CarVal Hires Pepper to Manage Portfolio of 10,000 Mortgages

28 October 2019 – CarVal Investors has hired the Pepper Group to manage the portfolio of 10,000 mortgage loans it acquired this year from Blackstone. The US firm sold the portfolio to CarVal in July for nearly one billion euros, in its first major divestment of the last five years.

Pepper will manage the mortgage portfolio starting next year, taking over from Blackstone itself. The Australian Pepper group offers financial services and currently manages more than €30 billion in loans. It has been operating in Spain since 2006.

Original Story: Vozpópuli – Alberto Ortín

Adaptation/Translation: Richard D. K. Turner

Solvia: Sabadell Puts its Real Estate Subsidiary Up For Sale

17 October 2018 – El País

Sabadell is going to listen to offers from several real estate vulture funds that are interested in acquiring its subsidiary Solvia, the manager of its properties. The entity, which declined to comment, has now entrusted the sales process to an investment bank. In the summer, Jaime Guardiola, CEO of Sabadell, justified holding onto Solvia due to “the great contribution it makes to the bank”, but now he is taking a step towards selling it. Sources in the sector indicate that Sabadell wants to strengthen itself and take advantage of the good climate still being enjoyed in the real estate market.

The banks are getting rid of properties before the booming market deflates. They are selling not only portfolios, but also the companies that specialise in the management of those real estate assets, known in the sector as servicers. Until now, it was typical for the banks to include their servicers in the package of asset sales: that is what CaixaBank did with Servihabitat and BBVA with Anida.

But, Sabadell wanted to get more mileage out of its subsidiary and so decided not to sell Solvia when it divested around €12.2 billion of its properties to Axactor, Cerberus, Deutsche Bank and Carval. Nevertheless, Sabadell has now taken the definitive step and is open to offers from the interested vulture funds. According to sources in the market, the interested parties include Cerberus and Oaktree.

148,000 assets under management

Based on data as at May 2018, Solvia is one of the leaders in the real estate services market in Spain, with a portfolio of 148,000 units in assets under management, whose value exceeds €31 billion, according to the entity. In a report from Goldman Sachs, Sabadell indicates that Solvia’s annual profit amounts to €40 million.

The company has extensive experience in the marketing of new build developments, given that it has placed more than 10,000 homes in new developments on the market since 2015. At the moment, Solvia has 55 developments up for sale. In terms of rental, as of October, the firm was managing 32,000 assets, of which 74% belong to Sabadell. Solvia also works with other clients, including Sareb.

The report from Goldman Sachs noted that Sabadell could sell Solvia as a way of raising its capital ratios, with little detriment to its income statement.

Market sources agree with these arguments to explain the step taken by Sabadell. On the one hand, as the European Central Bank has indicated, entities must accelerate the sale of all businesses relating to the real estate sector. The banks are aware that times of lower economic growth will come and understand the importance of taking advantage of the appetite that the large international funds still have for Spanish property.

On the other hand, the sale of Solvia will also result in cost savings, a reduction in the workforce and, above all, lower capital consumption. In the last quarter, between March and June, Sabadell’s capital ratio decreased by one point, from 12% to 11% for its CET 1 fully loaded capital ratio (the highest quality indicator). The limit on the basis of which the ECB applies severe measures is 10.5%.

This decrease was due to the problems that Sabadell has been facing with its British subsidiary TSB, which was left without a service for weeks. Between March and June, the bank lost €138 million in provisions against real estate portfolios and the problems at TSB.

Original story: El País (by Íñigo de Barrón)

Translation: Carmel Drake

Solvia Acknowledges That it Will Have to Generate Value from Solvia “Sooner or Later”

27 July 2018 – La Vanguardia

The CEO of Banco Sabadell, Jaime Guardiola, has acknowledged that “sooner or later”, he will have to generate value from Solvia, highlighting the “great job” that the entity has done and how “proud” he feels of the servicer.

That was according to the bank’s most senior executive at the presentation of Sabadell’s half-year results, where he reported that the entity has recorded a net profit of €120.6 million, down by 67.2% compared to the same period a year earlier, due to the provisions recognised as a result of the reduction in problem assets and the migration costs of the platform of TSB, its British subsidiary.

“Solvia not only serves assets on the bank’s books but also those of other clients such as Sareb. Beyond its financial value, it has a great industrial value, with some great professionals with a very different profile from those in the banking sector”, he specified.

In Guardiola’s opinion, Solvia is one of the bank’s entities that has done “a great job”, and so if at any time this value were to be realised and recognised, then selling the asset could become an option, although currently, it contributes in a positive way to Sabadell’s accounts.

Recently, the entity chaired by Josep Oliu disposed of four portfolios comprising problem assets with a gross value of €12.2 billion, which were awarded to the funds Axactor, Cerberus and Deutsche Bank, together with Carval.

The day on which it announced the sale of the largest batch of assets, worth €9.1 billion, Sabadell reassured the market that Solvia would continue to form a critical part of the bank and would continue to provide integral management services of the real estate assets subject to the operation on an exclusive basis.

Original story: La Vanguardia 

Translation: Carmel Drake

Popular Sells Its Portuguese RE Manager For €72M

7 August 2015 – Expansión

Banco Popular is replicating the model it adopted for Aliseda in Portugal. The entity chaired by Ángel Ron has decided to sell a majority stake in its real estate and debt management company in the neighbouring country. Popular closed the operation on 9 June by selling the business to Quarteira, a company owned by funds of the US firm Carval, for €72 million.

The Spanish entity will maintain a 20% stake in the new company – Recovery to Business (Recbus) – which will take over the management of the real estate assets of the Portuguese banking subsidiary.

This operation has generated capital gains of €69.5 million for Popular: €55.6 million from the sale of the 80% stake in Recbus to Carval and €13.9 million from the revaluation of its retained 20% stake.

Sources at the Spanish entity stress that this transaction is positive for two reasons, since: “it makes the most out of the management of the real estate business in Portugal, benefitting from the experience of the partner”; and “it allows Banco Popular Portugal to focus on its traditional commercial banking activity”.

This agreement replicates the deal that the bank reached with Värde Partners and Kennedy Wilson at the end of 2013, when it sold a 51% stake in Aliseda for €810 million.

The growth of Aliseda

Aliseda is currently in an expansion phase after earning €68 million last year. Its shareholders – Värde, Kennedy and Popular – have signed an agreement to increase its capital, to repay debt.

Aliseda Inmobiliaria recorded revenues of €1,127 million during the first half of the year, according to Efe. The company sold more than 6,400 properties and hopes to generate record breaking revenues of €2,000 million in 2015.

Last year, the company sold more than 8,600 assets.

Of the assets sold, 44% were new build properties, 26% were second hand….and 14% were land.

Original story: Expansión (by J. Zuloaga)

Translation: Carmel Drake