Tag: BMN

Haya Real Estate Tops Off its Annus Horribilis with Losses of €0.5M

18 June 2019 – El Confidencial

Haya Real Estate suffered an “annus horribilis” in 2018 after it failed to debut on the stock market and was unsuccessful in its efforts to renegotiate its contract with Sareb (discussions are still on-going). Those events were further compounded by the servicer’s recently published results for the year, which saw it record losses of €445,000, compared with a profit of €32.57 million in 2017, despite a 6.7% increase in revenues to €273.7 million.

The losses were caused by several factors, both accounting and operational nature, and would have been even greater had the group not consolidated the results of Haya Titulización, which contributed profits of €1.27 million.

In fact, the real estate servicer platform Haya Real Estate itself recorded losses of €1.7 million in 2018 compared with profits of €20 million last year. They were caused in part by the new contract that the servicer signed with Bankia in 2018, to include BMN’s assets, which involves disbursements and amortisations during the first few years and which have penalised the company in accounting terms. In addition, Haya purchased the company Mihabitans from Liberbank in June 2018.

Specifically, the amortisations of the management contracts of Bankia and Liberbank increased by more than €20 million YoY in 2018, which, combined with the poor performance of other operating costs (they soared by 46% to €92.2 million) meant that the servicer had little chance of repeating its success of 2017.

Original story: El Confidencial (by Ruth Ugalde)

Translation/Summary: Carmel Drake

Sareb Offers the Contracts of Altamira, Servihabitat & Solvia to its Rivals

17 June 2019 – El Confidencial

Sareb is on a mission to change its course. According to market sources, the bad bank chaired by Jaime Echegoyen (pictured below) has decided to put its contracts with Altamira (owned by doBank), Servihabitat (Lone Star) and Solvia (Intrum) out to tender two years before their scheduled renewal.

Even though the contracts are not due to expire until the end of 2021, Sareb is putting them out to tender alongside that of Haya Real Estate, which is due to expire at the end of 2019. This represents a boost for Cerberus’s servicer, given that its competitors will now also have to focus on retaining their own contracts rather than just bidding for Haya’s.

In the event that Sareb awards the contracts of Altamira, Servihabitat and Solvia to other entities, it will have to compensate the servicers since their contracts clearly establish early termination clauses.

Altogether, Sareb is looking at putting out to tender the management of €34 billion in loans and properties that it still has left in its portfolio. The four will have to submit their bids in the next few months, specifying which assets they want to manage and what commissions they will charge.

The largest mandate is that of Haya, which manages assets proceeding from Bankia, which accounted for 37% of the bad bank’s original assets. It is followed by Altamira, which manages the assets proceeding from Catalunya Banc, BMN and Caja 3 (29% of the total); Servihabitat, which manages the assets from NCG Banco, Liberbank and Banco de Valencia (19%); and Solvia,  which manages assets from Bankia (foreclosed), Banco Gallego and Ceiss (15%). Clearly, there is a lot at stake for these servicers.

Original story: El Confidencial (by J. Zuloaga & R. Ugalde)

Translation/Summary: 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

 

IBA’s Socimi Zambal to Complete €80M Capital Increase

30 July 2018 – Eje Prime

Just over a year after expanding its share capital by more than €91 million, Zambal is preparing to undertake a new operation. The Socimi managed by IBA Capital has convened its shareholders for a General Meeting in September to carry out a new capital increase, in this case, amounting to €80 million.

According to a statement filed by the company with the Alternative Investment Market (MAB), the capital increase will be undertaken through the issue of 80 million shares with a nominal value of €1 and an issue premium of €0.25, which “will be subscribed and fully paid up through the offsetting of loans”.

Without resorting to bank financing, Zambal has built a portfolio worth more than €730 million. The company’s main assets include, for example, the property at number 77 Avenida San Luis (which houses the headquarters of Gas Natural in Madrid); the Vodafone Building on Avenida de América, and number 18 Avenida de Burgos, which is leased in its entirety to BMW.

The Socimi, which started life in 2013, is an investment vehicle managed externally by IBA Capital Partners. The company specialises in the investment and subsequent management of assets in cities such as Madrid and Barcelona in the office and retail segments, although the company is also looking at other assets such as nursing homes, hospitals, retail parks and logistics platforms.

One of the most recent operations undertaken by Zambal was the purchase of two office buildings on Calle Albarracín in Madrid, which is leased to the French multi-national Atos. That operation involved an investment of €38 million.

Original story: Eje Prime 

Translation: Carmel Drake

Haya’s Revenues Rise by 12% in Q1 2018 to €56M

24 May 2018 – Eje Prime

Haya is continuing to grow its real estate business. The Spanish servicer, controlled by the US fund Cerberus, recorded revenues of €55.9 million during the first quarter of the year, whereby increasing its turnover by 12% with respect to the same period in 2017. Its EBITDA amounted to €24.4 million during the same period, up by 6% compared to last year.

The volumes of the real estate company amounted to €895.2 million, which represented a YoY increase of more than 40%. The generation of cash by the servicer amounted to €20.2 million, up by 58%, whilst the firm’s net corporate debt stood at €414 million.

Haya, which managed almost €40 billion in real estate assets during the first quarter, was awarded the new Bankia contract a month ago for the management of all of that entity’s toxic assets, including the REO portfolio from the recently absorbed BMN. This week, the servicer placed on the market 4,000 homes from the bank Cajamar.

Moreover, since the beginning of 2018, the company led by Carlos Abad has signed two new contracts for the management of assets with funds and institutional investors. Haya’s next challenge is its debut on the stock market, which Cerberus recently postponed until after the purchase of BBVA’s property portfolio has been signed, which the fund acquired in 2017.

Original story: Eje Prime

Translation: Carmel Drake

Bankia Prepares €1bn Toxic Asset Sale to Digest BMN’s Real Estate

17 May 2018 – Voz Pópuli

Bankia is working on one of its largest divestments since José Ignacio Goirigolzarri took charge of the group. The nationalised entity is assessing the sale of a portfolio of problem assets worth €1 billion, the largest since 2015, according to financial sources consulted by Voz Pópuli.

The bank’s teams have not defined the exact perimeter of the portfolio yet nor have they prepared the sales documentation together with an advisor. Nevertheless, the plan is that the project will come onto the market in the summer and be closed during the final quarter of the year.

The portfolio will contain flats and real estate loans inherited from Bankia’s former savings banks as well as from BMN, the group that it merged with at the end of last year. The increase in the size of the portfolio with respect to previous years is precisely due to the integration of the group chaired by Carlos Egea, which contributed €4.4 billion in toxic assets to Bankia’s existing €12.8 billion portfolio.

Strategic objective

In the strategic plan, announced at the beginning of the year, Goirigolzarri stressed the objective of reducing its exposure to problem assets by almost €3 billion from €17.2 billion at the end of 2017. During the first quarter, it managed to clean up €600 million. That rhythm, together with the portfolio that it is working on, would enable it to meet the objective in 2018.

For the time being, Bankia is not working on any multi-million euro operations, such as the ones closed last year by Santander and BBVA, and the one that Banco Sabadell is currently exploring.

By contrast, Bankia is placing portfolios of between €200 million and €500 million on the market to maximise the return that it obtains for its shareholders.

In this vein, it has Project Beetle underway, containing €400 million in problem loans, and it recently put Project Vera on the market, comprising €250 million in non-performing loans. Moreover, it has sold a portfolio worth €300 million to the fund GoldenTree Asset Management, according to El Independiente.

Original story: Voz Pópuli (by Jorge Zuloaga)

Translation: Carmel Drake

Bankia Transfers the Management of its Real Estate Portfolio to Haya Real Estate

27 April 2018

The agreement affects properties worth a total of 5.400 billion euros. Haya will handle Bankia’s current portfolio and any new assets that may be added in the future. Cerberus’ real estate manager already manages Liberbank and Cajamar’s real estate holdings.

Bankia has entrusted Haya Real Estate, the Cerberus fund’s real estate management company with full management of its real estate assets, including those from Banco Mare Nostrum (BMN). Both companies signed new agreements for the management of real estate and credit assets and the provision of services to replace those already signed in September 2013.

Likewise, Bankia reported that it had included the management contracts for unpaid debts and certain real estate assets owned by BMN at the time.

Haya Real Estate will handle all of Bankia’s current stock of assets, as well as any new assets that the financial institution may acquire in the future. As reported by the bank, the agreement currently affects a portfolio worth a total of 5.4 billion euros.

Bankia added that this operation would not have an impact on the group’s accounts. With this transaction, the financial institution concludes the reorganisation of its real estate business and unpaid debts ” to increase efficiency after its merger with BMN.”

Currently, Haya also manages a package of 52,000 loans from Sareb and exclusively sells real estate and developer loans to Grupo Cooperativo Cajamar. It also exclusively manages Liberbank’s real estate holdings.

The bank chaired by José Ignacio Goirigolzarri presented its accounts for the first quarter of 2018 this Friday. The bank saw profits fall by 25% due to the absence of extraordinary items and the merger with BMN. Specifically, the company achieved an attributable profit of 229 million euros, compared to €304 million in the same period in 2017.

Agreement With BBVA

In addition to this agreement with Bankia, Cerberus will finalise the purchase of 80% of BBVA’s real estate business next September, for around 4 billion euros, according to the fund’s financial director, Jaime Sáenz de Tejada. In total, Cerberus will acquire some 78,000 real estate assets with a book value of approximately 13 billion euros and the assets and employees necessary for its management.

Original Story: Bolsamanía – Virginia Palomo

Translation: Richard Turner

 

Haya Real Estate Wins Contract to Manage Assets Worth €15bn+ For Bankia-BMN

9 April 2018 – Expansión

The negotiations between Haya Real Estate, the Spanish subsidiary of the US fund Cerberus, and Bankia, regarding the management of the latter’s real estate assets, are on the verge of completion. In fact, the parties have already established the perimeter of the new agreement: Haya is going to manage real estate assets worth between €15 billion and €17 billion, in gross terms, on behalf of Bankia and BMN, according to sources in the know.

After receiving the legal approvals to merge the also public company BMN at the end of December, Bankia decided to break the agreement it had signed with Cerberus regarding its property, as well as the agreement that BMN had signed with Lindorff. To do that, it had to pay a “three-figure” indemnity. Other sources in the sector estimate that the compensation payment will have amounted to around €100 million for each fund.

These indemnities depend on who initiates the termination decision, which in this case was Bankia following its integration of BMN.

Open to third parties

The process to take on the management of the real estate assets linked to the resultant entity was subsequently opened up to third parties.

Cerberus will have paid a higher amount than the forecast estimated by Bankia, which took advantage of the merger with BMN to renegotiate upwards a new contract in light of the good times that the real estate sector in Spain is currently enjoying.

Haya Real Estate (Cerberus) took over the management of Bankia’s assets worth more than €12 billion in 2013. At that time, the fund paid between €40 million and €90 million, a range conditioned by the fulfilment of the planned property sales.

The old contract was due to expire in 2023. Now, Haya is going to be Bankia-BMN’s servicer until 2028, according to the sources. Meanwhile, sources at Bankia indicate that the parties are finalising the negotiations and that the finishing touches to the operation have not been agreed yet.

BMN teamed up with Aktua in 2014. The former real estate arm of Banesto is now controlled by the Norwegian fund Lindorff.

Haya Real Estate has become a major player in the real estate sector in Spain. In recent years, it has teamed up with Sareb, BBVA, Cajamar and Liberbank, amongst other entities.

Cerberus’s platform in Spain managed €40.2 billion in assets at the end of 2017, up by 2% compared to the previous year. Having fought off competition from Lindorff in the bid to become the only company to manage the real estate assets of Bankia and BMN, Haya has cleared the way for its stock market debut. The Spanish subsidiary of Cerberus has engaged Rothschild to prepare its IPO.

Bankia will hold its General Shareholders’ Meeting in Valencia tomorrow. The focus will focus on the ERE (collective dismissal) following the integration of BMN and the rumours of a merger with BBVA.

Original story: Expansión (by R. Sampedro)

Translation: Carmel Drake

Cerberus Wins Bid To Manage & Sell Bankia’s Expanded Real Estate Portfolio

5 March 2018 – La Información

Cerberus has fought off competition from Lindorff to become one of the new Bankia’s partners, responsible for managing and selling its portfolio of foreclosed assets, which now exceeds €5 billion. The group chaired by José Ignacio Goirigolzarri has opted to continue with its existing partner in the end, to the detriment of the partner that has been working with BMN since 2014, for reasons that may go beyond the mere economic bid offered by both, indicate reliable sources.

Bankia’s alliance with Cerberus dates back to 2013, when it acquired its real estate firm Habitat on which it built Haya Real Estate, the servicer, which is now finalising its debut on the stock market after having also been awarded contracts to manage the portfolios of BBVA, Liberbank, Cajamar and Sareb (…).

At that time, almost all of Spain’s financial institutions opted to divest their “servicers” in light of the need to accelerate the sale of their toxic assets and the large appetite of specialist funds to grow in size and contracts. BMN’s story is similar. In 2014, it sold its real estate asset company Inmare to Aktua for €40 million. Aktua was Banesto’s former real estate servicer company, which Lindorff acquired from Centerbridge Partners in a close battle with Apollo and Activum SG Capital Management in 2016.

The Norwegian fund, which is itself currently immersed in an integration process with Intrum Justitia, thus took over the management of the real estate assets of the banking group led by Caja Murcia, as well as of those transferred by BMN to Sareb. The entity now also works for Ibercaja and with certain portfolios from entities such as Santander.

Haya Real Estate and Lindorff’s contracts with their respective clients are similar because they both impose a decade-long period of exclusivity, forcing Bankia to review its position following the absorption of BMN, just like with other types of joint ventures. The bank is going to proceed first to break the contracts and indemnify each partner for a sum estimated to amount to €100 million, according to Expansión, and then it plans to close a new agreement with the winning party. Both partners may have submitted similar bids although it is understood that Aktua offered an exclusively commercial service whilst the agreement with Haya Real Estate included the absorption of the workforce.

The transfer of employees

The new Bankia Group’s property portfolio has a gross value of €5.1 billion, as at the end of 2017, compared with €3.5 billion registered a year earlier excluding BMN’s exposure. The entity has a cushion of provisions that covers 35.9% of its portfolio value in such a way that it could afford to dispose of the portfolio at 64.1% of its initial value without incurring losses. The bulk – 62% – are homes associated with foreclosed mortgages and another 16% are properties received for debt in construction or property development – 48% of that proportion corresponds to land -.

BFA’s subsidiary reduced its problematic assets by 9.9% YoY last year – excluding the incorporation of BMN’s exposure onto its balance sheet – thanks, above all, to sales amounting to €427 million (€5.55 million corresponded to gains) and a 15.3% reduction in doubtful risks.

With the integration of BMN, the bank is being forced to review and rethink all of the contracts where exclusive suppliers operate in both networks. It has already resolved one relating to life insurance, which will see it discontinue BMN’s relationship with Aviva – it will pay that firm €225 million by way of compensation – in favour of Mapfre, which was also victorious in 2016 when the bank came across another duplicate alliance, for the first time (with the same British insurance company, which was also a historical ally of Bancaja). It still needs to settle a similar agreement with Caser, and put the finishing touches to its deals with Lindorff and Cerberus.

Original story: La Información (by Eva Contreras)

Translation: Carmel Drake

Bankia Plans to Grant €400M Per Year in Property Developer Loans

28 February 2018 – El Confidencial

Talking about property developer loans at Bankia is like mentioning rope in the house of a man who hanged himself. Nevertheless, José Ignacio Goirigolzarri is not only not afraid of the business that took his entity to the brink of bankruptcy, he also wants to become an important player in that segment once again. His aspiration is to reach a market share of between 7% and 8% between now and 2020, which would mean granting more than €400 million per year since then. That is according to the new strategic plan for 2018-2020 presented by the entity on Tuesday. The plan did not excite the market for its forecasts, but rather for the announcement that it is going to return 20% of the bank’s capitalisation to its shareholders.

The President of Bankia estimates that “the real estate development market, in terms of turnover (not balances) is going to amount to between €5 billion and €5.5 billion over the next three years. We aspire to reach a market share in the origination of new loans of between 7% and 8%, from the 0% that we registered at the end of 2017”. The restructuring plan imposed by the European Commission for the entity’s rescue with public money prohibited it from participating in that business until now. “We think that it is reasonable and that we will be able to achieve it”, he added.

This ambition to enter the property developer loan market contrasts with its prudence in terms of retail mortgages, where it expects a decrease of 2.2% during the year. Bankia explains that “mortgages account for a very significant weight, representing around two-thirds of the bank’s total portfolio. It is reasonable for the balance to decrease and for higher quality loans to join the fold”.

These figures are incomparable with those recorded during the real estate bubble that burst in 2008: the entity transferred property developer loans and foreclosed assets to Sareb amounting to €22.3 billion. But the return to this activity by Bankia is nevertheless significant, no matter how much Goirigolzarri assures that “it does not represent a large lever” for future results. Moreover, the President clarified that now the developments are more concentrated both geographically – Madrid, Cataluña, Andalucía and Valencia account for 65% of the total – as well as business-wise – the largest 20% of operators control 25% of the market.

Is it different this time?

(…). According to one source in the sector, “it seems that the banks have emptied their balance sheets of property and are now wanting to fill them up again”. The move is so clear that even the Bank of Spain has issued its first warnings to the sector and has introduced safeguards in the form of the new accounting circular to prevent a repetition of the disaster.

The major argument that the entities are using to justify themselves is one that you always hear before any crisis: “This time it’s different”. “Despite the best moment, the banks are now much more prudent when it comes to granting loans. In the property developer business, for example, we are analysing the feasibility of the project to be financed in great detail, as well as the solvency and professionality of the applicant, who will also have to assume part of the risk associated with the operation”, said one of the big four.

The proposal to return capital attracted more attention than the plan itself

In all other respects, the strategic plan presented on Tuesday did not surprise the market, given that it is less aggressive than those unveiled by the bank’s competitors recently. Basically, Bankia forecasts that its profits will grow to €1.3 billion in 2020 due to: rate hikes (it is the entity that will benefit the most from the forecast increases); even greater synergies with BMN than expected (€190 million vs the €155 million previously announced); and a reduction in toxic assets and in the need to recognise provisions against them. It also expects to increase its market share in all segments, although that will account for less than 20% of its forecast growth.

Original story: El Confidencial (by Eduardo Segovia)

Translation: Carmel Drake