Project Traveler: Sabadell Puts A €500M RE Portfolio Up For Sale

14 October 2016 – Voz Pópuli

Banco Sabadell has taken the lead in the Spanish banking sector once again with the sale of its toxic assets. Over the last few days, the Catalan entity has distributed a teaser (information brochure for investors) detailing a new real estate operation: Project Traveler. The portfolio contains 30 hotels, 30 work in progress real estate developments and other debts to SMEs, according to financial sources.

The operation involves collateral worth €500 million and it is already generating a lot of interest amongst international funds.

With this latest deal, Sabadell now has €1,500 million up for sale, given that straight after the summer, it put Project Normandy on the market, through which it wants to sell doubtful debt amounting to €1,000 million. Following the receipt of non-binding offers, that operation has recently entered its final phase, which will last for around a month.

The entity chaired by Josep Oliu has been one of the most active in recent years in terms of selling problem assets. Sabadell wants to reduce the real estate portfolio that it mainly inherited from the acquisitions that it made during the crisis in Spain, such as CAM, Caixa Penedès and Banco Guizpuzcoano, as quickly as possible.

According to the most recently published figures, as at June 2016, the bank held €19,900 million in problem assets, having reduced that balance by €6,000 million over the last two years. Along with portfolio sales, one of the key elements of the bank’s strategy is the work being performed by its real estate arm Solvia. That entity sells homes through the bank’s network and agents, and is responsible for managing overdue debt.

Project Traveler has attracted attention in the market because it is the second portfolio containing hotels to come onto the market in 2016, after Project Sun, being sold by CaixaBank, which is in the very final stages of negotiation.

Other operations

After the short break at the end of July due to the impact of Brexit on the market, the sale of portfolios has resumed once again in recent weeks. The first operation involved Abanca, which sold €300 million in unpaid mortgages to KKR; and then came Sareb’s return to the market – it is offering investors portfolios worth more than €1,000 million, after a year without any operations following the introduction of the Bank of Spain’s accounting circular.

For the large opportunistic funds, such as Cerberus, Blackstone, Apollo, Bain Capital – formerly Sankaty – and TPG, and the large investment banks, such as Goldman Sachs and Bank of America, these operations represent one of the best ways of making money in Spain at the moment. (…).

Original story: Voz Pópuli (by Jorge Zuloaga)

Translation: Carmel Drake

Sabadell Puts €1,300M NPL Portfolio Up For Sale

20 April 2016 – Expansión

Sabadell has become the most determined Spanish entity when it comes to trying to clean up its balance sheet. The entity chaired by Josep Oliu (pictured above) has two portfolios up for sale through which it hopes to sell off €1,300 million of non-performing assets. Moreover, it may soon add another €1,700 million portfolio, if a large deal that the entity is currently preparing eventually goes up for sale. In total, €3,000 million, of which €2,200 million comprises doubtful loans linked to real estate developments, and which represent around one sixth of its doubtful assets in Spain. The remainder, €800 million, relate to non-performing consumer loans.

The latest divestment to come onto the market is Project Pirene, advised by KPMG, containing €460 million of problem assets linked to property developers, according to sources consulted at international funds. Unlike some of its recent operations, this one originates from Sabadell’s own business, and not from CAM, Caixa Penedès or Banco Gallego.

This operation combines Project Corus, with €800 million non-performing consumer loans; and Project Normandy, under assessment, with €1,700 million non-performing real estate loans, according to El Confidencial.

The Catalan group hopes to close the first two operations within the next two months, so that they may be accounted for in its financial statements for the first half of the year. Meanwhile, Project Normandy may be delayed somewhat due to its large size. In fact, the operation would be one of the largest seen in Spain in recent years. The largest, Project Big Bang, containing €4,800 million in foreclosed assets, was suspended by Bankia due to its complexity and the large discounts being demanded by the funds.

Sabadell was one of the Spanish entities that reduced its default rate by the most during 2015. Following the purchase of the British bank TSB, its default rate fell by almost five percentage points. If we exclude that acquisition, the rate fell by almost three percentage points, from 12.74% to 9.86%. In total, the entity manages €21,500 million of problem assets, with a coverage ratio of 53% for its doubtful debts and of 44% for its real estate assets.

Besides these operations launched by Sabadell, only a handful of other entities have decided to divest their problem assets so far in 2016, namely Cajamar, Bankia and BBVA. Popular announced that it would be very active, but it has not yet put any portfolios on the market.

Original story: Expansión (by J. Zuloaga)

Translation: Carmel Drake