Sabadell Puts ‘Solvia Desarrollos Inmobiliarios’ Up for Sale

19 January 2019 – El Periódico 

Banco Sabadell has launched the sales process of Solvia Desarrollos Inmobiliarios (SDIN), the company that owns the bank’s land and which carries out its real estate development projects in Spain. On Friday, the entity placed the sales brochure for the firm in the hands of possible buyers, including international real estate funds, such as Cerberus, Blackstone, Värde and Oaktree, amongst others, according to confirmation provided by real estate sources. The process, regarding which the bank itself has declined to comment, could go on until April. The time necessary for buyers to express their interest and conduct analysis of the company for sale.

The process to sell the development company is beginning just a month after the bank chaired by Josep Oliu completed the sale of 80% of its servicer – real estate manager – to Lindorff Holding Spain, a company that belongs to the Swedish fund Intrum, after it fought off competition from the funds Cerberus and Centricus, which were also bidding for the real estate subsidiary. In that operation, Solvia was valued at €300 million. The price corresponded to 80% of the stake in the company, which could be increased by a maximum amount of €40 million if certain conditions, relating to the performance of some of Solvia’s lines of business, are met. The completion of the operation is scheduled for the second half of 2019.

Maturity period

SDIN is in the maturity period for its sale, according to sources familiar with the operation. The firm has a stock of more than 300 buildable plots, which are worth around €1.2 billion and has almost 130 developments underway across different parts of Spain, with more than 5,000 homes under construction. The size of the portfolio of SDIN, which is led by Francisco Pérez (pictured above), places it in the second league in the sector ranking, just behind the listed property developers, led by Metrovacesa, Neinor, Aedas and Vía Célere. Only Sareb has more assets (…).

Original story: El Periódico (by Max Jiménez)

Translation: Carmel Drake

Cerberus Completes Purchase of 35,000 Homes from Santander for €1.5bn

19 September 2018 – Eje Prime

Cerberus is strengthening its presence in the Spanish real estate sector with the purchase of a large portfolio of assets from Banco Santander. The US fund has reached an agreement with the financial entity to acquire a package of 35,700 residential properties for €1.535 billion.

The batch transferred by the Spanish bank has a gross value of €2.791 billion. The investment firm has been awarded the package in the end after significantly reducing the figure of €3 billion that it was expected to pay for the portfolio when the negotiations began.

The president of Banco Santander, Ana Botín, said in a statement that the exact percentage of the stakes that each party will hold in the new company that will be constituted following the formalisation of the transaction has not been determined yet. Nevertheless, Cerberus will control between 51% and 80% of the share capital, according to the senior executive.

Botín, who has indicated that the sale will have an “immaterial” impact on the results of the bank, expects the agreement to crystallise completely during the last quarter of this year or the beginning of 2019.

Original story: Eje Prime

Translation: Carmel Drake

Sabadell Engages Alantra to Sell 2 Portfolios Containing €8bn in Foreclosed Assets

11 April 2018 – El Confidencial

Banco Sabadell is in the running to try to complete its real estate clean-up this year, and to this end, has engaged Alantra to sound out the market to sell two portfolios known as Project Coliseum and Project Challenger, comprising €8 billion in foreclosed assets, which the entity has already started to show to potentially interested parties (…)

This move forms part of the plan designed by the financial institution at the end of last year to remove almost €12 billion in toxic assets from its balance sheet through the sale of a number of portfolios. The first two are already on the market and amount to €3.4 billion, but the main courses are about to be served.

In order to speed up the process, the entity chaired by Josep Oliu has opted to create a portfolio containing mainly Sabadell risk and another, subject to examination by the Deposit Guarantee Fund (FGD), containing properties proceeding from the former CAM, which are protected by the Asset Protection Scheme (EPA).

The first, according to financial sources, is going to comprise a gross volume of more than €5 billion, whilst the second will amount to around half that figure, at just over €2.5 billion, and it will need the approval of the FGD, given that it will have to cover 80% of the losses.

Sabadell closed last year with €8.0 billion in foreclosed assets and €5.7 billion in non-performing loans, according to the real estate exposure data submitted to the CNMV – Spain’s National Securities and Exchange Commission – and its average coverage ratio currently amounts to 55%.

The large buyers that Alantra is currently sounding out include the major funds that typically participate in these types of operations, such as Apollo, Lone Star, Blackstone and Cerberus, according to the same sources.

This potential divestment joins the two portfolios that Sabadell already has on the market: Project Galerna, which comprises €900 million in non-performing loans; and Project Makalu, comprising €2.5 billion in assets from the former CAM, according to Voz Pópuli. In both cases, KPMG is advising the sales process.

Moreover, as El Confidencial revealed, Solvia, the servicer arm of Sabadell, has decided to join the housing boom and create its own property developer, Solvia Desarrollos Inmobilarios, containing €600 million in land and unfinished developments.

The entity wants to grow this new property developer by signing agreements with different companies, funds and family offices interested in delegating the management and development of its land and developments.

If it manages to bring all of these plans to fruition, Sabadell will follow in the footsteps of Santander and BBVA, which last year completed their real estate clean-ups with the sale to Blackstone and Cerberus, respectively, of the bulk of their toxic properties. That would leave CaixaBank as the last major bank that still needs to make a significant move to comply with the guidelines set by Europe: to remove a decade of crisis from its balance sheet.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

Deutsche Will Partially Finance Popular’s New RE Firm

21 November 2016 – Expansión

Popular has taken a new step in the constitution of its real estate company, a key project in its attempt to try to recover investors’ lost confidence, which it hopes to have ready by the first quarter of next year. According to financial sources, Deutsche Bank has reached a preliminary agreement to finance this company.

In total, up to six banks and funds have expressed interest, which does not mean that they will all end up participating. However, according to sources close to the process, “these players are being offered provisional agreements to invest between €200 million and €500 million”. The same sources state that they have also held talks with the giants Apollo and Cerberus, who declined to comment about the process.

Popular wants to transfer assets with a gross value of €6,000 million, primarily finished homes, to the new entity. Specifically, for this reason, executives at the entity feel uncomfortable that the project is being referred to as the bad bank in financial circles because it will also incorporate high quality assets.

On the liability side, the company will initially have share capital contributed by the bank, which will then be distributed amongst all of its shareholders in the same proportion as their existing shareholdings. In addition, the company will issue subordinated debt, which Popular will subscribe to, as well as senior debt.

It is expected that the banks and funds that want to participate in the financing will do so through this latter (senior debt) tranche.

According to a report from Bank of America Merrill Lynch last Thursday, in which the firm reduced the target price from €1.30 to €0.75, the company’s liabilities will be constituted as follows: the share capital will amount to €975 million, whilst the senior debt will amount to €2,200 million and the subordinated debt will amount to €1,400 million. The US bank’s analysts predict that the players who finance the senior debt tranche will request an IRR of 10%.

Deutsche Bank, which together with EY, is acting as financial adviser to the project, as well as Apollo and Cerberus, have been active in the Spanish real estate market in recent years. The former acquired two portfolios from Bankia, between the end of 2015 and this summer, comprising loans, both real estate and property developer related, worth almost €1,000 million. Meanwhile, Apollo has acquired several portfolios (it recently bought a hotel portfolio from CaixaBank) and controls the former platform (servicer) of Santander, Altamira. And Cerberus, which hired the former CEO of BBVA, Manuel González Cid in 2014, owns the real estate arm of Bankia, now Haya Real Estate, and the Cajamar platform.

Assets on the balance sheet

Popular has damaged assets on its balance worth €33,000 million before provisions, which amount to another €15,000 million. According to Bank of America, this high volume (of assets and provisions) eliminates many potential interested parties from a merger. Besides constituting this company, Popular also wants to accelerate the sale of these assets through both its wholesale and retail channels.

The bank earned €94.3 million during the first nine months of 2016, 66.1% less than during the same period in 2015. Nevertheless, its banking activity (when separated out from its real estate business) generated profits of €817 million.

Original story: Expansión (by D. Badía)

Translation: Carmel Drake