Haya to Sell €188M in Secured Loans from Sareb

19 February 2019 – Expansión

Yesterday, Haya Real Estate put up for sale a package of non-performing loans (NPLs) with real estate guarantees, owned by Sareb, worth €188 million. The portfolio, baptised Project Marconi, comprises loans with an average value of €5.7 million, which are backed by around 1,445 properties.

Original story: Expansión

Translation: Carmel Drake

The Funds Bidding for Sabadell’s RE Have Until 27 June to Submit Their Offers

24 June 2018 – La Vanguardia

The deadline for the finalist funds to submit their bids to be awarded Banco Sabadell’s four portfolios comprising problem assets, whose combined value amounts to almost €11 billion, will close definitively on Wednesday, 27 June, the date on which the entity will have to choose the winners, according to sources close to funds consulted by Europa Press.

The entity chaired by Josep Oliu is looking to divest its Challenger and Coliseum portfolios, which amount to around €7.5 billion and comprise foreclosed assets (REO) and Makalu and Galerna, worth €2.5 billion and €900 million, respectively, comprising non-performing loans (NPLs).

Nevertheless, according to explanations provided by market sources, Sabadell is only going to be able to deconsolidate the largest portfolio from its balance sheet this year, the so-called Challenger portfolio (worth around €5 billion). The others will have to wait as they need to receive the green light from the Deposit Guarantee Fund (FGD) since the properties that constitute them proceed from the former CAM – Caja de Ahorros del Mediterráneo – a process that could take months (…).

The main international funds specialising in distressed debt and assets in risk of default are bidding for these portfolios. They are proposing significant discounts to their nominal values and their recoveries depends on the guarantee or collateral.

The strong investor appetite for Sabadell’s toxic property comes in a context in which political uncertainty is continuing to rage on the Old Continent. Cerberus, Blackstone, Lone Star and Oaktree are some of the finalist funds to be awarded the first two portfolios, whilst Deutsche Bank, Bain Capital, Oaktree and CPPIB are going to compete for the assets in the other two, according to sources at the funds and banks, speaking to ‘El Confidencial’ and ‘Vozpópuli’.

Significant reduction in real estate exposure

With the deconsolidation of its largest portfolio alone, Sabadell’s real estate exposure would fall below the €10 billion threshold, whilst the sale of all four portfolios would reduce its balance to around €4 billion, according to the accounts published by the bank for the first quarter of 2018. Thus, once the transactions have been completed, Sabadell’s accounts will have a much healthier balance sheet.

As at 31 March 2018, the entity had €14.9 billion in problem assets, which represented a decrease of 17.6% compared to the end of the same period a year earlier, when the figure amounted to €18.1 billion. The coverage ratio of the problem assets amounted to 55.2%, after applying IFRS 9, with a doubtful coverage ratio of 56.6% and a foreclosed asset coverage ratio of 53.7%. Similarly, the ratio of net problem assets over total assets stood at 3.1% (…).

A source of liquidity for the banks

In this way, Banco Sabadell is following in the footsteps of other entities such as Santander, BBVA and CaixaBank in the reduction of its heavy backpack of toxic assets, which the financial crisis left on their balance sheets (…).

Original story: La Vanguardia 

Translation: Carmel Drake

Popular’s €10bn Portfolio Sale Was The Largest RE Operation in the World in 2017

26 March 2018 – Cinco Días

Spain was the setting for the largest real estate operation in the world in 2017. The stars were Santander, as the vendor, and Blackstone, as the buyer. The object of desire was the property portfolio that took down Popular. The price: no less than a valuation of €10 billion.

The purchase of Popular’s property portfolio (containing real estate assets and loans with real estate collateral) led last year’s ranking of the largest operations in the sector involving a single asset or portfolio, compiled by Real Capital Analytics (RCA). Of the largest transactions, those undertaken in China stand out in particular, as well as a handful of deals completed in the United Kingdom. The classification excludes operations involving the purchase of companies.

The operation to sell Popular’s portfolio, announced in August, after Santander took control of the entity in June, was structured into a company worth €10 billion, in which Blackstone controls 51% and the rest remained in the hands of the bank chaired by Ana Botín.

Following that purchase, as well as others, such as Catalunya Caixa’s portfolio, Blackstone is now one of the largest owners of real estate assets in Spain. Another major operation of this nature was closed a few months later when Cerberus purchased 80% of BBVA’s real estate portfolio worth €5.5 billion (…).

In total, around the world, last year, deals worth USD 143.2 billion were closed, which represented an increase of 14% compared to the previous year.

China starred in the majority of the largest operations last year. China Vanke acquired an enormous land portfolio for real estate developments in Cantón for €7.1 billion, which constituted the second largest transaction of 2017. The next largest sale in the Asian country was the purchase of part of an office and retail development in Shenzhen by the company Kingboard, which is headquartered in Hong Kong (…).

In Europe and the USA, the focus was on alternative investments, such as student halls of residence, hospitals and logistics warehouses.

In fact, the third largest transaction in the world last year involved an alternative investment. Specifically, the sale of a stake in a portfolio of hospitals and 200 nursing homes in the USA and UK, which was purchased by the Chinese insurance company Taikang Insurance Group.

In Europe, in addition to Popular’s portfolio, the next largest deal saw the sale of the Bluewater shopping centre in the United Kingdom, worth €2.1 billion, in which Royal London Mutual Assurance acquired a stake.

In terms of office buildings, the sale of the Leadenhall Building in London, popularly known as the “cheese grater”, also stood out; it was acquired by the investment group CC Land, from Hong Kong, for more than €1.3 billion.

Typically, the large buyers include the largest investment managers, such as Blackstone, Brookfield, Deka, THI, Axa, Invesco and Morgan Stanley, whose clients tend to include sovereign funds from Norway and Abu Dhabi, as well as universities (for example, the Harvard investment fund) and workers’ unions or pension funds (German doctors, public sector workers from Korea and Ontario…).

In terms of 2018, for example in Europe, Borja Sierra, Executive Vice-President of Savills Aguirre Newman, believes that the clearest trend will be investment in the residential rental sector as a form of institutionalised real estate investment. “With the scenario of rising interest rates and measures from Trump that favour the renewal of infrastructure in the USA, I think that we will see a migration towards infrastructure funds, a move that will somewhat reduce investment pressure on the real estate sector. Nevertheless, the year has started with volumes that exceed those recorded in 2017, and so we expect a good year”.

Original story: Cinco Días (by Alfonso Simón Ruiz)

Translation: Carmel Drake

VBARE Secures an Additional €1.5M to Finance New Investments

2 February 2018 – Press Release

The Socimi has signed three mortgage loans to finance its on-going investments in Madrid, as well as in Spain’s main capitals. 

VBARE Iberian Properties Socimi (VBARE) has raised financing for its next round of investments after signing three mortgage loans amounting to almost €1.5 million (€1,491,786.69) in total and secured by some of the company’s assets in Madrid.

The first loan, from Banco de Crédito Cooperativo, dated 29 January, is secured by 15 assets located in different parts of Madrid and amounts to €675,786.69. The other two have been signed with Banco Sabadell and are secured by two other buildings, also located in Madrid, for a combined sum of €816,000.

According to VBARE’s Director General, Fabrizio Agrimi (pictured above), the Socimi finds itself in a time of great investor appetite, “we are analysing several investment opportunities, not only in Madrid but also in the main Spanish cities”.

Achieving an initial net return of at least 4% without leverage and a discount on the acquisition price of 4% over the market value are the criteria that the Socimi has established in its investment strategy for new assets.

VBARE is a real estate investment vehicle specialising in the acquisition and management of residential assets for rental. It operates under the special Socimi regime and has been listed on the MAB since 23 December 2016 (…).

VBARE currently has a portfolio comprising 197 assets. To date, the company has analysed assets worth more than €500 million and is constantly on the lookout for new business opportunities that fit with its investment policy.

Original story: Press Release

Translation: Carmel Drake

Sareb Sold Loans Worth €186M Online in 2017

11 January 2018 – Expansión

Sareb sold loans with a nominal value of €186 million through its online channel in 2017, according to a statement issued by the entity.

Last summer, the so-called bad bank, launched an initiative to sell non-performing loans through its website, whilst three of the servicers (Haya, Altamira and Solvia) implemented a similar plan through their respective “shop windows”.

By the end of 2017, Sareb had closed agreements to sell loans amounting to €35 million through its own online channel, plus €151 million in loans that the company sold through specialist managers.

In a pilot phase in July 2017, Sareb published a preliminary batch of non-performing loans on its website for an aggregated amount of €400 million and invited 30 professional investors to participate. It received non-binding offers for all of the loans up for sale and, in the end, 70% were converted into binding offers.

Now that the channel has been tested, Sareb has published a new batch of loans amounting to €550 million, with an average value of €13 million. The company hopes to receive non-binding offers from investors already registered on the platform during January.

During 2018, Sareb is expected to launch five more sales processes through the platform, of at least €500 million each, aimed at investors and professionals in the sector, as reported last summer.

In term of Altamira, Haya and Solvia’s shop window activities, almost 95% of the loans sold are backed by finished homes or land located in Cataluña, Andalucía, Madrid, the Community of Valencia and the Balearic Islands. The other loans are secured by offices in Madrid and hotel establishments in Gerona.

As at June 2017, the Spanish financial system accumulated non-performing loans amounting to €127.31 billion, equivalent to 16% of the total figure for the Eurozone, which amounted to €794.1 billion, according to data from the European Central Bank (ECB).

For the President of Sareb, Jaime Echegoyen (pictured above), the company has “the obligation” to innovate and contribute to boosting these types of transactions through the creation of new channels “accessing new kinds of investors and giving these assets more transparency”.

Original story: Expansión

Translation: Carmel Drake

Sareb Sells €150M NPL Portfolio to Oaktree

30 December 2017 – Expansión

The bad bank has closed the sale of several non-performing loan portfolios during the last few days of the year. A week ago, it announced the sale of a package of loans secured by properties to Deutsche Bank, whose nominal value amounted to €375 million. That was its largest sale of the year.

And yesterday, Sareb reported that it has reached an agreement to sell the so-called Project Tambo to the US fund Oaktree for a nominal value of €150 million. The debt is secured by residential assets and land located in the Balearic Islands, the Canary Islands, Cataluña, the Community of Madrid, País Vasco and the Community of Valencia.

Sareb has been advised by CBRE and Ashurst in this process, whilst Oaktree has awarded its mandate to JLL and Herbert Smith Freehills.

The bad bank, where the toxic assets of the rescued savings banks were parked, closed 2017 with a lower volume of transactions of this kind compared to 2016. Nevertheless, it has launched a trial to test an online sales channel, which may allow it to intensify its activity over the next few months.

Having said that, 80% of the revenues that Sareb obtains do not proceed from the institutional market, but rather from the direct sale of properties in the retail market.

In five years, Sareb has divested 27% of the 200,000 assets that it received initially and has repaid debt amounting to almost €13 billion. It has ten years left to liquidate the rest of its balance sheet. The entity’s cumulative losses amount to €781 million.

Original story: Expansión (by R. L.)

Translation: Carmel Drake

Sareb Puts Spain’s Largest Ever NPL Portfolio Up For Sale

7 November 2017 – Voz Pópuli

Sareb wants to star in the largest sale to date of non-performing loans in Spain. The company chaired by Jaime Echegoyen has put a portfolio of unpaid loans worth €2,600 million up for sale, according to financial sources consulted by Vozpópuli. It hopes to sell the portfolio before the end of the year and since it contains NPLs that are recognised off-balance sheet, all of the consideration paid will correspond to profits.

This operation has been baptised as Project Dune and is being advised by KPMG. Until now, the largest sale of an unsecured non-performing loan portfolio was completed by BBVA in 2014, when it sold a portfolio worth €1,700 million to Deutsche Bank.

Non-performing loans are credits that have been written off by the banks, which remove them from their balance sheets after recognising 100% provisions against them. In the case of Sareb, they are what is known in the market as mortgage tails: essentially, they are loans that remained uncollected following the execution of a real estate loan. These loans are purchased by opportunistic funds at significant discounts, of between 95% and 97%, which try to recover the maximum amount by taking the debtors to court. Since they are fully provisioned, the entire amount that Sareb receives from this sale will be recognised as profits.

Project Dune actually comprises two sub-portfolios: Pilat, containing 2,261 unsecured non-performing loans to 1,500 small- and medium-sized property developers, worth €2,442 million; and Kirbus, containing 115 loans secured by real estate, with a combined nominal value of €176 million.

In this way, the second sub-portfolio has almost 1,000 properties as collateral, of which around half are apartments, located primarily in Barcelona, A Corñua and Madrid. Half of the Dune portfolio is located in Cataluña, the Community of Valencia and Aragón.

On the basis of the prices that tend to be paid in this market, Sareb could end up generating revenues/gross profits of between €125 million and €175 million from this sale, depending on the degree of interest that the portfolio sparks amongst the funds and the level of competition between them.

Project Dune is not the only deal that Sareb has underway since it also has other portfolios worth more than €1,000 million on the market. The largest process currently in progress is known as Project Inés, containing €400 million, whose purchase is being finalised by Deutsche Bank. The bad bank typically uses these types of operations towards the end of the year to balance its budget and generate higher revenues to allow it to pay off some of its debt.

This sale is being coordinated by the prestigious portfolio team at KPMG, led by Carlos Rubí. Most of the team came from PwC and joined the firm in 2014.

Original story: Voz Pópuli (by Jorge Zuloaga)

Translation: Carmel Drake

Cerberus In Exclusive Negotiations With BBVA To Acquire €2,000M Portfolio

22 September 2017 – El Confidencial

The operation in question is called Project Sena and it is the most important portfolio that BBVA has put on the market to date. With a volume of toxic real estate assets worth €2,000 million, primarily comprising NPLs backed by residential collateral, the entity chaired by Francisco González is holding exclusive conversations with Cerberus, according to several sources in the know. Both the bank and the fund have declined to comment.

Nevertheless, the US fund’s appetite goes much further and extends to include the real estate company Anida, which could end up forming part of the transaction as well. That would result in the second largest real estate divestment to be undertaken by a Spanish entity this year, following the sale of €30,000 million in toxic assets agreed between the new Santander-Popular and Blackstone.

The negotiations between Cerberus and BBVA date back to last summer and are currently at a critical point, in terms of tilting the balance one way or the other. Options on the table include Cerberus acquiring Sena on its own, adding Anida into the mix, or acquiring the former and entering the process to compete for the latter, a decision that could be taken at the next meeting between the entity’s Board of Directors.

As El Confidencial revealed, the idea has been floated at La Vela (BBVA’s headquarters in Madrid) of selling Anida to accelerate the real estate unblocking that the Bank of Spain itself is encouraging all the entities to undertake. In fact, BBVA has engaged PwC to advise it on the operation, and it is open to receiving different offers.

In its favour, Cerberus has the advantage of being in pole position to acquire Sena, a card that it wants to play in its favour to also bid for Anida. Nevertheless, other investment giants, such as Lone Star and Apollo, may also be interested in acquiring the real estate firm, a giant with gross assets of more than €5,000 million and the heir, along with others, of the former fund BBVA Propiedad, which the bank practically rescued at the end of 2008, when the first signs of the crisis emerged.

The net real estate exposure on BBVA’s balance sheet amounts to €8,750 million, according to the bank’s most recent half-yearly accounts, thanks to high coverage levels, which amount to 57% on average, one of the most conservative figures in the sector.

With a strategy clearly aimed at divesting real estate, in the last year, BBVA has undertaken several major operations, such as the sale of its Boston and Buffalo portfolios, the transfer of 1,500 homes to Testa, whose gross value amounts to €485 million and the transfer of land worth €431 million to Metrovacesa. Moreover, alongside Santander, BBVA is a shareholder of Merlin Properties, the largest Socimi in Spain.

After all these movements, the largest pawn currently in play is Anida, which also includes a property developer division, Anida Desarrollos Inmobiliarios, and several subsidiaries that the bank has been gathering up under the same umbrella, such as Anida Operaciones Singulares and subsidiaries in Mexico and Portugal.

In theory, the overseas units would be left outside of the real estate company sales process that is currently on the table, an operation whose final outcome is regarded in the market with as much expectation as concern, given that in the past, the entity has received several expressions of interest for Anida that have never ended up materialising.

But now the panorama has changed, given that the operation between Santander and Blackstone has put pressure on the rest of the sector to make similar moves, and the entities are increasingly more inclined to accelerate the divestment of their real estate.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

Bain Buys c. €1,000M In NPLs From Ibercaja & Caixa Geral

13 July 2017 – El Confidencial

Bain Capital Credit has set its sights on Spain and Portugal and has purchased a total of €1,000 million in non-performing loans from Ibercaja and Caixa Geral. On Wednesday, the entity announced the acquisition of a portfolio of loans from Banco Ibercaja, which constituted the ninth acquisition of a portfolio in Spain by Bain Capital since 2014. The portfolio has a nominal value of €489 million and contains non-performing bilateral and low-yield loans with first ranking lien over property developer assets. The collateral behind the loans primarily comprises plots of land in the most reputed cities in the country for the development of residential properties and by real estate assets.

“We are excited about the opportunity to strengthen our position in the property development sector through this investment”, said the Director and Head of European Business at Bain Capital Credit, Alon Avner. Similarly, the firm has said that Spain is one of the most attractive markets in Europe in terms of unsecured non-performing loans and real estate assets.

In addition, for the acquisition to be successful, Bain Capital has engaged Hipoges and Altamira Asset Management, both loan management specialists; Basico, Deloitte Real Estate and JLL, as providers of real estate valuations; and Allen & Overy, as legal advisors.

On a roll with its European expansion

With the aim of strengthening its presence in the European markets, the US private equity fund has also just made its debut in Portugal. Its first operation there has involved the purchase of a portfolio of non-performing and low-yield loans with a total outstanding balance of around €476 million, as well as some recovered real estate from Caixa Geral de Depósitos, the most important bank in Portugal in terms of assets.

The offer has come after the Portuguese Government allocated €2,500 million to these types of assets as a stimulus measure. “We see great potential in Portugal, especially in the markets for real estate and low yield assets. We hope to close more operations in the future”, said the Director and Head of the Real Estate and NPL business for Europe, Fabio Longo.

The portfolio mainly consists of bilateral loans, backed by real estate guarantees, to small and medium-sized companies, as well as to larger companies. The loan guarantees span a wide range of asset classes, such as residential complexes, both finished and in progress, industrial and tertiary real estate assets, and land. “This investment demonstrates our expertise when it comes to carrying out complex transactions that require dedication and close collaboration with the vendor”, added Longo.

The following players participated in the operations: Hipoges and Finangest, as loan management specialists; Aura REE, JLL and CBRE, as suppliers of real estate valuations; and Uría Menéndez Proença de Carvalho, a local law firm.

Original story: El Confidencial (by Carmen Alba)

Translation: Carmel Drake

Blackstone Builds Rental Home Giant In Spain

18 May 2017 – Cinco Días

The fund Blackstone is the largest property owner in the world and has been backing real estate Spain for a while now. And, it is going to continue to do so in the short to medium term. For the time being, the fund’s plans involve becoming a giant in the rental housing segment and it is already starting to show its investment strategy through several companies, including three new Socimis.

Blackstone’s first major step was to create the servicer Anticipa Real Estate, under the structure of the former entity Cataluña Caixa Inmobiliaria. This asset management platform purchased 40,000 mortgages from the extinct Catalan entity for €4,123 million in 2015. Since then, it has continued acquiring these kinds of mortgage portfolios, to accumulate a total investment to date of almost €7,000 million.

The latest acquisitions made by Blackstone – which is headquartered in New York – have included a €400 million portfolio of loans backed by property developer collateral and another portfolio from BBVA comprising 3,500 properties, for around €300 million.

This entire portfolio of mortgage debt and properties is managed by Anticipa, a company that is led by its CEO, Eduard Mendiluce, a veteran director in the sector. (…).

The work that the servicer performs for Blackstone involves managing the loans granted by banks to individuals and property developers. In many cases, that task ends with the “dación en pago” or foreclosure of the property or development, due to non-payment. The company says that it treats each client on a case by case basis, and the process often means it has to accept a discount on the debt.

Of the portfolios acquired from banks, “daciones en pago” and foreclosures, Anticipa already owns 12,000 properties, which are leased out (in around 75% of cases) and put up for sale. “The idea is for it to become one of the large owners of rental housing in Spain”, explains a spokesperson.

The opportunistic fund – which purchases problem assets at a discount – is planning to remain in the Spanish market beyond the short term, and has absolutely no interest in selling its businesses within the next 5-7 years, but rather intends to benefit from the upwards trend in property.

To create the residential giant, the US firm has started to create vehicles to which it will transfer properties for rent. The first of these companies is Albirana Properties, a Socimi that started to trade on the Alternative Investment Market in March. That listed investment company, which benefits from certain tax advantages, already manages 5,000 homes.

But it is only the first to be listed. Other Socimis, namely Pegarena and Tourmalet, which have already been constituted and are already owned by several Blackstone funds, will follow. These firms, in turn, operate using Anticipa as their manager. (…).

Packaging up these homes into different companies will facilitate the sale of those companies in the future to various interested parties.

Blackstone decided to back the rental sector rather than the sales market at a time of change in the type of demand, according to experts in the sector. In particular, the generation of millennials, for cultural reasons – are more inclined to live without the tie of a mortgage – and, above all, the difficulties being faced by young people to obtain loans given the job insecurity.

Unlike other Socimis that specialise in rental housing, the management of assets by Albirana is more complex, given that its properties are relatively scattered geographically, as they proceed from individual mortgages. Typically these companies opt to manage entire buildings, but Blackstone’s company has specialised in what is known as granular management.

Currently, the majority of these properties are located in Cataluña. They are followed – at some distance – by homes in Madrid, Comunidad Valenciana and Andalucía.

Original story: Cinco Días (by Alfonso Simón Ruiz)

Translation: Carmel Drake