Scope: Spain’s Most Exposed Banks are set to Boost their Toxic Assets Sales

25 October 2018 – Expansión

The large real estate sale operations formalised during the last year by Santander, BBVA, CaixaBank and Sabadell, amongst other entities, have allowed the Spanish banking sector to reduce its total volume of problematic assets (NPLs) by approximately 60% from the peak of €200 billion reached in December 2013, to €82 billion recorded at the end of the first half of this year.

This massive clean up of a large part of the banks’ balance sheets has caused analysts at the credit rating agency Scope to consider the current ratios of toxic assets as “manageable and more of a legacy left over from the crisis than a real concern”. That is according to the authors of a recent report which evaluates the improvement recorded in the quality of assets in the Spanish banking system as a result of property sale operations such as those of Santander with Blackstone (€30 billion), BBVA and Sabadell with Cerberus (€13 billion and €9.1 billion, respectively) and CaixaBank with Lone Star (€12.8 billion).

Despite the effort carried out by a large part of the sector, those responsible for analysing the Spanish banks at Scope assume that those banks with comparatively worse levels of property exposure will accelerate their cleanups over the coming quarters, either by carrying out large sales or by placing several smaller portfolios.

Sources at Scope expect to see more large operations involving the sale of problem assets over the coming months, given that the large funds are now operating full steam ahead in the real estate segment, and “they are trying to gain scale and capitalise on their recently purchased platforms”, explains the report. Such is the case, for example, of Lone Star, which acquired Servihabitat from CaixaBank, and whichever fund ends up buying Solvia from Sabadell.

Financial sources agree that the cycle of real estate operations in Spain still has several operations in the pipeline, and they point to entities such as Bankia and Cajamar, which have relatively higher levels of problem assets than the sector, as candidates for starring in those transactions. Specifically, Scope points to Cajamar in its report, given that it is the only entity with a ratio of non-performing assets of more than 10%, according to data from the ratings agency.

The analysts at Scope also assume that Bankia will carry out movements to sell a substantial part of its toxic exposure. One of the nationalised entity’s strategic objectives is to accelerate the clean up of its balance sheet over the coming quarters. Moreover, the analysts anticipate that the global NPL ratio will continue to reduce quickly given that the other banks “are already in the process of completing the sale of several foreclosed asset portfolios”, explains the firm in its report.

The funds seek NPLs in other latitudes

Although the activity of buying credit portfolios is still intense in Spain, the funds specialising in these types of assets are setting their sights on other countries in search of opportunities to find value.

Sources in the sector explain that a large number of the opportunistic and real estate funds that have been undertaking operations in Spain are trying to close new transactions in Italy, Portugal, Greece and Cyprus (…).

Original story: Expansión (by Nicolás M. Sarriés)

Translation: Carmel Drake

Haya Real Estate Negotiates Contracts with Sareb & BBVA Ahead of its IPO

31 July 2018 – Europa Press

Haya Real Estate, the Spanish real estate servicer owned by the US fund Cerberus, has linked its possible IPO in Spain to the “visibility” that it obtains over the negotiations that it is holding to renew its contract to manage the real estate assets of Sareb and to take over the contract of BBVA.

That is according to the firm’s Finance Director, Bárbara Zubiria, speaking during the presentation of the servicer’s half-year results.

With respect to Sareb, Haya Real Estate is currently offering the bad bank various alternatives ahead of the termination, in mid-2019, of its contract to manage some of the bad bank’s assets.

In terms of BBVA, the firm is waiting for the entity to decide whether to award it the management of the assets that it is going to transfer to a joint venture owned by the bank together with Cerberus.

For the time being, during the first half of the year, Haya Real estate saw its revenues rise by 20% to €130.2 million, boosted by an “increase” in the commissions that it charges for its activity and management.

Meanwhile, the EBITDA grew by 16% to €64.9 million, according to reports from the company.

During the first half of the year, the servicer led by Carlos Abad managed assets amounting to €38.8 billion, on which it closed transactions worth €2.4 billion, up by 58% YoY.

In financial terms, at the end of the period, the firm had corporate debt amounting to €463 million.

Spain’s first listed servicer

Haya Real Estate is continuing to weigh up the pros and cons of its leap onto the stock market even though two of the three real estate companies that had announced their debuts, Azora and Testa Residencial, postponed their own IPOs and have opted to list on the MAB instead.

In the event that it does make its stock market debut, the firm led by Abad will become the first of its kind to list on the stock market in Spain and one of the first in Europe.

The servicer of Cerberus is not a real estate company, but rather a company that manages and develops real estate assets for third parties, in this case, primarily assets that were foreclosed by the financial institutions during the crisis.

Constituted in 2013, the firm currently manages loans and real estate assets worth almost €40 billion. Some of the entities that have entrusted the firm with the management of their assets include Cajamar, Liberbank, BBVA, Sareb and Bankia, amongst others.

Original story: Europa Press

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 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

Axactor Invests €250 Million Purchasing Real Estate Assets from Two Spanish Banks

26 March 2018

Axactor’s bilateral agreement with Cajamar, called Tango II, covers more than 600 assets and has an estimated value of approximately 30 million euros.

Axactor, the Nordic multinational debt buyer, finalised its acquisition of several assets from Cajamar and another undisclosed financial entity for an amount exceeding 250 million euros, the company said in a statement.

The bilateral agreements reached with the other Spanish financial entity, whose identity was not disclosed, are called Omega 1 and Omega 2 and are composed of a portfolio of more than 2,000 assets foreclosed properties valued at 80 million euros.

Since its arrival in Spain in 2015, the fund’s investments in more than 15 debt portfolios have exceeded 4 billion euros in nominal value.

Original Story: EjePrime

Translation: Richard Turner

Project Makalu: Sabadell Puts €2.5bn Portfolio Up For Sale

21 March 2018 – Vozpópuli

Banco Sabadell is stepping on the accelerator to complete its balance sheet clean up as soon as possible. After months of negotiations with the Deposit Guarantee Fund (FGD), the Catalan entity has decided to place on the market its first large portfolio proceeding from CAM’s Asset Protection Scheme (EPA). In this way, it has distributed information to investors about Project Makalu, comprising €2.5 billion in assets from the former Alicante-based savings bank, according to financial sources consulted by Vozpópuli.

This operation comprises foreclosed assets and unpaid loans from companies and individuals covered by the EPA. It follows another portfolio that has been on the market for a few days, Project Galerna, comprising €900 million in non-performing loans.

KPMG is advising Sabadell on both operations, which together comprise assets and loans worth €3.4 billion.

The group chaired by Josep Oliu has been negotiating with the FGD for months to try to kick-start these operations. The aim is that they will be followed by two more portfolios taking the total value of the assets for sale to €12 billion and whereby reset the entity’s real estate calculator. The issue is not simple because the sale of these loans may generate a hole for the Fund that would impact the State deficit.

Strategic plan

The Catalan entity announced at the recent launch of its strategic plan in London that it maintains the objective of reducing its exposure to problem assets at a rate of €2 billion per year. With the sale of Project Makalu alone it would more than exceed that goal.

The bank held €15.2 billion in problem assets at the end of 2017, but the forecasts indicate that that figure will fall below €9 billion by 2020: €4 billion in doubtful loans and €5 billion in foreclosed assets. And that is without taking into account the divestments that are now being worked on with the FGD.

Project Makalu is the fourth largest portfolio of problem assets ever to be put up for sale by a Spanish bank, behind only Popular’s Project Quasar, amounting to €30 billion, purchased by Blackstone; BBVA’s Project Marina, amounting to €13 billion, acquired by Cerberus; and Project Hercules, amounting to €6.4 billion in mortgages from Catalunya Banc, which was bought by Blackstone.

Meanwhile, Project Galerna is similar to Project Gregal, which Sabadell sold less than a year ago to three funds: Grove, D. E. Shaw and Lindorff. That portfolio comprised loans linked to consumers, without real estate guarantees, which had already been fully written off, and so all of the proceeds from the sale were recorded directly as gains.

Precedents

Besides Gregal, Sabadell closed two other major operations last year: Normandy, comprising €950 million in property developer loans, which was acquired by Oaktree, and which also proceeded from CAM’s EPA; and Voyager, comprising €800 million, which was purchased by the largest pension fund in Canada.

The latest operation launched by Sabadell joins others recently placed on the market by Sareb, BBVA, Cajamar and Kutxabank.

Original story: Vozpópuli (by Jorge Zuloaga)

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

Haya Reorganises Its Company Structure & Creates Haya Servicing

19 February 2018 – Eje Prime

Haya is reorganising its company structure. The real estate company, owned by the private equity fund Cerberus, has created a limited company, Haya Real Estate Servicing. This constitution forms part of the bond issue operation that the company carried out at the end of last year.

According to the Official Gazette of the Mercantile Registry, the corporate purpose of the new entity involves activities relating to the purchase, administration and sale of all kinds of real estate assets and securities.

Its share capital amounts to €60,000 and its headquarters are located on Calle Vía de los Poblados, the same registered address as the limited company Haya Real Estate, the group’s parent company. The sole administrator is Carlos Abad, the CEO of the real estate group and its legal representatives are Bárbara Zubíria Furest, the company’s Finance Director, and Ana Suárez Garnelo, Senior Legal Counsel and Secretary to the Board of Directors.

The move forms part of the bond issue that the group undertook in November last year. Then, the company debuted on the debt market by placing €475 million in guaranteed senior bonds.

For the debt issue, the group constituted a new limited company, Haya Finance, created solely to carry out that operation. Nevertheless, in the document sent to the Luxembourg stock exchange, where Haya asked for the bonds to be traded, the group revealed its intention to create a new limited company, arguing that this formula presented fewer restrictions.

“As at the date of issue, Haya is organised as a limited liability company”, said the group in the document. “In accordance with Spanish legislation, the capacity of a limited liability company to guarantee debt in the capital markets has not been tested in the Spanish courts” it continued. In this sense, Haya underlined that a limited liability company may only issue bonds worth up to twice its own resources, at most, unless the issue is guaranteed by a mortgage or joint guarantee from a credit institution, amongst others.

Nevertheless, the company also expressed that “the applicable Spanish statute does not expressly include any restrictions over the maximum amount that can be guaranteed by a limited liability company, and there is debate between the experts as to whether the aforementioned limited limitations should also apply to the guarantee interests provided by a limited liability company to guarantee debt on the capital market”.

Finally, Haya concluded that “in accordance with the trust agreement”, the principle guarantor “shall undertake to convert itself into a limited company that is not subject to the aforementioned restrictions”.

Last week, Cerberus engaged Rothschild to handle the IPO of Haya, currently worth €1.2 billion. The real estate company led by Carlos Abad currently manages a portfolio of assets worth almost €40 billion.

Founded in 2013, after Cerberus acquired the assets of Bankia Habitat, Haya has expanded its reach with the management of additional portfolios on behalf of other financial institutions such as Sareb, BBVA, Liberbank and Cajamar. During the 9 months to September, the servicer obtained revenues of €165.8 million and generated EBITDA of €89.8 million.

Original story: Eje Prime

Translation: Carmel Drake

Cerberus & Lindorff Compete for Bankia-BMN’s RE Business

14 February 2018 – Real Estate Press

Bankia has started talks with Haya Real Estate (Cerberus) and Aktua (Lindorff) to award the management of all of the real estate assets that it has incorporated into its portfolio following its merger with BMN (…), according to sources in the know. Bankia has been working with Haya since 2013 and BMN with Aktua, the former real estate arm of Banesto, since 2014.

The same financial sources indicate that Bankia is now in a stronger position to improve the conditions of its contract in light of the good times being enjoyed in the real estate sector. Although the technological integration of the two entities will not take place until 19 March, the authorities already approved the merger at the end of December.

In 2013, the entity chaired by José Ignacio Goirigolzarri awarded the business to manage and sell around €12.2 billion gross in real estate assets to Cerberus. That agreement comes to an end at the beginning of 2023. Haya Real Estate, the Spanish subsidiary of the US fund Cerberus, has become a major player in the real estate market in recent years. It manages debt and assets worth almost €40 billion and has engaged Rothschild to handle its upcoming stock market debut later this year. It also holds agreements with Sareb, BBVA, Cajamar and Liberbank.

In its failed attempt to go public, BMN got rid of its property manager Inmare in 2014 to focus on the traditional business. It then signed a 10-year agreement with Aktua.

Subsequently, the Norwegian fund Lindorff purchased Aktua in 2016. That company also manages the real estate assets of Ibercaja, amongst other entities.

Cerberus and Lindorff are re-enacting the battle fought last summer. Then, the funds were bidding to acquire the real estate subsidiary of Liberbank, Mihabitans. In the end, the US won those negotiations and was awarded the contract to manage Liberbank’s foreclosed assets for the next seven years.

Original story: Real Estate Press

Translation: Carmel Drake