Bankia Signs Property Developer Loans Worth €450M in 2018

2 January 2019 – Eje Prime

Bankia is consolidating its return to the property development sector. The bank signed loans worth €450 million for the construction of homes during 2018, its first year back in the real estate business after the restrictions imposed by the European Commission, as a condition for saving the company from bankruptcy, came to an end.

During the year that just ended, Bankia signed several financing operations with real estate developers to construct 2,200 homes in total in Madrid, Cataluña, the Community of Valencia, Andalucía and the Balearic Islands. With these figures, the bank doubled the expectations that it had set itself when it re-launched in the real estate sector, according to reports from the entity in a statement.

Following the results of the first year, the entity chaired by José Ignacio Goiriogolzarri says that it is carrying out its activity “in accordance with the new standards of prudence in the real estate sector, which includes a requirement for adequate marketing stages and the comprehensive control of the development of projects”.

The €450 million financed in 2018 forms part of Bankia’s strategy to try to re-conquer the property developer sector and achieve a market share of 8% by 2020.

Bankia was rescued in 2012 with public aid and sanctioned by Brussels to refrain from participating in the real estate market for five years as a condition for receiving some of the capital that was used to rescue it from financial crisis.

Original story: Eje Prime

Translation: Carmel Drake

Sareb Plans To Return €6,000M To Its Shareholders

16 June 2016 – Expansión

Sareb has a business plan on the table that involves returning its shareholders all of their investments, including an annualised return of between 1% and 2%. According to the explanation provided yesterday by the Chairman of the company, Jaime Echegoyen, these plans involve paying back €6,000 million to the banks and insurance companies that hold its share capital, together with the Fund for Restructuring (the Frob).

Between 2012 and 2013, those shareholders invested €4,800 million in Sareb – €1,200 million in share capital and €3,600 million in subordinated debt. The investors have already written off around three quarters of that amount.

Echegoyen, who was speaking yesterday at an event organised by UIMP, Apie and BBVA, did not specify whether the €6,000 million would be returned in cash or by handing over assets that the bad bank has not been able to sell by the time it has to be wound up, November 2027.

The Chairman of Sareb praised the role of the entities that supported the creation of the company, all of the major banks with the exception of BBVA. (…). The company’s most senior executive said that it was “time to help the whole country” (…).

Podemos’ plans

Echegoyen also made reference to the possibility that Sareb may be converted into a public housing stock, as proposed by (the political party) Podemos, something that in his opinion would have serious consequences for the Spanish economy.

“I don’t think we should forget that Sareb owes €43,000 million. If anyone wants to do anyhing with Sareb, they would have to deal with Parliament first and then Brussels”, he explained, before adding that “those €43,000 million would mean raising the deficit by 4 percentage points”.

Meanwhile, Sareb’s Chairman reported that the company has now sold 35,000 properties since it was created, although the rate of sales has decelerated slightly in 2016, to 25 homes per day, compared with the average of 27 since 2013. Despite that, he said that “we are performing in line with budget” and he maintained the goal to “stop losing money in 2017”.

This slight slowdown has happened despite the fact that the real estate market is experiencing a “sweet moment”, according to Echegoyen. This is reflected by the fact that new, more conservative, investors, “such as Socimis, family offices, insurance companies and private banks have covered the gap left by the opportunists”.

The importance of property

According to the executive, low interest rates are encouraging investors to pay attention to real estate assets. “Property is intrinsic to human beings, above all Spaniards”, he said. “Banks are still granting finance, but are no longer allowing any nonsense”, he added.

The Chairman of Sareb acknowledges that competition is being felt from other banks when it comes to selling properties, although he pointed out that the financial institutions are in more of a hurry to sell given the pressures (they face) from the stock market and capital requirements.

“We have time, a trump card, on our side, which lasts for the next 12 years. Furthermore, we are never going to be listed on the stock exchange, which means that we are not subject to pressure from the financial markets”, he noted.

Original story: Expansión (by J. Z. and S. A.)

Translation: Carmel Drake

‘Ciudad de la Luz’ Will Be Sold For At Least €47M

22 February 2016 – Expansión

The second attempt is underway to auction off the Ciudad de la Luz cinematographic studios in Alicante, which are owned by the Generalitat Valenciana. The sale is being forced by Brussels, which has ruled that the €265 million invested by the Valencian Administration represented unlawful State aid.

The new round of auctioning will take place after just one offer was received during the first round and that was disqualified for failing to comply with the conditions.

The new documents value the complex in Alicante at €94.4 million, but financial bids may be submitted with a maximum discount of up to 50%. In order words, the minimum bid that can be made for the entire Ciudad de la Luz complex stands at €47.2 million.

Brussels has finally approved the new documents prepared by the Valencian Government after months of negotiations, but it has imposed several conditions on the sale. Thus, the European Commission states that the complex may be sold in its entirety or on a piecemeal basis, in six lots, contrary to the aspirations of the Generalitat, which has also failed to defend the use of the studios for cinematographic purposes. The documents state that the studios may be sold for use by any type of industry and to the highest bidder.

Nevertheless, the Consell has succeeded in ensuring that the starting figure for the bidding is much higher than the previous one, given that the last auction, which was suspended in August last year, allowed offers to be made for as little as €20 million. Moreover, the potential purchasers must submit a business plan, which may or may not be linked to the film industry. Also, the proposed activity must not generate noise or environmental damage, and the site may not be used for speculative purposes. The Administration has excluded three buildings from sale: the training centre, the offices and the catering facilities.

Brussels will decide

Investors now have a period of two months, ending on 18 April, to submit their proposals. At that point, the purchase offers will be assessed and the winner will be chosen, so that the deal can be closed in June. Brussels reserves the right to have the last word and will have to approve any deal.

The current CEO of the public company Ciudad de la Luz, Miguel Mazón, said yesterday that the Government had contributed around €500 million in public money to the complex and its activity since Eduardo Zaplana introduced the flagship project in the year 2000.

Original story: Expansión (by Mª. J. Cruz)

Translation: Carmel Drake

Brussels Authorises CPPIB’s Investment In Puerto Venecia

10 August 2015 – Expansión

Brussels has authorised the transaction on the basis that it will not have a negative impact on Europe’s economic environment.

The European Commission has authorised the joint acquisition of the largest shopping centre in Spain, Puerto Venecia in Zaragoza, by the Canadian pension fund CPPIB and the current owner, the Luxembourg holding company Intu, on the basis that the transaction will not have a negative impact on Europe’s economic environment.

The company created by CPPIB and Intu already controls the Parque Principado shopping centre in Oviedo, but the European Commission considers that the new operation does not threaten competition in the EU, because it will have a “limited impact” on the structure of the market.

The case, which was referred to Brussels on 10 July, has been examined in accordance with the simplified procedures that apply to less problematic deals.

Original story: Expansión

Translation: Carmel Drake

Bankia Puts Property Worth €4,800M Up For Sale

6 May 2015 – Expansión

Project Big Bang / The financial entity has put a batch of homes, land and commercial buildings up for sale, with the objective of disposing of all of the foreclosed assets left on its balance sheet.

Bankia has decided to accelerate the process to divest its real estate assets with a ‘macro-transaction’ involving a large block sale. The financial institution has launched so-called Project Big Bang, which includes a portfolio of residential and commercial assets (including offices and shops), as well as land, worth €4,800 million.

The transaction is still in its very early stages, involving initial meetings with investors, but it will represent the largest asset sale process seen to date (excluding transfers of debt with real estate collateral).

The properties up for sale include assets that Bankia did not transfer to Sareb following its nationalisation, as well as foreclosed assets resulting from subsequent defaulted payments. Most of the portfolio corresponds to residential assets. Thus, of the €4,800 million assets that Bankia has included in the batch, €3,300 million related to residential properties at 31 March 2015. In total, the bank will transfer 38,545 residential units (flats, chalets, parking spaces and storage rooms), with a total constructed surface area of 3.6 million square metres.

Along with the €3,300 million of residential assets, Bankia is selling 4,938 commercial units worth €1,100 million.

Land at zero cost

The portfolio also includes 2,589 plots of land with a total surface area of 4.6 million square metres. This land has a value of zero, according to Bankia, having been fully provisioned.

The sale is being coordinated by Credit Suisse and KPMG. The transaction may be closed as a single deal or through the sale of several blocks. The sale value may also decrease from €4,800 million to a smaller amount, say sources close to the process.

Many of the large funds, including Blackstone, Lone Star and Apollo, have already expressed their interest in the portfolio. These investors will have to compete with Cerberus, which has a preferential right to examine Bankia’s real estate portfolio. This “preferential” arrangement forms part of the negotiations that the US fund has held with the Spanish entity in recent years. In 2014, Bankia transferred its Bankia Habitat business unit to Cerberus for a consideration of between €40 million and €90 million, together with the 400 professionals who work for the platform.

Last September, Cerberus joined forces with the Norwegian fund Lindorff to acquire some of the doubtful and substandard loans, plus those that had doubtful or substandard outlooks, worth €900 million, which the entity chaired by José Ignacio Goirigolzarri (pictured above) was selling, as part of the Somo transaction. In February, Bankia launched a campaign to accelerate the sale of its remaining properties.

The clean up

Project Big Bang represents the largest divestment initiated by Bankia to date in the foreclosed asset and doubtful debt segment. The entity chaired by José Ignacio Goirigolzarri has been one of the most active in this market, having transferred almost 80 portfolios containing problematic loans since 2013, with a nominal value of €10,000 million.

Initially, Bankia undertook these types of transactions due to necessity, since the restructuring plan agreed with Brussels compelled it to divest non-strategic assets amounting to €50,000 million.

Although it has now almost completed this plan, the entity has decided to ‘step on the divestment accelerator’ in 2015 in order to reduce its default rate and focus its resources on new productive assets that improve its financial results. As well as the foreclosed assets, Bankia is also currently negotiating the sale of problematic mortgages, property developer loans and hotel debt.

If it closes all of these transactions, the nationalised group would become the first entity to withdraw from the segments considered by the market as a burden to the sector.

Original story: Expansión (by R. Ruiz and J. Zuloaga)

Translation: Carmel Drake

Bankia’s Divestment Plan Comes To An End After 400+ Sales

20 April 2015 – Expansión

97% of the plan has been completed / In two years, the entity has transferred 200 investments, 130 real estate companies and 80 loan portfolios, amounting to more than €15,000 million.

Over the last two years, Bankia’s divestment team has had to go to the notary’s office every other day. The intense activity in terms of the sale of investments and loan portfolios has resulted in 400+ transactions since 2013 and the entity is now close to fulfilling the mandate imposed on it by Brussels.

In total, Bankia has transferred 200 financial and industrial investments; 130 real estate companies; and 80 problem loan portfolios, according to sources close to the entity.

Thus, Bankia has already exceeded the target it was set of divesting more than €50,000 million non-strategic assets – by the end of 2014, the figure was close to €59,000 million – but not all of the companies that were agreed as part of its rescue have been transferred. 3% of the plan agreed as part of the rescue still needs to be completed.

In this final sprint, which Bankia has until 2017 to complete, the entity will have to sell off dozens (tens) of real estate and industrial companies, many of which have filed for liquidation and have hardly any value.

Strong reputation

Over the last two years, the team at Bankia, led by the Director of Investments, Manuel Lagares, has earned the respect of foreign investors by closing the sale of portfolios worth €10,000 million and financial and industrial investments, worth €5,500 million.

Although Bankia was forced to make these divestments, the funds value the fact that it is one of the few entities that has not held back from sales processes and that it stands out as one of the best entities to have adapted to demand. Thus, overseas investors recognise that one of the first doors that they call at upon arriving in Spain is that of the bank chaired by José Ignacio Gorigolzarri (pictured above), as well as those of Sareb and the Frob.

Although Bankia has now almost completed its divestment plan, the entity continues to be very active in the market, as it seeks to improve its balance sheet and free up non-productive assets.

Some of the largest transactions conducted by the team at Bankia include the sales of its shares in: Iberdrola, which it sold for €1,500 million; Mapfre, for which it obtained €1,250 million; IAG, for which it earned €675 million; and Indra, which it transferred for €337 million.

Recently, the entity had decided one of the great real estate battles in recent years, which involved Realia, where it agreed to sell its 25% stake to Carlos Slim. It may also decide to transfer its stake in Globalvia soon, for which it is negotiating, together with FCC, with the Malaysian sovereign fund Khazanah Nasional Berhad.

Other transactions

Another transaction in the pipeline involves the sale of City National Bank of Florida, its North American subsidiary, which is pending authorisation by the Federal Reserve.

Together with its investments, Bankia has also transferred lines of business such as its asset manager, which was acquired by Cerberus; and Bankia Bolsa, which it transferred to GVC.

Original story: Expansión (by Jorge Zuloaga)

Translation: Carmel Drake