28/11/2014 – Expansion
Kutxabank is at the brink of successfully closing one of its largest divestments in the Spanish financial sector in 2014. The Basque group is giving the finishing touch to an agreement with U.S. fund Lone Star on sale of its real estate developer Neinor together with a repossessed asset portfolio. The transaction’s price may reach €800 million.
In the final phase of the tender called Project Lion, Lone Star outbidded investment banking tycoon Goldman Sachs and now negotiates with the vendor on the exclusive basis. In spite of the privilege, still key matters shall be discussed, such as volume of the REO assets to be included in the sale. It is estimated that a €500 million worth of land and a €1 billion of ongoing housing developments will be transferred to the fund.
Last year, Neinor lost €58 million and owned €175 million in properties. Two-thirds of its sales were sealed in the Basque Country region, whereas the remaining 34% in Navarre, Malaga and Cantabria. ‘The company specializes in urbanization, development and land, home and industrial warehouses’ sales, as well as managing other firms’, its annual report states.
With the buyout, Lone Star demontrates its stake on the residential market turning around in Spain. Few months ago, the fund bought a huge €4.5 billion NPL portfolio from Eurohypo , including credits to developers and the retail indistry. Allied with JPMorgan, Lone Star paid €3.5 billion for this Project Octopus.
A recent report by Arcano forecasts ‘a real estate speedup’ for 2015. ‘In Spain as a whole, prices have hit the bottom and they will rise more than predicted in Madrid, Catalonia and the Basque Country, driven up by huge demand on the part of foreigners (one third of the total) and family offices, which have healthier balances and are eligible for mortgages. New housing development is reviving in low-supply areas‘, Arcano claims.
According to financial sources, other funds are likely to follow the example of Lone Star and team up with developers throughout 2015. Their objective is to grow the business beyond apartment sales through servicers bought from Spanish banks, like Altamira, Aliseda or Servihabitat.
Kutxabank performed best among the entites at the latest stress test by the ECB.
Original article: Expansión (by Jorge Zuloaga)
Translation: AURA REE