Liberbank Puts €200M Mortgage Portfolio Up For Sale

16 November 2016 – Voz Populi

Liberbank’s sole objective right now is to reduce its default rate. The entity led by Manuel Menéndez is working around the clock to try to control its default rate, which will soar from 8.8% to more than 16% on 1 January 2017. For this reason, it has just launched the sale of its first portfolio in the last two years aimed at large investors.

This situation has arisen because the programme of guarantees that it received in exchange for acquiring the state-intervened bank CCM is coming to an end. Until now, none of the problem assets from the Manchegan savings bank have been consolidated into Liberbank’s balance sheet, but they will be from next year.

The entity born out of the mergers between Cajastur, Caja Cantabria and Caja Extremadura, and the purchase of CCM, has put its retail network into full swing to try and sell the maximum number of homes possible. In addition, Liberbank will now focus on the sale of portfolios to large international investors.

The first portfolio to come onto the market is known as Project Fox, containing between €150 million and €200 million in unpaid mortgages, according to financial sources. It is not the first entity to sell loans granted to individuals to buy homes; Bankia and Deutsche Bank España have also done the same recently.

Liberbank will try and close Project Fox before the end of the year, although it would not be a problem if the sale gets pushed back to Q1 2017. That is because the final year end accounts that the entity presents for 2016 as a whole, will still benefit from the cushion of CCM’s asset protection scheme (EPA) to decrease the default rate. The accounts that it publishes in March will be the first to reflect the new situation without the aid.

Several portfolios

At least one or two other portfolios will be put on the market alongside Project Fox over the next few weeks. According to several financial sources, one will contain non-performing loans (to SMEs and consumers) amounting to several hundreds of millions of euros. In total, all of the divestments that the financial group is putting on the market during the final stretch of 2016 will exceed €500 million.

Liberbank’s aim is to stabilise its default rate at less than 15% by the beginning of 2017. The entity has not ruled out participating in a major operation next year, to allow it to return to normality in terms of its doubtful and foreclosed assets, primarily by getting rid of its properties in Castilla-La Mancha.

The pressure on the entity is growing, given that both the Bank of Spain and the European Central Bank (ECB) are focusing on provisions, in the face of the new domestic accounting circular and the entry into force in 2018 of new international regulations, which will change the rules of the game.

These are not the first portfolio sales undertaken by Liberbank. It sold a non-performing portfolio to Cerberus in 2013 and another non-performing portfolio to JB Capital Markets in 2015. In addition, it negotiated the sale of its doubtful debt recovery platform to Lindorff and Cerberus in 2014, although the operation did not go ahead in the end after it failed to get approved by the Board of Directors.

Original story: Voz Populi (by Jorge Zuloaga)

Translation: Carmel Drake

Half Of Cruzcampo’s Former Site In Sevilla Goes Up For Sale

13 June 2016 – Andalucía Información

Investors and governments alike are trying to take advantage of the improvement in the economic environment to reactivate the real estate market in Sevilla. Whilst on Thursday, the Town Planning department put 19 plots of land in Sevilla, on which 1,440 homes may be built, up for forced sale through public auction, now comes the mandate for the confidential sale of half of the urban development rights over the large site of the former Cruzcampo factory, where the PGOU has authorised the construction of 1,963 homes, in addition to tertiary uses.

The site of the historical brewery on Avenida de Andalucía had gone from being a star project to a failing project. The Basque real estate company Urvasco, which acquired the plot during the golden years of the real estate boom, commissioned the design of a “high standing” neighbourhood to four of the star-architects at the time: Norman Foster, Jean Nouvel, Arata Isozaki and Guillermo Vázquez Consuegra, who…even had their photo taken together with Monteserín, the then mayor, on the balcony of the Town Hall, in 2006. At the time, sourcecs spoke about an investment of €750 million in the construction of a luxury neighbourhood that was going to boast a high category hotel with around 150 rooms.

Nevertheless, with the burst of the (real estate) bubble just two years later, the project ended up foundering, along with its developer, Urvasco, which was unable to meet its obligations with the banks that had lent it €330 million and so it had to hand over the land to a pool of financial entities and companies linked to them (around a dozen in total).

The ‘Compañía para los Desarrollos Inmobiliarios de la Ciudad de Híspalis’ is the owner of half of the urban development rights of this land (49.91% to be exact). The Company was constituted by Banco Popular, CajaSur, Caja Granada, Caja España, Caixa Catalunya, Cajastur, Caja Laboral, Bancaja and Caja de Ahorros de Extremadura.

This company, which had accumulated debt amounting to €294 million and losses of €200 million, filed for voluntary bankruptcy in January 2016 in the Commercial Court of Madrid, and its application was approved on 22 February. However, that has not represented an obstacle to the process to sell its urban development rights, entrusted to an intermediary company, which is looking for potential investors in a restricted process that will run until Friday (17 June), the deadline for the acceptance of offers.

The sales brochure highlights that the plot has a surface area of 18,286 sqm and is located just 400m from El Corte Inglés on Nervión Plaza (presented as the main shopping centre in Sevilla), as well as from Sevilla F.C.’s stadium and the Santa Justa train station.

The Interior Reform Plan definitively approved the development of 1,963 homes, of which 890 will be allocated for social housing, as part of a total constructible area for residential use of 225,823 sqm, as well as a further 29,345 sqm for tertiary use. Therefore, the gross buildable area amounts to 255,168 sqm.

All of this will be constructed on wide blocks located in the Southern area of the plot. The Northern section will be a green area covering more than 70,000 sqm. According to the sales brochure, “the proposed plans seeks to achieve a maximum liberation of space, of around 35% in total, for the enjoyment of citizens. To achieve this, the plans propose the construction of tall buildings, which in the case of the residential units will be 15-storeys high”.

Original story: Andalucía Información (by M. J. Florencino)

Translation: Carmel Drake