Spain’s Banks Prepare for a Mass Sale of Refinanced Mortgages Ahead of a European Regulatory Change

14 January 2020 – Expansión

Spain’s large banks are preparing for the mass sale of refinanced mortgage portfolios to opportunistic investment funds over the course of this year, ahead of a European regulatory change that will come into effect from January 2021. The new rules will require most refinanced debt to be classified as non-performing loans, which will impose more onerous capital requirements on the entities holding those assets.

Refinanced mortgages are those whose borrowers are currently up to date with their repayments but whose terms (economic conditions or duration) have been adjusted to avoid defaulted payments.

In the year to September 2019, Spain’s eight listed banks (Santander, BBVA, CaixaBank, Bankia, Sabadell, Bankinter, Unicaja and Liberbank) removed problem loans amounting to almost €37 million from their balance sheets. No detailed figures are compiled about refinanced mortgages, but sources in the sector estimate that a new market worth thousands of millions of euros could be generated as a result of the upcoming legislative change.

According to the new criteria to be introduced by the European Central Bank, refinanced loans will be classified as non-performing if the associated income generated by them falls by more than 1% as a result of the new terms of the loan. With such a strict threshold, almost all such loans will, therefore, be classified as non-performing.

In this context, a new market is expected to emerge whereby the banks try to divest portfolios of refinanced mortgages that are still considered healthy, but at lower prices.

The likely winners will be opportunistic funds, such as Cerberus, Blackstone and Lone Star, which typically buy doubtful assets with average discounts of 70%, and go on to generate double-digit returns through a combination of synergies and economies of scale.

Original story: Expansión (by R. Sampedro)

Translation/Summary: Carmel Drake

Tilden Park Acquires 2,500 Homes from Coral Homes

4 January 2020 The fund Tilden Park has paid between 100 and 150 million euros to acquire 2,500 flats from Coral Homes, a company owned by Lone Star (80%) and CaixaBank (20%). Tilden was founded by Josh Birnbaum, a former director at Goldman Sachs who became famous for his bets against the US sub-prime mortgage market, as depicted in the film “The Big Short.” The homes were part of the Kingfisher Project.

The fund made its first investment on the Iberian Peninsula in November when it acquired 1,800 toxic loans and 180 REOs from BPI, a subsidiary of CaixaBank in Portugal.

El fondo Tilden Park ha adquirido 2.500 pisos a Coral Homes, una compañía propiedad de Lone Star (80%) y CaixaBank (20%), por entre 100 y 150 millones de euros. Tilden fue fundado por Josh Birnbaum, un exdirector de Goldman Sachs que se hizo famoso por sus apuestas contra el mercado hipotecario de alto riesgo en los Estados Unidos, como se muestra en la película “The Big Short”. Las casas eran parte del Proyecto Kingfisher.

El fondo realizó su primera inversión en la Península Ibérica en noviembre cuando adquirió 1.800 préstamos tóxicos y 180 REO de BPI, una filial de CaixaBank en Portugal.

Original Story: El Confidencial – J. Zuloaga

Translation/Summary: Richard D. Turner

Goodman Real Estate Rings Out 2019 With Acquisition in Madrid

4 January 2020 Goodman Real Estate has finalised its acquisition of a plot of land in Getafe, Madrid, from Lonestar, CaixaBank and the Masaveu family for thirty million euros. The land, where Goodman will invest 90 million euros to build a new logistics facility, is located in the southern zone of Madrid.

The deal is an example of the type of logistics operations that are driving the Spanish sector, as the rise of e-commerce and a focus on last-mile facilities are ramping up demand. According to estimates by JLL, investors ploughed a record 1.818 billion euros into the sector in 2019, an increase of 27.5% year-on-year.

Approximately 50% of the logistics facilities sold in 2019 were in Madrid, while a further 25% were located in Barcelona. Secondary markets, such as Bilbao and Zaragoza, are also gaining prominence. The increase in investor interest has also squeezed profitability in the two largest markets, falling from 5-6% to just 4.75%.

En español

Goodman Real Estate ha finalizado su adquisición de un terreno en Getafe, Madrid, de Lonestar, CaixaBank y la familia Masaveu por treinta millones de euros. El terreno, donde Goodman invertirá 90 millones de euros para construir una nueva plataforma logística, se encuentra en la zona sur de Madrid.

El acuerdo es un ejemplo del tipo de operaciones logísticas que están impulsando el sector español, ya que el aumento del comercio electrónico y un enfoque en las instalaciones de última milla están aumentando la demanda. Según las estimaciones de JLL, los inversores invirtieron un récord de 1.818 millones de euros en el sector en 2019, un aumento del 27,5% interanual.

Aproximadamente el 50% de las instalaciones logísticas vendidas en 2019 se encontraban en Madrid, mientras que otro 25% se encontraba en Barcelona. Los mercados secundarios, como Bilbao y Zaragoza, también están ganando protagonismo. El aumento en el interés de los inversores también ha reducido la rentabilidad en los dos mercados más grandes, cayendo del 5-6% a solo el 4.75%.

Original Story: El Confidencial – E. Sanz / C. Hernanz

Translation/Summary: Richard D. Turner

The Pace of NPL Sales Falters in Spain

6 December 2019 – Spanish banks have reduced their pace of sales of NPLs this year, as CaixaBank, Sabadell, Bankia, Bankinter, Unicaja and Liberbank unloaded a total of just 4.9 billion euros in the first nine months of 2019. Those financial institutions wrapped up the quarter with €35.006 billion of such assets on their books, 12% less than at the beginning of the year. In contrast, Spain’s banks in sold off €90 billion in non-performing loans and REOs in 2018.

Standard & Poor’s, on the other hand, published a report in February estimating that Spain’s banks should rid themselves of €30 billion in NPLS between 2019 and 2020. That figure would have lowered their collective NPL ratio to below 4% compared to 7% at the time. Both S&P and Spain’s central bank also argued that the banks needed to increase the pace of sales to prepare for a potential slowdown in the economy.

Original Story: El Economista – Eva Díaz

Adaptation/Translation: Richard D. K. Turner

 

Meridia Takes €83.5-Million Loan to Build Project in Barcelona’s 22@

21 November 2019 – A socimi controlled by Meridia has arranged an up to €83.5-million syndicated loan with CaixaBank and Santander to build the future headquarters of Everis in Barcelona’s 22@ district.

The firm’s real estate vehicle, Meridia III, requested the loan, which will be guaranteed by the plot of land located at Avenida Nova Icària 213, as well any future construction on the site. The loan will last until seven years after the end of construction.

Original Story: Expansión – Marisa Anglés

Adaptation/Translation: Richard D. K. Turner

Insur Refinances €100 Million in Outstanding Debts

20 July 2019 – Richard D. K. Turner

Inmobiliaria del Sur (Insur) took advantage of favorable market conditions to refinance its outstanding debt this week. The firm refinanced 100 million euros of debt, equal to 60% of its total net liabilities, at significantly better conditions, freeing up over 35 million euros over the next five years. Insur owns rental properties, including offices, commercial premises and car parks.

Insur Patrimonial arranged the refinancing in an operation involving a total of 11 banks, led by Santander. Those banks include Caixabank, BBVA, Unicaja, Sabadell, Bankinter and Novo Banco. In addition to the €100 million, the firm also borrowed another €10 million to acquire an office building in Seville for redevelopment into a hotel to be leased to Hotusa.

Original Story: El Confidencial – Carlos Pizá de Silva

Photo: F. Ruso

CaixaBank Nears Sale of Niseko Project

9 July 2019 – Richard D. K. Turner

CaixaBank is nearing completion of the sale of its Niseko Project to two U.S. investment groups, D. E. Shaw and Farallon Capital Management. The total portfolio of non-performing loans have collateral guarantees and a face value of approximately 670 million euros.  

Niseko Project is divided into two sub-portfolios, Hokkaido and Sapporo. Hokkaido, which consists of eight large loans, all with guarantees, is set to go to D. E. Shaw. The sub-portfolio has an estimated market value of about 200 million euros (€400 million face value). The second portfolio will go to Farallon Capital Management and comprises 100 smaller loans.

At the same time, the Catalan bank is putting a new portfolio, the Chamonik Project, worth another 500 million euros, up for sale.

Original Story: El Confidencial – Jorge Zuloaga

CaixaBank Creates a Subsidiary to Finance Loans to Property Developers

17 June 2019 – Eje Prime

CaixaBank has created a new subsidiary to finance loans to property developers. The entity will operate under the brand CaixaBank Real Estate&Homes and will seek stable agreements with established property developers such as Neinor, Aedas Homes and Vía Célere, amongst others.

In 2018, CaixaBank financed 581 real estate projects lending €2.6 billion in total, up by 13% YoY. Moreover, 84% of the developments financed by the bank last year corresponded to projects involving less than 50 homes.

Original story: Eje Prime

Translation/Summary: Carmel Drake

CaixaBank will Occupy Norman Foster’s New Building in Colón (Madrid)

4 June 2019 – Voz Pópuli

According market sources, CaixaBank has won the bid to acquire the iconic glass-cube Axis building that Normal Foster is building in Plaza de Colón in Madrid.

The bank has reportedly fought off competition from Tesla and Microsoft and so the property will be occupied by a sole tenant, rather than by various shops and offices as initially envisaged.

The building work is expected to be completed at the end of this year and the property will comprise three open-plan floors, with large transparent façades overlooking Plaza de Colón and Calle de Génova, as well as a rooftop terrace.

Original story: Voz Pópuli (by David Cabrera)

Translation/Summary: Carmel Drake

The FROB Recorded a €382M Provision Against its Stake in Sareb in 2018

20 May 2019 – El Confidencial

The Spanish Fund for Orderly Banking Restructuring (FROB) presented its accounts for 2018 this week revealing that it decided to recognise a €382 million provision against its stake in Sareb last year.

In this way, the FROB has now written off 92.3% of its initial investment in the entity chaired by Jaime Echegoyen (pictured above), up from 75% in 2017. If the rest of the investor entities, namely all of the large Spanish banks with the exception of BBVA, do the same, then they will have to recognise losses of around €450 million.

In absolute terms, the FROB’s stake in Sareb is now worth €169 million compared with its initial investment of €2.192 billion. The FROB is Sareb’s largest shareholder with a 45.9% stake, followed by Santander (22.3%), CaixaBank (12.2%), Sabadell (6.6%) and Kutxabank (2.5%).

As the bad bank’s largest shareholder, the FROB typically sets the tone of the provisions for the other entities. Last year, after the FROB increased its cumulative provision to 75%, other shareholders such as CaixaBank and Sabadell recognised extraordinary provisions in their accounts for Q2. This year, the average provisioning rate is expected to increase from around 70% to 90%.

Sareb closed 2018 with losses of €878 million (up by 55%) due to the strong competition in the institutional market and the real estate crisis that still affects much of the country. The bad bank sold 21,152 properties last year and its income from property management soared by 19% to €1.4 billion, but its income from the loan portfolio fell by 16% to €2.2 billion and so total income fell by 5% to €3.7 billion.

The outlook for the bad bank for the next few years is not great and many experts forecast that not even a single euro will be recovered from Sareb.

Original story: El Confidencial (by Jorge Zuloaga)

Translation/Summary: Carmel Drake