Kutxabank Prepares the Sale of Residential Land Worth €700M

26 February 2018 – Eje Prime

Kutxabank is awakening from its lethargy in the Spanish real estate sector. The Basque bank, which resulted from the merger of three savings banks from the region (Kutxa, BBK and Caja Vital), wants to get rid of 40% of its portfolio of toxic assets, which would mean launching onto the market a portfolio of land and promotions worth between €500 million and €700 million.

This operation will be the second most important divestment to be undertaken by the financial entity, after it sold its real estate arm, Neinor Homes, to the fund Lone Star, back in 2015 for €930 million.

The objective of the bank is to take advantage of the good times that the residential market in Spain is currently enjoying to place its assets with international funds and new property developers, according to Vozpópuli.

This option that Kutxabank is considering comes at a time when the sector is complaining about the lack of developable land, which means that it is likely that the bank will easily find groups interested in acquiring its land. The plots are largely inherited from the merged Cajasur, a Cordoban entity that BBK integrated in 2010.

If it carries out the transaction, Kutxabank would join Santander and BBVA on the roadmap of Spanish banks with respect to real estate. The sale of a large part of the property held by two of the country’s major financial institutions last year, both to US funds, set a course that other smaller banks are now starting to follow.

Original story: Eje Prime

Translation: Carmel Drake

Neinor Buys 7 Plots Of Buildable Land In El Cañaveral (Madrid)

27 December 2016 – El Confidencial

Developments in the south-east of Madrid have come under the spotlight of Neinor, one of the largest property developers in Spain, which has just marked a turning point with the purchase of several plots of buildable land in El Cañaveral, the most advanced neighbourhood in the capital’s ambitious expansion project.

The company led by Juan Velayos has acquired seven plots of land, with a combined buildable area of 47,000 m2, where it plans to start to build almost 500 homes, according to sources familiar with the transaction. The company itself has declined to make any comments.

Specifically, Neinor wants to construct 24 detached homes and 459 multi-family homes, plans which would lead to the definitive launch of El Cañaveral, where 14,000 homes are expected to be created in total, to house a population of around 50,000 people.

Nevertheless, Velayos’ plans for this development go much further, given that it is one of the few areas in Madrid where it is possible to buy buildable land, in other words, land that is ready to be developed.

According to the same sources, the company is holding advanced conversations to acquire four other plots, whose buildability exceeds 11,300 m2 and where it hopes to build another 95 homes.

Appetite for growth

Since its re-launch just over a year ago, Neinor has shown a strong appetite for growth, and to achieve that objective, it is actively searching for blocks of buildable land where it will be able to start to build new homes quickly.

In fact, the road map that the company announced at the end of 2015 aims to develop around 3,000 homes per year and to establish a permanent bank of land to enable it to build 10,000 homes. (…).

In addition to these ambitious business plans, another major corporate challenge promises to mark Neinor’s future in 2017, namely, its debut on the stock market. It is already working on the IPO and the size of the company will play an important role in its success.

The current firm Neinor was created by Lone Star, one of the international funds that was most committed to Spain during the worst years of the crisis, from the foundations of Kutxabank’s former real estate group.

This company, named Neinor by the Basque entity, was created in 2012 from the sum of the different real estate activities of the Basque former savings banks – BBK, Vital and Kutxa – and the Andalucían entity Cajasur.

Lone Star bought the property developer at the end of 2014 for €930 million, in an operation that represented a real milestone for the real estate sector, which was still licking its wounds, given that it represented the largest transaction by a company in the sector since the outbreak of the crisis.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

GE Finalises The Sale Of Its Banking Business In Spain

16 December 2015 – Expansión

GE Capital Bank is finalising its exit from Spain. The financial subsidiary of the US multi-national is holding negotiations with several investors to sell its entire loan business in the country. According to various financial sources, the business is primarily mortgage based and has a volume of almost €600 million.

The multi-national company has engaged PwC to manage this operation, known as Project Zágato.

There are three key candidates on the list to take over GE Capital’s portfolio, namely: Blackstone, which has experience in the management of banking mortgages after its acquisition of Catalunya Banc’s loans; Oaktree, which closed a similar operation with Bankia earlier in the year; and Evo Banco, owned by Apollo, which is looking to grow its assets through this type of portfolio, like it did with a portfolio from Citi in April.

The mortgages that GE Capital has put up for sale have a default ratio of 30% and the majority come from loans that the US entity granted through APIs (real estate agents).

The Australian fund Pepper Group is currently managing the portfolio. The other businesses that the Group has in Spain, mainly consumer financing, have been maturing in recent months.

GE Capital’s exit from Spain comes in response to a change in the multi-national company’s strategy at the global level. At the beginning of the year, the US group decided to divest the majority of its financial activity to focus on its industrial business involving turbines, aircraft engines and medical equipment, amongst others. At the time, the group had financial assets amounting to $500,000 million (€455,000 million).

Strategic shift

The multi-national took this decision due to the commercial risk that the financial arm of its business represented when the financial crisis hit in 2008, despite the fact that it generated half of the group’s profits.

Since then, GE Capital has been selling off parts of its business through agreements such as the one reached with Wells Fargo in October, for the transfer of assets amounting to $32,000 million. Just over a year ago, when its financial unit had not yet been dismantled, it sold part of its consumer business in Sweden, Norway and Denmark to Santander, for €700 million.

The group began to withdraw from Spain at the beginning of 2015, when it delisted itself from the Spanish banking register. At the time, it had negative reserves of €220 million as a result of the losses accumulated over several years, due to its high default rate.

The entity first started recording losses in 2008 with €13.6 million and did not manage to emerge from the red until 2014, when it recorded profits of €53 million.

At the end of 2014, GE Capital Bank held assets worth €524 million, according to data from the AEB.

Before the outbreak of the crisis, GE Capital had partnerships in Spain with CAM and BBK.

Original story: Expansión (by J. Zuloaga)

Translation: Carmel Drake

Kutxabank Stirs Up The Mortgage War With A 2.5% Fixed Rate Product

12 March 2015 – Expansión

Kutxabank launches one of the best offers in the market / The Basque entity enters the battle started by Sabadell and CaixaBank and seeks to foster loyalty from its customers.

Kutxabank continues to embroil itself in the mortgage war that has been unleashed in the Spanish financial sector, which is showing the first signs of economic recovery. Two months after the launch of mortgages offering rates of Euribor + 1%, the bank comprising the former Basque savings banks BBK, Kutxa and Vital, has now launched one of the most attractive fixed rate offers in the market: a 30-year 2.50% fixed rate product.

According to the entity, its proposal is the “most attractive” in the market because, not only is it offering a reduced interest rate, also this rate will remain unchanged throughout the life of the loan. The nominal interest rate (‘tasa nominal’ or TIN) of 2.50% represents an annual percentage rate (APR, ‘tipo annual equivalente’ or TAE) of 3.28%, according to the new calculation rules, which include various expenses.

Currently, several institutions are embroiled in the fixed-rate mortgage war. Sabadell is offering a nominal fixed rate mortgage at 3.25% (4.18% APR) over thirty years and at 2.90% over twenty years, and CaixaBank has loans at nominal rates of between 2.50% and 3%, depending on the other products held by the customer, and with no set-up fees. Other banks, such as Bankinter, Bankia and BMN are also offering fixed rate mortgages with interest rates of between 3.4% and 4.6%.

Just like with its variable rate mortgages, Kutxabank is looking to foster loyalty from its customers and achieve maximum links (with them) through this aggressive offer . As such, the entity requires them to have their salaries, which must amount to at least €3,000/month, paid directly into their accounts; make payments with the bank’s cards amounting to more than €3,600/year; make contributions to pension plans or social welfare institutions of more than €2,000/year, and take out life assurance contracts with Kutxabank. The set-up fees for the mortgage will be 0.25%, with a minimum charge of €400.

According to the Basque entity, fixed rate mortgages “provide greater security and stability” for customers, as they allow them to know what their instalments will be, at all times, regardless of (variations in) interest rates (in the wider market).

Kutxabank has a 35% share of the mortgage market in the País Vasco and almost 70% of its total loan book is concentrated there, amounting to €31,000 million. The bank is working on the assumption that the mortgage market is in full recovery, after increasing its home loans by 24% in 2014.

Original story: Expansión (by M. Á. F.)

Translation: Carmel Drake

Socimis And Funds Invest €2,520m In Offices In 2014

15 January 2015 – Expansión

The acquisition of office buildings soared by 212% in 2014, thanks to deals signed by international investors, such as Blackstone, and new real estate companies, including Hispania and Merlin Properties.

The launch of Socimis and the arrival of large international funds in Spain has resulted in record investment figures in the Spanish real estate sector. And a new type of asset is proving particularly popular: offices.

According to a report by Deloitte Real Estate, 40% of the non-residential purchases (i.e. offices, shopping centres and stores, hotels and logistics platforms) made in Spain last year were office buildings. Thus, of the €6,500 million invested in 2014 in total, €2,520 million was spent purchasing office property, including Vodafone’s headquarters in Madrid, Gallina Blanca and HP’s headquarters in Barcelona, and the old offices of BBK in Bilbao.

In total, almost 50 transactions were closed, and more than half (57%, according to Deloitte Real Estate) were made by investors with an institutional profile, such as Socimis.

All four of the real estate companies listed on the stock exchange – Merlin Properties, Lar España, Hispania and Axia Real Estate – acquired office buildings during the last year. Merlin Properties, the largest Socimi currently listed in Spain, invested €130 million in the purchase of five office buildings in Madrid, which it leases to groups such as Philips, Vestas and Neoris. Yesterday, the company announced the purchase of Gallina Blanca’s headquarters, together with two logistics warehouses, for €88 million.

Meanwhile, Axia Real Estate paid €180 million for a portfolio of properties owned by Credit Suisse in Spain, which included 3 office blocks located in the Campo de las Naciones area of Madrid.

“Investment in the office market has grown significantly thanks to the Socimis and overseas investors, who consider that rents have reached their lowest levels and now is the perfect time to take positions”, explains Javier García Mateo, Director of Deloitte Real Estate. In this sense, rental costs in Spain’s two largest office markets (Madrid and Barcelona) have already recorded slight increases in the most sought after areas, i.e. in the business districts.

According to Deloitte, the highest rents in Madrid have been agreed for offices on Paseo de la Castellana, 31 (31 euros per square metre per month) and in Barcelona, on Avenida Diagonal, 640 (21 euros per square metre per month).

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

A Vulture Fund Buys €340 Mn in NPLs From Kutxabank

30/06/2014 – Expansion

Basque Kutxabank transferred a €340 million worth of non-performing loans to an opportunistic fund. Great majority of the credits were granted in 2008 and 2009 and they are not backed with real estate assets. Large part of the defaulting loans belong to Cajasur acquired by BBK.

 

Original article: Expansión

Translation: AURA REE