Blackstone Finalising Sale of Mortgage Portfolio to CarVal Investors

25 June 2019

Blackstone is finalising the sale of 10,000 mortgages loans to CarVal Investors for nearly €1 billion. Blackstone originally acquired the loans as part of a €5.5-billion portfolio it bought from Catalunya Banc in 2014.

After the sale, which Blackstone expects to finalise in the coming days, the U.S. firm will still own another 9,000 lower-quality loans from the Catalan bank.

CarVal Investors specialises in the investment, through various funds, of loan portfolios sold by financial institutions. The company, with offices in Minneapolis, London, New York, Luxembourg and Singapore, has invested more than 20,000 million dollars in nearly 2,000 loan portfolio transactions in 31 countries.

Original Story: Vox Populi – Alberto Ortín

Photo: Europa Press

Sareb Offers the Contracts of Altamira, Servihabitat & Solvia to its Rivals

17 June 2019 – El Confidencial

Sareb is on a mission to change its course. According to market sources, the bad bank chaired by Jaime Echegoyen (pictured below) has decided to put its contracts with Altamira (owned by doBank), Servihabitat (Lone Star) and Solvia (Intrum) out to tender two years before their scheduled renewal.

Even though the contracts are not due to expire until the end of 2021, Sareb is putting them out to tender alongside that of Haya Real Estate, which is due to expire at the end of 2019. This represents a boost for Cerberus’s servicer, given that its competitors will now also have to focus on retaining their own contracts rather than just bidding for Haya’s.

In the event that Sareb awards the contracts of Altamira, Servihabitat and Solvia to other entities, it will have to compensate the servicers since their contracts clearly establish early termination clauses.

Altogether, Sareb is looking at putting out to tender the management of €34 billion in loans and properties that it still has left in its portfolio. The four will have to submit their bids in the next few months, specifying which assets they want to manage and what commissions they will charge.

The largest mandate is that of Haya, which manages assets proceeding from Bankia, which accounted for 37% of the bad bank’s original assets. It is followed by Altamira, which manages the assets proceeding from Catalunya Banc, BMN and Caja 3 (29% of the total); Servihabitat, which manages the assets from NCG Banco, Liberbank and Banco de Valencia (19%); and Solvia,  which manages assets from Bankia (foreclosed), Banco Gallego and Ceiss (15%). Clearly, there is a lot at stake for these servicers.

Original story: El Confidencial (by J. Zuloaga & R. Ugalde)

Translation/Summary: Carmel Drake

Project Castillo: Blackstone Puts 11,000 of Catalunya Banc’s Subprime Mortgages Up for Sale

13 June 2019 – El Confidencial

Blackstone has engaged Bank of America to liquidate almost all of the remaining Catalunya Banc subprime mortgages that it purchased from the State between 2014 and 2015 as part of Project Hércules.

After almost five years of actively managing the portfolio, the US fund now has just 31,000 of the more than 100,000 subprime mortgages that it purchased, which are worth €1 billion compared with €5.7 billion in 2015.

Project Castillo is going to contain almost 11,000 of those mortgages, all of which are up to date in terms of payments, but which have been refinanced at some point over the last 5 years.

This sale forms part of a series being undertaken by Blackstone as it completes its first cycle of investments in Spain. In this context, the US fund’s rental home Socimi Fidere put most of its assets up for sale recently.

Original story: El Confidencial (by Jorge Zuloaga)

Translation/Summary: Carmel Drake

Sabadell Finalises Sale of €5bn in Real Estate Assets to Cerberus

12 July 2018 – Voz Pópuli

Banco Sabadell is finalising the largest real estate divestment in its history. The entity chaired by Josep Oliu (pictured below) is negotiating with Cerberus to close the sale of Project Challenger, a package of real estate assets worth around €5 billion, according to financial sources consulted by Voz Pópuli. Sources at Sabadell declined to comment.

Cerberus is thought to be negotiating a payment of around €2 billion, according to the same sources. The agreement could be signed within the next few days. The bank has been holding exclusive negotiations for several days with the fund chaired by John Snow and led in Spain by Manuel González Cid, although it has not ruled out the possibility of other candidates also presenting offers, including Lone Star and Bain Capital.

Project Challenger comprises properties – homes, developments and land – that Sabadell foreclosed during the crisis. The assets are not covered by the Deposit Guarantee Fund (FGD), and so their sale is relatively simple, provided the negotiations do not run aground in the coming days.

Goodbye to real estate

In addition to Project Challenger, Sabadell has launched three other operations in the last few months to free up its balance sheet of toxic assets. It has already closed one of those deals: Project Galerna, which the bank sold to Axactor, as revealed by this newspaper.

In addition to Galerna, Sabadell has Project Makalu underway, with €2.4 billion in problem loans; and Project Coliseum, with €2.5 billion in foreclosed assets. These three portfolios are covered by the Asset Protection Scheme (EPA), which the bank received in exchange for taking over CAM. For this reason, their sales depend on the negotiations currently underway with FGD.

Sabadell is expected to make a decision regarding the future of its real estate over the coming weeks to reveal a radically different image of the bank at the presentation of its half-year results, which will take place at the end of this month.

For Cerberus, this agreement would see it consolidate its position as one of the largest funds with real estate assets in Spain, alongside Blackstone – which took over the property of Popular and Catalunya Banc – and Lone Star, which signed a billion euro agreement recently with CaixaBank.

Meanwhile, in Spain, Cerberus controls the platform Haya Real Estate, which it has tried to list on the stock market, albeit unsuccessfully; and it is close to signing the acquisition of Anida and BBVA’s property, pending approval from the FGD.

Original story: Voz Pópuli (by Jorge Zuloaga)

Translation: Carmel Drake

The FROB Engages Intermoney Valora to Revalue Former CX Assets

5 February 2018 – Expansión

The Spanish Fund for Orderly Banking Restructuring (FROB) has engaged the financial consultancy firm Intermoney Valora to carry out a “valuation service for certain assets in the framework of the process to wind up Catalunya Banc (CX)”.

Sources familiar with the process indicate that this project stems from the process to privatise the former Catalan savings bank, which was nationalised by the FROB in 2012. In accordance with the design of the divestment at the time, the banking business was transferred in its entirety to BBVA, whilst the real estate business (known as the Hercules portfolio) was acquired by the fund Blackstone.

Those same sources indicate that at the time, a small percentage of the assets that should have been transferred to Blackstone, remained under the umbrella of BBVA for technical reasons and could not be transferred. “That has generated what is known as compensable damage, which was anticipated for in the sales contract and, therefore, had been provisioned”, they add.

The role of Intermoney Valora will be to estimate the economic value today of that small percentage of assets pending transfer to Blackstone, so that the indemnities can be calculated.

According to details specified on the Frob’s public contracting page, Intermoney (which competed with five other firms) will receive €130,000 for this assignment and will have two months (extendable for up to one more) to carry out the work.

Last week, the President of BBVA, Francisco González, admitted that he would not have bought CX today. “We are delighted to have purchased savings banks but that was five years ago. Would we buy CX today? Probably not”, he said.

Original story: Expansión (by N. Sarriés)

Translation: Carmel Drake

Blackstone’s Real Estate Empire in Spain

6 August 2017

The US giant controls at least 100,000 real estate assets in Spain through dozens of companies. Most of the properties are in Catalonia. When it finally completes the purchase of the Popular’s real estate portfolio, Blackstone will become the largest property development company in Spain, ahead of Sareb.

Few ordinary people have heard of Blackstone. Even when asked about it, this firm sounds more like a private mercenary company (Blackwater) than what it is: one of the largest asset managers in the world and the largest foreign investor in Spanish property.

The fund is a silent giant, with dozens of companies linked to the real estate market, of which three are publicly traded. It manages around 100,000 real estate assets, of which at least 10,000 are flats for rent and social housing (VPOs). Blackstone has also has just agreed to one of the largest real estate acquisitions in history: 51% of Banco Popular’s property portfolio. If this deal goes through, it will control the same amount of assets as Sareb, the company created by the Spanish government in 2012 to manage the property of troubled banks.

Blackstone realized that it had to have a presence in Spain in 2013. It saw clear signs that the economy was bottoming out and decided to bet on the real estate sector. That summer it finalized one of the fund’s first major deals in Spain, the purchase of public housing from the Municipal Company of Housing and Land (EMVS), which has subsequently given Blackstone a serious headache. However, this deal (along with two others involving Goldman and Sareb) signalled the beginning of a real estate recovery in Spain.

The American fund came to Spain through Magic Real Estate, a company created by, among others, Ismael Clemente, the current Managing Director of one of Ibex’s real estate companies, Merlin Properties. After purchasing some small portfolios, Blackstone realized that it had to take a stronger position in Spain.

Key moment

Its first step came in 2014 with the acquisition of Catalunya Caixa Inmobiliaria, a real estate platform renamed Anticipa. Blackstone then tried to buy Eurohypo for 3.5 billion euros, which was eventually acquired by Lone Star. It got its way with Project Hércules, in which it acquired 6.4 billion euros in problematic mortgages from Catalunya Banc.

These deals were completed by the same team that conducts all of Blackstone’s major deals in Spain: the two brains behind the deals are Diego San Jose, who has twelve years of experience in the fund; and Eduard Mendiluce, ex-director of Catalunya Banc, who has detailed knowledge of the nationalized bank’s entire portfolio and of the banking/real estate sector in general.

The Fidere (Blackstone) real estate development in Soto de Henares (Madrid).

Jean-Christophe Dubois, who oversees investments from London, and Jean-François Bossy, a financier specializing in complex operations, taxation and legal issues, also take part in all of Blackstone’s major deals.

So far, a large part of the interests of this fund in Spain are in a securitization fund, which controls the Catalunya Banc’s problematic mortgages. According to the latest official figures, the mortgage package has already been reduced from 6.4 to 4.4 billion euros. Loan delinquency stands at 64%, with Blackstone co-investing with the state-run bank restructuring fund FROB. They are investing, however, under different conditions: Blackstone has a guaranteed profitability of 13% and the public fund will only profit under a series of complex scenarios.

Blackstone is cooperating with the FROB on Catalunya Banc’s toxic mortgages, where the US fund has a guaranteed return of 13%

In addition to the securitization fund, the American fund has three companies listed in Spain (Spanish REITs): Albirana Properties Socimi, with about 5,000 rental flats valued at €500 million; Corona Patrimonial Socimi, with more than €100 million in investments in office buildings; and Fidere Patrimonio, with rental flats (of which many are social housing) valued at €300 million.

Beyond these few listed companies, there are dozens of Blackstone companies registered in Spain. And few are less asset-laden, as some combine real estate assets and debt worth several hundred million euros: Tourmalet Propco Investment 2015 manages assets worth €800 million acquired from CaixaBank; Empire Real State Spain, flats acquired from Sabadell worth €500 million; and Patriot Propco, holding debt transferred by Popular at the end of last year, with an initial valuation of €418 million.

Geographical location of Banco Popular’s properties

All these investments will almost be small details when Blackstone takes control of 51% of Popular’s bank bad, with assets worth 30 billion euros. With this, the fund will be able to diversify its portfolio, which is currently highly exposed to Catalonia.

So far, Blackstone has done well with the strategy of betting hard on property while maintaining a low profile. From now on its bet will be double or nothing, and being on the bad end of the bet will be costlier than having remained in the background.

Original Story: voxpopuli – Jorge Zuloaga

Translation: Richard Turner

 

Santander Invites NBOs For Popular’s Assets & Aliseda By End Of July

6 July 2017 – Voz Pópuli

It could be the largest real estate operation of the last few decades in Spain. Santander has revolutionised the world of the major investments funds with the express sale of all of Banco Popular‘s property, after engaging Morgan Stanley to coordinate the sale.

The bank chaired by Ana Botín may sell all of Popular’s real estate assets and loans, worth €30,000 million, in one go. The process is going faster than investors expected. Santander and its advisor have given the funds it has invited to participate until the end of the month to submit their non-binding offers (NBOs). And the prices being floated amount to around €5,000 million, according to financial sources consulted.

Blackstone, Apollo and Lone Star are already working on the process and Cerberus may join them shortly. They are the largest opportunistic funds present in Spain, with the most financial muscle to be able to handle an operation of this kind. That is why they have been chosen. However, the doors to new investors have not been closed.

The idea is that the buyer will acquire a 51% (or higher) stake in a joint company together with Santander and that that company will hold Popular’s €30,000 million assets. These assets are provisioned at 69%, and so they have a net value of almost €9,250 million. We calculate therefore that to acquire 51% of these assets and loans, plus take over Aliseda (which Santander repurchased last week), the buyer will have to pay around €5,000 million.

The key, after the summer

In addition to the bids for the 51% stake, experts are not ruling out the possibility that one of the funds will go off piste and put a proposal on the table for a smaller package of assets. Santander is open to all ideas at this stage. The group plans to first listen to the proposals, analyse them over the summer and then negotiate the small print between September and December.

This is the operation that the large opportunistic funds have been waiting for since 2011. Those investors arrived in Spain during the worst period of the crisis with the purchase of small loan portfolios and real estate platforms, with their sights set on the hope that large opportunities would arise some day, such as in this case with Popular.

In fact, they have been complaining for a couple of years that the portfolios coming onto the market are too small (ranging between €500 million and €1,000 million) for their appetite, given that other types of competitors have emerged that have caused prices to soar and have left them without any assets.

It is also worth considering that the funds that are participating in this process raised capital at the end of last year to invest in Southern Europe. Specifically, €15,000 million. As such, they have liquidity to handle operations such as Popular’s.

The three funds and Cerberus starred in major acquisitions in Spain during the crisis. Blackstone acquired Catalunya Banc’s macro-portfolio of doubtful mortgages amounting to €6,400 million. Apollo purchased Altamira, several portfolios and Evo Banco. And Lone Star secured Project Octopus (€4,500 million in large real estate loans), purchased Neinor and listed it on the stock market, and has recently agreed to acquire Novo Banco in Portugal.

Original story: Voz Pópuli (by Jorge Zuloaga)

Translation: Carmel Drake

BBVA Sells 9 Properties From CX RE Fund For €37M

2 June 2017 – Europa Press

BBVA Asset Management has sold nine properties from the CX Propietat real estate fund for €37 million in total. That price is 20.96% lower than the most recent appraisal value of the aforementioned assets.

According to a statement filed by the asset manager with Spain’s National Securities and Exchange Commission (CNMV), this sale represents an “important step forward” in the liquidation of the CX Propietat fund. The fund filed for liquidation in September 2013, before BBVA acquired the former Catalan savings bank Catalunya Banc (CX).

The asset manager is going to continue making “its best efforts” to facilitate the complete liquidation of this fund “as soon as possible”, said the company to the supervisor.

According to sources at BBVA, once the sales process for the fund’s entire portfolio has been completed, the definitive liquidation value will be calculated.

Original story: Europa Press

Translation: Carmel Drake

Blackstone Sells c. €300M Of Catalunya Banc’s Mortgages

8 May 2017 – Expansión

The banks’ non-performing assets are finally starting to generate returns for some of the entities that backed them during the worst moments of the crisis. Four and a half years after Catalunya Banc fell victim to the excesses of the real estate sector and was intervened by the State, and two years after Blackstone finalised its purchase of a portfolio of doubtful mortgages from the Catalan entity, which is now owned by BBVA, the US firm has shown that what were once toxic assets, are toxic no more.

And it has done so through the sale of some of the mortgages that it bought from Catalunya Banc. In fact, Blackstone has created a securitisation fund, with a nominal portfolio of €400 million in loans, and has placed it amongst investors at a price that represents selling almost €300 million of the total without a discount, according to official documentation submitted by the company.

Given that Blackstone purchased mortgages from Catalunya Banc worth almost €6,400 million nominal and that it paid €3,600 million for them, the fact that it has now sold the majority of the securitisation fund at its nominal value implies that investors no longer consider them to be problem loans and that they are willing to buy them without demanding an additional return for any higher risk.

Of course, there are several factors that have contributed to this. “Blackstone has included the best loans from the portfolio in the securitisation fund”, say sources in the market, who insist that the US firm still owns the majority of the loans it purchased two years ago.

In addition, the management of the loans plays a role, given that 82.75% of them have been restructured, according to figures from Fitch, which means that they have been granted grace periods or parallel financing since Blackstone took over the portfolio.

Different tranches

The result of these two factors is that Tranches A and B of the securitisation fund have been sold to investors without any discount on their nominal values. They will pay annual interest of 0.9% and 1.9%, respectively, until 2022 (from April of that year, the yield will rise to 1.6% and 3.3%).

The two tranches amount to €288 million, i.e. they represent 72% of the total fund. Meanwhile, Tranches C and D, which contain the worst mortgages and which have the lowest solvency rating, have been sold for 98% and 93% of their nominal values and will pay interest of 2.5% and 2.6%, respectively, for the first five years. Tranche E, the most risky, has been subscribed in its entirety by Blackstone, at a significant discount. (…).

Original story: Expansión (by Inés Abril)

Translation: Carmel Drake

Blackstone Puts €400M Of Catalunya Banc’s Mortgages Up For Sale

27 March 2017 – Expansión

The banks have put a red circle around 2017 in their calendars, as the year when the doubtful portfolios that have hurt them so hard in the past and that are still denting their balance sheets even now, will show signs of life. Some of the entities may end up generating more profits than they initially expected.

And Blackstone is leading the way. The US giant has created a securitisation fund containing some of the non-performing loans with a nominal value of €6,000 million that it purchased from Catalunya Banc in 2015 for almost €3,600 million. Two years later, and after restructuring many of the credits, the investment group has decided that the time has come to capitalise on its investment.

It will do so with the sale to investors of a portfolio containing €403 million of these formerly delinquent loans. It represents Blackstone’s second foray into this field. Last year, the firm opened fire with the first securitisation of structured loans in Europe, although now it is redoubling its efforts given that the volume up for sale is 52% higher.

The fund comprises 3,307 residential mortgages granted in Spain, with a loan to value (credit over the value of the home) of 60.9%. Almost 80% of these mortgages have been restructured and many of the borrowers are up to date with their repayments. Meanwhile, there has been no change to the rest, according to information that Blackstone has provided to Moody’s to allow the risk ratings agency to make its assessment.

Profits

Blackstone’s aim is to sell this portfolio to investors in order to materialise some of the gains obtained from the management of the non-performing loans. In all likelihood, the securitisation fund will be placed below its nominal value, but at a much higher level than Blackstone paid when it acquired the mortgages from Catalunya Banc, before the State intervened entity was acquired by BBVA.

In exchange, Blackstone will offer different coupons to investors, depending on the type of mortgages that they take on.

The fund has been divided into five tranches, depending on the risk. The first has a very high level of solvency and so will pay annual interest of 3-month Euribor plus a spread of 0.90%.

The second and third tranches, which still have high or intermediate solvency ratings, will pay premiums over Euribor of 1.9% and 2.5%, respectively. The fourth tranche is ranked below investment grade and will pay a return of 2.6%.

The objective of Blackstone and the three banks that it has engaged for the securitisation (Credit Suisse, Bank of America Merrill Lynch and Deutsche Bank) is that the operation will be completed next week.

A new market

This second securitisation by Blackstone is clear confirmation that a new market has opened up for buyers of delinquent portfolios from the banks. In fact, sources from several investment banks are confident that there will be a significant volume of secondary operations of this kind this year, where the new owners of the bank’s non-performing loans will sell their positions to other funds and to the market alike, through securitisations. (…).

Original story: Expansión (by Inés Abril)

Translation: Carmel Drake