Sareb Seeks to Integrate its Residential Business into a Listed Property Developer

22 February 2018 – Cinco Días

Sareb has started on a road that it has not yet explored in its short life. The so-called bad bank is evaluating the possibility of entering the residential property development business with a bang, as it plans to team up with a partner in the sector, in exchange for providing land to a joint venture company. That is according to several sources familiar with the process that has reportedly just started.

According to the sources, Sareb has started a process to divest land and developments in progress for around €800 million, which would result in the largest transaction in the history of the entity.

But on this occasion, the managers of Sareb are seeking to use a new formula, which would involve it contributing land to the share capital of a large property developer, be it one that is already listed or one that is considering its market debut. In return, it would enter the residential property development business and benefit from the high profit margin generated by the house construction business.

The operation is in its initial phases and several sources explain that the size of the land portfolio that Sareb wants to put up for sale may still vary, as may the formula for entering the share capital of the real estate company that ends up winning the tender. Sources at the entity declined to comment.

In any case, Sareb would enter the share capital of the property developer with the final aim of the joint venture making its debut on the stock market, which would allow the bad bank to easily divest its stake in the market in the future, in the same way, for example, that Santander and BBVA have done in the case of Metrovacesa’s return to the stock market.

The intention of the entity is to enter as a minority shareholder, ceding the management, of one of the large real estate companies that are currently starring in the new upward cycle in terms of residential development.

This would be a very similar operation to the one carried out by Santander and BBVA with Metrovacesa. In recent years, the banks have been increasing the property developer’s portfolio by contributing land from their balance sheets in exchange for stakes in the company’s share capital. For example, in July last year, the two banks injected land worth €1.1 billion into Metrovacesa through a non-monetary capital increase.

According to the sources, entering the share capital of a property developer would allow Sareb to benefit from the upward cycle in the housing sector since that business generates high profit margins on the construction of homes, much greater than those generated on the simple sale of land portfolios.

The idea could be summarised by the integration of all of Sareb’s residential and land development business by a property developer, to gain a long-term partner.

Only a limited number of candidates have been invited to participate in the process to become Sareb’s strategic ally, around six potential partners, according to the sources.

The perimeter of the assets, worth around €800 million, would make the operation the largest undertaken by the entity chaired by Jaime Echegoyen (pictured above). Until now, the largest direct sale was the so-called Eloise portfolio, which was acquired by Goldman Sachs, for €553 million. Initially, Sareb even considered a larger contribution of land, worth up to €1.2 billion, but the experts consider that such a volume would be too difficult for any partner to digest.

In fact, the candidates to integrate Sareb’s assets are very limited because of the volume of the operation. All sights are set on the large listed companies in the sector, such as Neinor, Aedas and Metrovacesa, as well as on the other property developers that are backed by international funds, which are not currently trading on the stock market. In the case of the latter, the formula whereby that company ends up on the market would have to be analysed to facilitate the liquidity that would allow Sareb to divest over the medium term. In that case, the list is much more extensive: Aelca (Värde), Vía Célere (Värde), Gestilar (Morgan Stanley), Q21 Real Estate (Baupost), Inmoglacier (Cerberus), Habitat (Bain Capital) and ASG Iberia (Activum).

In terms of the timings fixed by the entity, the sources indicate that the operation will be closed before the summer, although they acknowledge the difficulty of the process to complete the finishing touches of the negotiations to find a strategic partner.

According to sources in the sector, the timings may also be determined by Sareb’s intention to pre-empt other major land operations that are expected to take place over the next few months.

Such is the case of Blackstone, which acquired 51% of Popular’s property portfolio, assets worth around €10 billion. Cerberus is also expected to be active in the market, through Haya Real Estate and Anida – after acquiring 80% of BBVA’s portfolio worth €5 billion – and, finally, Bain Capital, with Liberbank’s property.

Original story: Cinco Días (by Alfonso Simón Ruiz)

Translation: Carmel Drake

Dos Puntos’ Owners To Contribute €640M In Merger With Vía Célere

11 April 2017 – Expansión

The merger between Dos Puntos (the property developer backed by the fund Värde Partners) and Vía Célere (created by Juan Antonio Gómez-Pintado in 2007) is facing a key milestone today. The shareholders of Dos Puntos will meet today for an extraordinary meeting to discuss the departure of the incumbent President, Javier Eguidazu, and the appointment of Gómez-Pintado as the new Chief Executive. The agenda for the meeting also includes the merger of both companies, which will include a capital increase, through monetary contributions. The owners of the new Vía Célere will contribute €640 million.

Original story: Expansión

Translation: Carmel Drake

Kutxabank Stirs Up The Mortgage War With A 2.5% Fixed Rate Product

12 March 2015 – Expansión

Kutxabank launches one of the best offers in the market / The Basque entity enters the battle started by Sabadell and CaixaBank and seeks to foster loyalty from its customers.

Kutxabank continues to embroil itself in the mortgage war that has been unleashed in the Spanish financial sector, which is showing the first signs of economic recovery. Two months after the launch of mortgages offering rates of Euribor + 1%, the bank comprising the former Basque savings banks BBK, Kutxa and Vital, has now launched one of the most attractive fixed rate offers in the market: a 30-year 2.50% fixed rate product.

According to the entity, its proposal is the “most attractive” in the market because, not only is it offering a reduced interest rate, also this rate will remain unchanged throughout the life of the loan. The nominal interest rate (‘tasa nominal’ or TIN) of 2.50% represents an annual percentage rate (APR, ‘tipo annual equivalente’ or TAE) of 3.28%, according to the new calculation rules, which include various expenses.

Currently, several institutions are embroiled in the fixed-rate mortgage war. Sabadell is offering a nominal fixed rate mortgage at 3.25% (4.18% APR) over thirty years and at 2.90% over twenty years, and CaixaBank has loans at nominal rates of between 2.50% and 3%, depending on the other products held by the customer, and with no set-up fees. Other banks, such as Bankinter, Bankia and BMN are also offering fixed rate mortgages with interest rates of between 3.4% and 4.6%.

Just like with its variable rate mortgages, Kutxabank is looking to foster loyalty from its customers and achieve maximum links (with them) through this aggressive offer . As such, the entity requires them to have their salaries, which must amount to at least €3,000/month, paid directly into their accounts; make payments with the bank’s cards amounting to more than €3,600/year; make contributions to pension plans or social welfare institutions of more than €2,000/year, and take out life assurance contracts with Kutxabank. The set-up fees for the mortgage will be 0.25%, with a minimum charge of €400.

According to the Basque entity, fixed rate mortgages “provide greater security and stability” for customers, as they allow them to know what their instalments will be, at all times, regardless of (variations in) interest rates (in the wider market).

Kutxabank has a 35% share of the mortgage market in the País Vasco and almost 70% of its total loan book is concentrated there, amounting to €31,000 million. The bank is working on the assumption that the mortgage market is in full recovery, after increasing its home loans by 24% in 2014.

Original story: Expansión (by M. Á. F.)

Translation: Carmel Drake