continue to do so”, said the President of Sareb. “We prefer to find an amicable solution rather than play hardball, but if we have to resort to other means, we will go to court”, he said, admitting that it is probable that the number of litigation cases involving Sareb will increase in the near future.

In recent months, a more decided approach from Sareb has been noted in certain bankruptcy processes. Like in the case of the bankruptcy of Reyal Urbis, one of the largest corporate failures in Spain’s history, where, after years of negotiation to reach an agreement, which seemed unfeasible from the beginning, Sareb’s proposal to continue reassessing the matter resulted in the liquidation of the company last September. The debt of Reyal Urbis with Sareb alone exceeds €800 million.

Sareb’s presence has also been felt in the bankruptcy of the company that used to own the In Tempo skyscraper in Benidorm, the tallest residential building in Europe, which was sold to a fund last year. And in the case of the bankruptcy of Nozar, where Sareb recently requested greater agility in the process, almost ten years after the bankruptcy was declared.

“Sareb is involved in the bankruptcies of the most well-known real estate companies; but also in thousands of other much smaller bankruptcies, each one in its own province, judged by its own bankruptcy administrators and its own idiosyncrasies”, say sources at the organisation. “Over the last few years, we have had to put in order our positions in all of these processes”, they add.

During Sareb’s five-year life, the entity, known increasingly less as the bad bank, has liquidated 27% (around €13.6 billion) of the portfolio that it was created with. The management and divestment of loans and properties has generated €20.7 billion of revenues. During the same period, the entity has paid off 25.4% of its debt, €12.9 billion. Last year, it recorded losses of €565 million, down by 15%.

Original story: Voz Pópuli (by Alberto Ortín)

Translation: Carmel Drake

Värde Will Start Building c.900 New Homes In Q1

11 January 2017 – Cinco Días

The new real estate company Dospuntos, which wants to become one of Spain’s major property developers, will start the year by marketing a significant number of new build properties in a sector that has started to wake up slowly, without any star players. “We are going to start 18 developments containing around 900 homes during the first quarter of the year”, confirmed Javier Eguidazu (pictured above), CEO at Dospuntos, a company controlled by Värde Partners.

These homes will be located in Madrid, Galicia, Andalucía, Castilla y León and Cataluña, primarily in large cities and metropolitan areas. In La Coruña, the real estate company already announced last month that it was beginning its first project there, known as Casa Vega, in the centre of the city. The company will also debut soon in Sevilla, Málaga, Valladolid, Barcelona, Leganés (Madrid) and Oleiros (La Coruña).

“The market has finally woken up. There is pent-up demand because hardly any new homes have been constructed over the last decade. Every property that comes onto the market is sold”, said Eguidazu regarding the recovery in the property development sector.

His company is looking to become one of the largest property developers in the country. After the real estate crisis, almost all of the major players disappeared – went bankrupt – or took time out whilst they waited for better times. Just a handful of companies such as Pryconsa, Vía Célere, local developers, cooperative managers such as Domo and new platforms linked to the banks (Aliseda, Altamira, Solvia…) continued to build at a slow pace. Other listed companies, such as Realia – controlled by the magnate Carlos Slim – and Quabit, are only resuming their business now. Anida, owned by BBVA, also strengthened its business at the hand of Manuel Jove, founder of the now bankrupt company Fadesa.

Dospuntos emerged in June 2016, after Värde purchased the damaged real estate business from the San José Group. It was created to construct around 7,000 homes on land coming from several sources: purchases by the US fund, inherited from San José and even some new acquisitions. “The company has financial muscle. In 2016, we spent €150 million on land”, said Eguidazu.

Along with Neinor Homes, owned by the Texan fund Lone Star, Dospuntos leads this new type of property developer, owned by overseas funds and interested in investing in the real estate recovery in Spain, now that the traditional players have disappeared (…).

The real estate company’s main shareholder is Värde, which holds more than 50% of its share capital. The fund from Minneapolis manages assets amounting to more than €10,000 million all over the world. It has been particularly active in Spain, with the acquisition of Popular’s credit card business, as well as half of that bank’s real estate arm, Aliseda, in an operation for which it teamed up with the fund Kennedy Wilson. Moreover, it has entered the office business of Procisa, the owner of the La Finca business park in Pozuelo de Alcorcón (Madrid).

As a shareholder of Dospuntos, Värde (which means “value” in Swedish) is accompanied by the funds Marathon and Attestor, as well as by banks such as Bank of America and Barclays.

From 2019, the company wants to reach a cruising speed of 2,000 new homes per year on average, according to comments made by Eguidazu at a presentation last June. By then, the company forecasts that it will be generating revenues of between €500 million and €600 million per year.

The shareholders plan to invest €2,000 million between 2016 and 2021, at an average rate of €400 million per year, of which €800 million will be allocated to buying more land on which to build homes. Over the long term, between 30% and 40% of the company’s resources will come from bank financing. (…).

Original story: Cinco Días (by Alfonso Simón Ruiz)

Translation: Carmel Drake

Banco de Portugal Chooses Lone Star To Buy Novo Banco

5 January 2017 – ABC

The Board of Directors of Banco de Portugal has selected the US fund Lone Star to participate in the final negotiations to purchase Novo Banco. Its decision is based on the fund’s €770 million proposal, which would be accompanied by a subsequent injection of an equivalent amount to strengthen the bank’s capital.

But Antonio Costa’s Socialist Government will have the last word, and so the complex process is far from complete. Even so, it is clear that Lone Star’s offer is the most attractive, after the bid from the Chinese giant Minsheng was deemed to lack the necessary financial guarantees.

Lone Star’s only competitor in the bidding was an alliance between two other US private equity funds, Apollo and Centerbridge, whose most senior managers travelled to Lisbon to try to complete their negotiations against the clock.

The major difficulty stems from the fact that Lone Star is shielding itself through the creation of a commission bridge that holds Novo Banco’s non-strategic assets. Novo Banco is the cleaned up heir of the now extinct entity Espírito Santo. That situation is something that concerns the Portuguese Finance Minister, Mário Centeno, to such an extent that he has even raised the possibility of nationalising the entity.

In any case, the proposal from Lone Star falls well below the figure required for the operation to be considered a success by the Portuguese State, given that it put €4,900 million on the table in 2014 to avoid the total collapse of the entity when Espírituo Santo went bankrupt that same year.

Original story: ABC (by Francisco Chacón)

Translation: Carmel Drake

Ibosa To Convert Hotel Foxá Into Luxury Homes

30 November 2016 – Cinco Días

The Hotel Foxá located next to Chamartín train station will soon disappear to be converted into a residential tower containing luxury homes, worth up to €1 million each. According to the property developer, the Ibosa Group, the design will adopt a “New York architecture” style.

The company, which manages housing cooperatives, will spend €30 million (including the purchase of the building) on the project to convert the former Hotel Foxá M-30 in Madrid – which has been closed since 2013 – into a 16-storey residential complex containing 72 homes, which are expected to be handed over to their owners during the final quarter of 2018.

70% of the homes in the tower, known as Torre Borealis, have already been sold and the demolition work is expected to begin next spring, once all of the properties have been sold. The construction work will involve the complete renovation of the building, including a total transformation of the façade, according to explanations provided by the Head of Ibosa.

In fact, the company expects to obtain the licence that it needs to undertake the work at the building within the next few weeks. The property previously housed a four star hotel for 13 years.

The price of the homes will range from €175,000 to €900,000, with each property containing between one and four bedrooms. Moreover, the constructed surface area will range between 40m2 and 200m2 per apartment. The building, located on Calle Serrano Galvache 14, will have a double height entrance hall and 1,000 m2 of common areas, including a “gastroteca”, a swimming pool and a gym. There will be several different types of apartments, including ground floor duplexes, (normal) duplexes and penthouses with terraces up to 120m2.

Hotel Foxá M-30 closed its doors after the company Trome, owned by the businessman Mariano Moreno Fernández, was declared bankrupt, with debt amounting to around €300 million. The company used to own several hotels and spas.

Original story: Cinco Días

Translation: Carmel Drake

Edival Files For Bankruptcy

20 January 2015 – El País

The company failed to reach an agreement with its creditors.

The real estate company Edival, which became one of the leading companies in the sector in Valencia, has filed for bankruptcy. Mercantile Court No. 2 in Valencia passed the bankruptcy order, which had been requested by the company after it failed to reach an agreement with its creditors.

Edival, led by Manual Puchades until his death, when he was succeeded by his sister, Teresa, had managed to weather seven very difficult years for the real estate market without resorting to bankruptcy, but that has now become inevitable.

Going forward, the company will be managed by an insolvency administrator, and creditors have one month to submit their claims for inclusion on the list under bankruptcy law.

The company, which had an important presence in other regions besides Valencia, including Murcia and Madrid, promoted numerous social housing developments and recorded huge results in the years of the construction boom.

In 2006, for example, it recorded a turnover of €144 million and profits of €22.6 million, an increase of 39% on the previous year. When the crisis hit, however, Edival had bank debt amounting to almost €500 million, which it has failed to assimilate on its own.

Original story: El Páis (by Ignacio Zafra)

Translation: Carmel Drake