Tag: CPPIB

BBVA Sells its Last Large Problem Portfolio to CPPIB

17 December 2018 – El Confidencial

The Canadian fund CPPIB has been awarded BBVA’s last major portfolio of problem assets. The investor, which manages the money of the public pensions in the North American country, is negotiating the final details of its purchase of €2.5 billion in unpaid real estate loans from the Spanish entity, according to financial sources consulted by El Confidencial. BBVA declined to comment.

The sale, framed as Project Ánfora, is going to close within the next few days.

CPPIB has won the bid, fighting off competition from two major US investors: Cerberus and Lone Star. The auction has been coordinated by Alantra and, according to average market prices, must have been closed for a price of around €1 billion.

For BBVA, this same represents almost the conclusion of the clean up of its real estate inheritance. Together with Project Ánfora, the entity, which is still chaired by Francisco González, agreed to sell €12-13 billion in property to Cerberus (Project Marina) a year ago. The final details of that operation are still being closed with the Deposit Guarantee Fund (FGD).

Before the sale of Ánfora and Marina, BBVA had a net real estate exposure of €5.5 billion, based on data as at September 2018. The aim is for the real estate inheritance to be reduced to almost zero by the end of the year.

The Ánfora portfolio also contains refinanced loans amounting to €900 million, a new type of asset in this type of process.

For CPPIB, this is the second batch of problem assets that it has purchased from BBVA this year. It already acquired Project Sintra, containing €1 billion in unpaid loans to property developers.

The Canadian fund broke into Spain a few years ago with the acquisition of Altamira, together with Apollo and the ADIA sovereign fund, the main investor vehicle of Abu Dhabi. CPPIB’s interest in Spanish real estate means that it cannot be ruled out that it will end up being the buyer of Altamira following the current sales process. Large vehicles such as the Canadian one use alternative assets such as properties to diversify their portfolios and reduce their dependence on stock market and bonds.

Original story: El Confidencial (by Jorge Zuloaga)

Translation: Carmel Drake

Project Ánfora: BBVA Studies €1bn+ Offers from Cerberus, CPPIB & Lone Star

19 November 2018 – Voz Pópuli

BBVA has chosen the three finalists who are going to compete for the largest portfolio of assets currently on the market, Project Ánfora. The entity is holding negotiations with three major North American funds, Cerberus, CPPIB and Lone Star, according to financial sources consulted by Voz Pópuli.

Up for grabs: a portfolio a real estate loans worth €2.5 billion. Some of the offers exceed €1 billion, according to the same sources.

BBVA expects to conclude the process before the end of the year to whereby end 2018 in the best way possible. It will be the last set of annual accounts with Francisco González as President, and at the current pace, they could be closed with one of the largest profits in the group’s history. The entity earned €4.3 billion to September; its record annual profit to date is €6.1 billion, which is registered in 2007.

In addition to Project Ánfora, BBVA has just closed Project Marina: the sale of its real estate arm Anida and of assets worth €13 billion to Cerberus. Nevertheless, the transfer of a large part of those assets, which proceeded from Unnim, is pending authorisation by the Deposit Guarantee Fund (FGD).

Property to zero

Following those two operations, and others in the past – such as the sale of its stake in Testa – the property left on BBVA’s balance sheet is going to almost immaterial. With that, the CEO, Carlos Torres, hopes that the real estate unit will stop weighing down on the group’s income statement from 2019 onwards.

The favourite of the candidates to purchase the €2.5 billion portfolio is Cerberus. Not only because of the appetite that the US fund has been showing regarding the purchase of real estate assets in Spain, but also because of the interest that it will have in Divarian, the new Anida, continuing to manage the assets.

CPPIB (Canada Pension Plan Investment Board) is the other entity that is backing the Spanish market most heavily, through its stake in Altamira and the acquisition of portfolios from Sabadell and BBVA.

Meanwhile, Lone Star has started investing more money in Spain following the changes in its management team and because it wants to gain volume to make its acquisition of CaixaBank’s property profitable.

Original story: Voz Pópuli (by Jorge Zuloaga)

Translation: Carmel Drake

CPPIB, doBank & Haya Compete for Altamira

14 November 2018 – Cinco Días

The sector of real estate servicers for assets proceeding from the banks is in flux. The latest process in the market to catch the attention of major funds and operators in the sector involves Altamira, the firm controlled by the manager Apollo, which owns 85% of the company, and Santander (15%). The first entity to make a major bid has been its competitor Haya Real Estate (owned by Cerberus), as published by Cinco Días on 8 November. That offer has now been joined by one from CPPIB, the Canadian Pensions Fund and one of the largest investors in the world.

Another player interested in Altamira Asset Management, according to financial sources, is the Italian firm doBank, formerly UniCredit Credit Management. That listed entity is controlled by Fortress. It is the largest doubtful loan manager in the transalpine country. Meanwhile, Canada Pension Plan Investment Board (CPPIB) is a fund that manages the pensions of 20 million Canadian people, with assets worth €245.7 billion.

Altamira was created by Santander as a servicer for its toxic assets linked to property. In 2013, the bank sold 85% of the entity to the US fund for just under €700 million. Five years later, the manager from New York, which has not managed to star in any of the major bank portfolio purchases, has decided to exit the company. The amount of the operation, a sales process that has been entrusted to Goldman Sachs, is expected to exceed €600 million.

Altamira has become one of the large managers of financial and real estate assets in Spain, with a total volume of assets under management of €53.8 billion compared with €26 billion at the end of 2014, and with more than 82,000 properties, on behalf of around fifteen clients.

In recent months, there has been significant movement in the shareholders of these servicers, in large part linked to the sale of the bank portfolios. If Cerberus, through Haya, manages to acquire Altamira, it will be the third entity that the US fund controls, after Haya and Divarian (formerly Anida, linked to BBVA). The idea of the fund is to integrate it with Haya to relaunch that firm’s debut on the stock market, as reported by this newspaper. Blackstone, in turn, controls Aliseda (previously owned by Popular) and Anticipa. Lone Star acquired Servihabitat (formerly owned by La Caixa) this summer, and Sabadell has also put Solvia up for sale, another servicer that also interests Cerberus.

Original story: Cinco Días (by Alfonso Simón Ruiz & Pablo Martín Simón)

Translation: Carmel Drake

Apollo, CPPIB & ADIA Are Open to Offers for Altamira

12 July 2018 – Voz Pópuli

The ownership of the real estate company Altamira may change hands over the coming months. The company controlled by the fund Apollo has hung up the “For Sale” sign after the refinancing and restructuring of its contract with Santander, signed just a few days ago, according to financial sources consulted by Voz Pópuli.

At least 85% of the real estate firm will go on the market. The servicer currently manages assets worth €54 billion. The US fund Apollo is the entity that controls the majority stake, whilst its ownership is shared equally with two other partners: the largest Canadian fund, CPPIB (Canada Pension Plan Investment Board); and the main Abu Dhabi investment fund, the ADIA (Abu Dhabi Investment Authority) sovereign fund.

Each of them controls 28.3% of Altamira, just like Apollo, although it is the latter who leads the real estate company and chairs its Board.

Divestment

After four and a half years of investment, the main shareholders have decided that now is the right time to sell, given the strong performance of the real estate market and the appetite from large investors to enter the business.

In fact, sources consulted indicate that several international and Spanish investors have already approached Altamira. One of the candidates is Haya Real Estate, a similar platform, owned by Cerberus, which is interested in growing its business ahead of a potential stock market debut.

Another possibility being rumoured in the market is that CPPIB itself may purchase the 56% stake in Altamira currently owned by Apollo and the Abu Dhabi sovereign fund. The Canadian fund entered the market for the acquisition of toxic asset portfolios from the banks last year with a bang, by closing an operation with Sabadell; and this year, it has signed another deal with BBVA.

The possible sale of Altamira comes after the refinancing of the real estate firm agreed with the banks and the renegotiation of the contract with Santander. Thanks to this operation, the shareholders of Altamira are now going to share out a €200 million dividend, according to El Confidencial, which means that the numbers already add up for the funds.

The relationship between Apollo and Santander

Apollo and its two partners already tried to exit Altamira two years ago but failed to reach an agreement with Santander, which made a low offer that was not accepted. Since then, the real estate firm has pushed ahead with its own internationalisation by branching out into Portugal and Cyprus.

Original story: Voz Pópuli (by Jorge Zuloaga)

Translation: Carmel Drake

Sabadell Receives 7 Offers to Liquidate its Doubtful Debt

28 June 2018 – Expansión

In the end, seven international funds have presented offers to Banco Sabadell to be awarded one or more of the four portfolios that the entity has put on the market this year to liquidate almost all of its problem asset balance. The funds in question are Cerberus, Lone Star, Blackstone, Oaktree, Deutsche Bank, Bain Capital and CPPIB, although not all of them have bid for all of the assets, given that three of the funds are only interested in the foreclosed properties and the four others only want to purchase the non-performing loans (NPLs).

On the advice of KPMG and Alantra, Sabadell has set itself the objective of divesting toxic assets worth €10.8 billion this month, before the summer. That figure is equivalent to 72% of the bank’s total problem assets, which amounted to €14.9 billion at the end of the first quarter. Of that total figure, €7.5 billion are doubtful balances and €7.4 billion are foreclosed.

This volume of non-performing assets, which is weighing down on the entity’s balance sheet, has been packaged into four portfolios called Challenger (€5 billion), Coliseum (€2.5 billion), Makalu (€2.4 billion) and Galerna (€900 million). Just over half, €5.8 billion, are assets inherited from the purchase of CAM, and, as such, they form part of the Asset Protection Scheme (EPA). As a result, the divestment of three of the portfolios (Coliseum, Galerna and Makalu) must first be approved by the Deposit Guarantee Fund (FGD), which is the entity that will cover 80% of the losses generated by those protected portfolios.

Original story: Expansión (by Sergi Saborit)

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

BBVA Sells €1-Billion Portfolio of Development Loans to Canadian Fund

16 June 2018

The bank’s real estate exposure in Spain will fall to almost nil by the end of this year, after having been reduced by some 21 billion euros over the last two years.

BBVA is taking its last steps in its quest to eliminate the risk stemming from the toxic assets it inherited from the swift end of the real estate bubble. Yesterday, the bank finalised the sale of a portfolio of loans to developers valued at approximately 1 billion euros to the Canadian pension fund CPPIB, sources in the financial industry stated.

It is the largest sale of a specialised portfolio of loans to developers in the Spanish market. The developments included in the transaction, baptised Sintra, can be found throughout Spain.

The financial institution had been probing the interest of opportunistic funds since the end of 2017, looking to rid itself of a portfolio valued at a gross amount of about 1.5 billion euros, as reported by Expansión. Large funds, such as Lone Star, Blackstone and Apollo, were believed to have been interested in such credits, which are tied to real assets.

PwC advised the bank on the transaction. Official sources at BBVA declined to comment. With this latest sale, BBVA will reduce its exposure to the real estate sector to almost nothing. Pressure from national regulators and the need to free up provisions added to the bank’s efforts to sell off the toxic assets.

Early success

BBVA’s gross exposure to real estate stood at €15.352 billion as of March. Taking into account the sale to the Canadian pension fund and a separate transfer of assets to a company controlled by the fund Cerberus, the bank’s risk linked to property will be reduced to just €1.352 billion. That is €20.783 billion less than at the end of 2016.

The bank will thus achieve its goal of reducing its real estate exposure almost entirely a year and a half ahead of schedule.

BBVA has been one of the most active financial institutions in real estate sales since the beginning of 2017. The most relevant transaction was the bank’s agreement with the American fund Cerberus to create a joint venture in Spain. The operation was negotiated last November and is expected to be finalised in September.

The real estate assets covered in the agreement include some 78,000 properties with a gross book value of €13.billion. Cerberus will control an 80% stake in the company, while the bank will hold on to the remaining 20% while managing to shed the toxic assets from its balance sheet.

However, BBVA has also negotiated several other major real estate transactions. In mid-2017, the bank sold the Jaipur project, another portfolio of loans to developers valued at 600 million euros (total gross debt at nominal value), to Cerberus.

The bank has also reduced its exposure to companies linked to the real estate market. This was apparent in Metrovacesa’s IPO this year, which relieved the bank of its 27% participation in the company.

37% of product sales are conducted online

BBVA has doubled the group’s digital sales. In the first four months of the year, 37.5% of the financial institution’s total sales were conducted through digital channels.

The bank is doubling down on its digital strategy, foreseeing “accelerated and consistent” growth in the number of its customers that access the bank’s products through these channels, it announced yesterday.

The trend has led the bank to bring forward its objectives in its digital transformation. The financial institution expects that 50% of its customers will access its services using digital means by the end of this year or at the beginning of 2019.

In March of this year, when the bank presented its most recent audited accounts, BBVA had 19.3 million customers who used mobiles to access the bank’s products and services, an increase of 43% compared to March 2017. That is equivalent to one-third of its total customer base.

Now, the bank expects to reach the milestone of having half of its customers accessing using digital means.

At the moment, the bank has 24 million customers that access digitally, equal to 45% of its total customer base, a growth of 25% compared to March 2017.

Tangible benefits

The bank argues that its digital strategy has tangible benefits on its accounts by improving efficiency and boosting recurring revenues. In fact, the group is already profitable in all the markets in which it operates, including Spain.

BBVA justifies its digital focus stating that such customers acquire more products and stay loyal.

In fact, they have an abandonment rate that is 57% below that of traditional users. The biggest differences are in Mexico, Turkey and Spain.

Original Story: Expansión – R. Sampedro

Photo: JM Cadenas / Expansión

Translation: Richard Turner

CPPIB Puts Valencia’s Largest Hall of Residence Up For Sale

25 April 2018 – El Economista

The Canadian pension fund CPPIB is going to take advantage of the investor appetite that currently exists for student halls of residence by placing the “For Sale” sign up over one of its assets in Spain. Galileo Galilei is the largest accommodation block for students in Valencia and one of the largest in the country, according to confirmation from several sources speaking to this newspaper.

With more than 500 beds, the asset will come onto the market during the course of the next month, given that its owner has entrusted the sales process to the international consultancy firm Savills, which declined to comment.

Currently, this hall of residence, which is the only one located on the campus of the Universidad Politécnica de Valencia, forms part of the Liberty Living portfolio, one of the largest managers of student halls of residence in the United Kingdom. CPPIB acquired the British group in March 2015 for GBP 1.1 billion (around €1.2 billion) and continued to grow its portfolio.

In December 2016, CPPIB closed an important operation with Blackstone, which divested a portfolio of 13 student halls, located in the United Kingdom, Germany and Spain, which included Galileo Galilei. For that package, comprising 6,484 beds, the pension fund paid around GBP 460 million (€536 million) to the US firm.

Almost a year and a half later and with the sector in Spain in full boom, CPPIB has decided to put this property on the market in an operation that, according to the experts, could amount to €32 million.

Galileo Galilei currently has 520 beds spread across individual, double and triple rooms, which range in price from €515/month to €846/month. That figure includes all consumption, restaurant services, doctors, cleaning and sports activities.

In addition, the hall of residence offers supplementary services such as laundry, sheet and towel changes, a university support academy for all subjects, IT and nutritional advice, amongst others. Moreover, on the ground floor, the property houses a shopping arcade with restaurants and cafeterias offering special prices for students and various local shops such as a beauty salon, a hairdresser, a print shop, a travel agent, a newsagent, a driving school and a language academy.

With these features and its high occupancy rate, Galileo Galilei is expected to arouse significant interest amongst investors looking to gain positions in the alternative asset market in Spain in the main university cities, such as the case of Valencia. “Since 2016, the city has appeared in the Top 100 ranking of the QS Best Student Cities, which highlights the best cities in the world for students. It is also one of the most sought-after locations by European students participating in the Erasmus program,” says Patricio Palomar, Senior Investment Consultant at Aire Partners.

In fact, the expert highlights the growth potential of the supply in this market, which in its metropolitan area “has around 165,000 students matriculated, a mobility rate of approximately 29% and just 4,123 beds in colleges and halls of residence, which results in a supply rate that falls below the Spanish average”, Moreover, Palomar points out that “the process of economic recovery currently being seen in this area is expected to lead to an increase in demand from domestic and international students alike, and this situation of imbalance may be accentuated even further”.

Original story: El Economista (by Alba Brualla)

Translation: Carmel Drake

CPPIB Buys €800M RE Portfolio from Sabadell

20 December 2017 – Eje Prime

With year-end just around the corner, the major players in the real estate sector in Spain are putting the pressure on to close operations. Such is the case of Sabadell, which has just sold a portfolio of real estate assets worth €0.8 billion to the Canadian fund Canada Pension Investment Board (CPPIB) for approximately €0.2 billion.

This investment giant, which channels investments worth €210 billion, has won the auction for Project Voyager, through which the entity chaired by Josep Oliu is divesting €0.8 billion in problem loans linked to the construction, SME and hotel sectors, according to Voz Pópuli. The other finalists were Deutsche Bank, Bain Capital and Cerberus.

The completion of this agreement will represent CPPIB’s first investment in Spain; the fund is known for its conservative profile. With this sale, Sabadell will comfortably exceed its annual target of reducing its volume of problem assets by more than €2 billion. As at the end of September, it had decreased the balance by €1.764 billion, to just over €15.5 billion.

Original story: Eje Prime

Translation: Carmel Drake

GSA Buys Oaktree’s Student Halls In Madrid & Barcelona

21 June 2017 – Expansión

GSA (Global Student Accommodation) has reached an agreement with Oaktree Capital to purchase its student halls of residence in Spain (which are owned and operated by an entity called Nexo). This operation, whose financial details have not been revealed, comes less than a year after GSA purchased Oaktree’s platform of halls of residence in the United Kingdom, comprising 7,100 beds, back in September 2016.

Both operations have been advised by the real estate consultancy firm JLL.

Nexo is one of the largest developers and operators of student halls of residence in Spain and currently owns a portfolio of approximately 2,300 beds located in Madrid and Barcelona – split between operational assets and those under construction.

The firm has three operational halls of residence in Madrid – Galdós, with 370 beds; El Faro, with 358 beds; and Claraval, with 186 beds – as well as the Lope de Vega University Residence, also located in the Spanish capital, which will open its doors in September 2017 and which will house 468 students, from both Spain and overseas.

The operation also includes two additional projects under development in Barcelona, which will be ready for use in 2019 and which increase the total number of beds to 2,234. The first centre, Barcelona Sants, will have 348 beds and the second, Campus Sur Diagonal, will have 504 beds.

Nicholas Porter, founder and President of GSA, said that the firm is continuing to fulfil its plans for rapid expansion in Europe with its focus on higher education markets.

Interest from funds in this segment has increased in recent months. In order to benefit from this situation, Azora and Grupo March have put RESA up for sale – it is the largest student residence management platform in Spain, with 9,000 beds – and interest has already been expressed by Axa, Round Hill, the Canadian pension fund CPPIB, CBRE Global Investment and Partners Group, amongst others.

Original story: Expansión (by R. Arroyo)

Translation: Carmel Drake