Spain’s Banks Prepare for a Mass Sale of Refinanced Mortgages Ahead of a European Regulatory Change

14 January 2020 – Expansión

Spain’s large banks are preparing for the mass sale of refinanced mortgage portfolios to opportunistic investment funds over the course of this year, ahead of a European regulatory change that will come into effect from January 2021. The new rules will require most refinanced debt to be classified as non-performing loans, which will impose more onerous capital requirements on the entities holding those assets.

Refinanced mortgages are those whose borrowers are currently up to date with their repayments but whose terms (economic conditions or duration) have been adjusted to avoid defaulted payments.

In the year to September 2019, Spain’s eight listed banks (Santander, BBVA, CaixaBank, Bankia, Sabadell, Bankinter, Unicaja and Liberbank) removed problem loans amounting to almost €37 million from their balance sheets. No detailed figures are compiled about refinanced mortgages, but sources in the sector estimate that a new market worth thousands of millions of euros could be generated as a result of the upcoming legislative change.

According to the new criteria to be introduced by the European Central Bank, refinanced loans will be classified as non-performing if the associated income generated by them falls by more than 1% as a result of the new terms of the loan. With such a strict threshold, almost all such loans will, therefore, be classified as non-performing.

In this context, a new market is expected to emerge whereby the banks try to divest portfolios of refinanced mortgages that are still considered healthy, but at lower prices.

The likely winners will be opportunistic funds, such as Cerberus, Blackstone and Lone Star, which typically buy doubtful assets with average discounts of 70%, and go on to generate double-digit returns through a combination of synergies and economies of scale.

Original story: Expansión (by R. Sampedro)

Translation/Summary: Carmel Drake

Centricus Still Leads Race to Acquire Haya Real Estate

10 December 2019 – The potential sale of the real estate asset manager Haya Real Estate is firming up as the new Spanish government coalition has made reassuring statements regarding the sale and the sector. After the elections on November 10, the left-leaning political parties PSOE and Unidos Podemos signed a pre-agreement to form a government. Market watchers feared that the new government would look unkindly at the sale.

Centricus is currently leading the race to acquire Haya, though DoBank, Intrum and Centerbridge are still seen to be in contention. Cerberus, which owns Haya Real Estate, is looking to finalise the deal by the end of the year.

The US firm’s sale of the servicer has suffered a serious of reversals.  Cerberus initially looked to list the firm on the Spanish stock market with a preliminary valuation of €1.3 billion. In March, the listing was cancelled due to doubts regarding Haya’s asset management contract with Sareb, and the price lowered to €1,2 billion.

Bids for Haya’s €42.431-billion portfolio are currently said to range between 600 and 700 million euros.

Original Story: Cinco Diás

Adaptation/Translation: Richard D. K. Turner

 

Sire Acquires Portfolio of Logistics Assets in Zaragoza

5 December 2019 – Strategic Industrial Real Estate (Sire), a joint venture managed by Arrow Capital Partners, has acquired a portfolio of logistics assets in Zaragoza. The deal, in conjunction with Cerberus, includes 38,536 square meters of gross leasable area worth 20 million euros. Savills Aguirre Newman and Latham & Watkins advised on the acquisition.

Sire has €2 billion to invest in European logistics and industrial assets.

Original Story: Eje Prime

Adaptation/Translation: Richard D. K. Turner

Cerberus and Tilden Park Each Look to Acquire Lezama Portfolio

4 December 2019 – Cerberus and Tilden Park are vying to acquire Kutxabank’s last large portfolio of bad debts. The two investment funds are looking to buy €400-million portfolio of non-performing loans, called Lezama. Kutxabank’s sale would put its NPL-ratio at less than 2.5%.

The acquisition would be Tilden Park’s first in the Spanish market. Josh Birnbau, a former executive at Goldman Sachs, founded the firm after he became famous for taking a large bet against sub-prime mortgages, one that earned his former company €2.277 billion.

Original Story: Eje Prime

Adaptation/Translation: Richard D. K. Turner

Centricus Rethinks its Potential Acquisition of Haya Real Estate

2 December 2019 – Softbank’s Centricus investment fund is rethinking its expected acquisition of Haya Real Estate from Cerberus. The US firm originally valued Haya at one billion euros, though it dropped its asking price due to doubts regarding Haya’s contract with Sareb.

Despite Haya’s success in renewing its management contract with the bad bank, Haya’s revenues could still be reduced by 50%. Sareb also reduced the agreed-upon fixed fees and payments in return for variable payments. At the same time, Softbank as recently needed to inject large amounts of funds to save its investment in the troubled WeWork.

Original Story: Eje Prime

Adaptation/Translation: Richard D. K. Turner

Sareb Close to Awarding €8-Billion Contract to Service Real Estate Portfolio

21 October 2019 – Sareb has chosen two finalists to vie for the management contract for €8 billion in loans and real estate: Haya Real Estate, controlled by Cerberus, and Servihabitat, by Lone Star. The bad bank expects to award the contract, which is the largest currently on the market, within the next few weeks. The existing contract, with Haya RE, is set is expire, which led Sareb to seek to reduce its costs.

Sareb opted in the spring of this year to place the contract on the market again, to lower its associated costs. Principally, the firm is looking to pay less in management fees, while paying more for successful sales and placements. Until now, the bad bank has been paying roughly €100 million per year in fees.

Four other groups had been vying for the contract: DoValue’s Altamira AM, Intrum’s Solvia, Finsolutia, and Hypoges. However, three other contracts, currently with Solvia, Altamira and Servihabitat, are set to expire in 2021.

At the same time as Sareb is looking to reduce its fees, the contract, known as the Project Esparta, includes the bad bank taking on more responsibility for the assets. The change has reduced the size of the portfolio in play from about €11 billion (at net book value) to roughly €8 billion now. The new servicer’s activities will be limited to selling or renting any properties, while Sareb will take on many of Haya RE’s previous duties.

Original Story: El Confidencial – Jorge Zuloaga & Ruth Ugalde

Photo: EFE / Emilio Naranjo

Adaptation/Translation: Richard D. K. Turner

Cerberus Sells Hotel Feria in Valencia

4 October 2019 – The US-group Cerberus has sold the Feria Hotel in Valencia to an undisclosed buyer. The 140-room, 17-floor hotel is located in the neighbourhood of Benimàmet and was originally built in the 1980s.  The buyer is expected to reopen the hotel, which has been shuttered for over a decade.

Original Story: Valencia Plaza – Begoña Torres

Photo: Kike Taberner

Adaptation/Translation: Richard D. K. Turner

 

Cerberus Looks to Expand in Spain

3 October 2019 – Cerberus is looking to increase its presence in the Spanish residential real estate market. The fund, which already owns Inmoglaciar, is in talks with investment banks to potentially acquire a larger developer to further enhance its activities in the Iberian peninsula.

Most recently, the US fund bid on Solvia Desarrollos Inmobiliarios’s developer. However, though the fund was a finalist in the bidding process, it lost out to Oaktree, which paid €880-million for the firm, including the company’s structure and landholdings.

Other international funds have been quicker to raise their games in Spain.  Lone Star acquired Neinor and eventually took it public. Castlelake created Aedas with a land bank acquired during the crisis and also took it public. Värde took over Aelca, Parquesol and Vía Célere.

Cerberus is aiming to build 3,000 homes a year, based on its ownership of Immoglaciar and other potential acquisitions. The latest possibility is Inmobiliaria Espacio, which the Villar Mir Group put up for sale two weeks ago.

Original Story: Cinco Días – Alfonso Simón Ruiz / Pablo Martín Simón

Adaptation/Translation: Richard D. K. Turner

Cerberus Extends €30.9-Million Loan to Optimum RE After Acquisition

24 September 2019 – The American private equity firm Cerberus, through its Irish subsidiary Promontoria Bravo, has granted a €30.9 million loan to the socimi Optimum RE. The unsecured loans were granted in two separate agreements worth 28.9 million euros and 1.9 million euros.

Optimum was able to substitute the new loans for a previous, secured loan worth 28.9 million euros. Promontoria Bravo acquired 99.4% of the socimi in September for €69 million.

Original Story: Eje Prime

Adaptation/Translation: Richard D. K. Turner

Cerberus Nears Sale of Haya Real Estate to Centricus

10 September 2019

The US-fund Cerberus is near to completing its planned sale of its servicer, Haya Real Estate. Centricus, a London-based fund backed by Softbank, is considered the leading contender to acquire the asset. Both firms declined to comment.

Market sources believe that the firms may finalise the transaction in the coming days. The amount of the sale partly depends on Haya’s renegotiation of its contract with Sareb. Cerberus had initially planned a stock market listing for its servicer, but doubts regarding that renegotiation led the US fund to shelve those plans.

The US fund then opted to sell the service, and in the early summer, Cerberus received three competing offers for Haya, estimated to be around ​​700 million euros, from doBank, Centerbridge and Centricus.

Original Story: La Información  – Pepe Bravo

Adaptation/Translation: Richard D. K. Turner