Tag: debt forgiveness

Santander & Blackstone Hold Onto the Real Estate Company GAC40

18 May 2018 – Voz Pópuli

Project Quasar Investment, the company created by Santander and Blackstone to bring together Banco Popular’s real estate assets worth €30 billion, has absorbed the company ‘Gestión de Activos Castellana 40’ (GAC40), whose debt amounting to €220 million Popular forgave on 30 December 2014, a move that caught the attention of the European Central Bank.

According to sources familiar with the operation, GAC40 filed for creditor pre-bankruptcy after it found itself in the cause of dissolution, but that measure was cancelled after the formal agreement was reached to transfer Popular’s assets to Project Quasar Investment in March. Sources consulted describe the operation as a “bargain”, given that Santander and Blackstone have effectively acquired GAC40’s assets at a discount of almost 69% and without the burdens that was weighing it down.

The Hispania Buildings in the centres of Murcia and Alicante are just two of the assets owned by GAC40. The company also owns the following shopping centres: La Fuensanta in Móstoles (Madrid); Juan de Borbón (Murcia); and Hispania, in Orihuela. Moreover, it has one supermarket in Totana (Murcia) and another one in Vinarós (Castellón), as well as a hotel in Cartagena. Although most of the properties are occupied, the mortgage charges that had been hanging over them since the real estate boom meant that their sale was unfeasible, according to the sources consulted.

The properties form part of Grupo Hispania, which the businessman Trinitario Casanova, the same person who agreed the sale of Edificio España in Madrid to the Riu group last year, sold in 2008 to José Ramón Carabante – the former shareholder of real estate companies from the boom and the founder of the only Spanish team to have operated in the Formula 1 arena, Hispania – for €650 million.

Carabante abandoned the management of Grupo Hispania in 2011 and was replaced by José Fernando Martínez Blanco, an expert in the liquidation and restructuring of companies. According to the sources consulted, Martínez Blanco was appointed by Banco Popular to acquire Carabante’s companies.

Martínez Blanco changed the registered name of the companies acquired from Carabante to ‘Gestión de Activos Castellana 40’ (GAC40) in 2012. The firm was weighed down by a debt amounting to €562.5 million, with Banco Popular as the main creditor. Until the absorption of GAC40 by Santander and Blackstone, Martínez Blanco had continued as the administrator of the company.

Forgive and refinance

GAC40 has remained active all these years thanks to financial support from Popular, which has been forgiving and refinancing the company’s debt year after year.

On 30 December 2014, Banco Popular’s Board of Directors decided to waive GAC40’s debt. That decision caught the attention of the European Central Bank, which conducted an inspection and identified “deficiencies” in the authorisation of the operation, as this newspaper reported.

The most recent refinancing of GAC40’s debt happened a month after the intervention of Banco Popular and its sale to Santander. On 6 July 2017, the company agreed “as the primary financial creditor”, to “convert the debt into a participation loan amounting to €19.4 million”.

With that debt conversion agreed just a month after Popular’s intervention, GAC40 was able to correct the critical situation that it found itself in. According to the company’s accounts for 2016, to which this newspaper has had access through Insight View, the company was in cause of dissolution with a negative goodwill balance of €221 million and financial debt of almost €250 million.

Original story: Voz Pópuli (by Alberto Ortín)

Translation: Carmel Drake

Colau Wants To Turn Tourist Flats Into Social Housing

7 August 2015 – Expansión

Tourism in Barcelona / Colau will forgive 80% of the fines imposed on the most centrally-located unlicenced apartments if their owners agree to allow the properties to be used by the town hall (for social housing) for three years.

Curbing tourist “speculation” was one of the most-repeated slogans quoted by Ada Colau, the mayoress of Barcelona, during her election campaign. After suspending the opening of new hotels and hostels for a whole year across the entire city, now it is the turn of a new battery of measures, which will affect a key sector for the Catalan capital’s economy, tourism.

On Wednesday, the town hall reported that it is going to launch a pilot plan in the Ciutat Vella district – the most central area of the city – aimed at the owners of unlicenced tourist apartments who have been fined repeatedly in recent years.

In exchange for writing off 80% of their cumulative fines, the town hall will offer them the opportunity to place their apartments at the disposal of the town hall for a period of three years, which will then award them to families in situations of social emergency under rental agreements. If owners grant their properties for a longer period, then the town hall may write off 100% of their fines. Once the fines have been repaid, the apartment owners will receive the rent directly from the families.

From 15 September, the town hall will start to inform fined owners about this option for dealing with their penalties.

For the time being, the initiative will focus on 330 property owners, whose fining procedures have been completed. There are more illegal apartments whose penalties are still being processed, but for now the initiative will not affect them. On average, fines amount to €15,000 per property owner, but according to the law, they may reach up to €90,000.

As part of its measures to combat the new “speculative bubble”, the town hall has also announced that it will fine any digital platforms that advertise tourist flats without a licence from September.

The town hall explicitly cited two websites that account for 80% of the supply, Airbnb and Booking, and asked them to provide information to identify the apartments they advertise, so that checks can be completed to see which properties have licences and which do not.

Ada Colau’s team also warned the online platforms that they should include the licence numbers of the apartments they advertise. If they do not collaborate, they will be subject to significant fines, in accordance with the ruling legislation. They also stated that not all illegal apartments have been fined yet due to a lack of “political will”.

Reactions

The platform Airbnb said in a statement that the fines that have been announced “create confusion” and represent “a step back” in terms of the regulation of the sector.

The opposition parties, CiU and PP described the measures announced as “smoke (and mirrors)” and accused Colau of taking decisions for show (i.e just for the sake of being seen to do something) and C’s asked the town hall not to “blackmail” property owners. ERC rejected the idea to write off fines because it “rewards” those who have not held licences for years. The PSC saw the announcement as a positive move, but called for more inspections.

Original story: Expansión (by David Casals)

Translation: Carmel Drake

Blackstone To Offer Debt Forgiveness On Spanish Mortgages

1 July 2015 – Bloomberg

Blackstone Group LP is seeking to restructure some of the €6.4 billion Spanish home loans it bought at a discount to help borrowers meet repayments, according to three people with knowledge of the matter.

The world’s largest private equity firm is offering to cut outstanding debt or allow homeowners to hand back the keys and walk away from loans, said two of the people, who asked not to be identified because the matter is private. Blackstone holds the mortgages of 40,000 homeowners in Spain after buying the debt for €3.6 billion from struggling savings bank CatalunyaCaixa.

Blackstone can avoid the time and expense of repossessing homes by helping borrowers find ways to continue paying their mortgages, something that is more difficult for Spanish banks because of provisioning requirements and central bank regulations. Avoiding evictions may also mute political claims that private investors are coming to Spain to take people’s homes away.

“If you are struggling to pay your mortgage, you are undoubtedly better off having Blackstone as your creditor than a traditional Spanish bank,” said Juan Villen, Head of Mortgage Services at property website Idealista.com. “Blackstone can be much more flexible.”

Andrew Dowler, a London-based spokesman for Blackstone, declined to comment when called by Bloomberg News.

Loan Portfolio

The subject of Spaniards losing their homes is a hot-button political issue, with power in the Madrid and Barcelona town halls swinging to parties that pledged to ban evictions during municipal elections in May. The Platform Against Evictions activist group organized demonstrations outside Blackstone’s offices in New York, London, Madrid and Barcelona in March, and posted a video on its website accusing the firm of intending to evict “en masse.”

Anticipa, Blackstone’s mortgage servicing unit, took over the management of the loan portfolio two months ago, with about 75 percent of the debt classified as under-performing or non-performing, according to the people. It will take about seven years to restructure the debt, they said.

Spanish home prices have fallen by more than 42% since the peak in 2007, according to Tinsa, Spain’s largest homes appraiser. That has left about a fifth of borrowers in negative equity, according to Villen. Lenders in the country foreclosed on more than 70,000 properties in 2014, with Andalusia, Catalunya and Valencia hit the hardest, according to the National Statistics Institute, which began compiling data at that start of that year.

Post Keys

Blackstone’s plan to allow homeowners to post the keys and walk away from their debts, a legal process known as “dation in payment”, is seen as a significant step by analysts.

“Unlike in the U.S. and other European countries, Spanish law stipulates a bank can foreclose on a home and still pursue the borrower for the rest of his life if the value of the loan is higher than the price that the bank forecloses at,” Villen said. “The offer of “dation in payment” is a refreshing way of approaching borrowers that are in negative equity.”

The private equity company will only foreclose on “strategic defaulters” who can pay but refuse to, while homeowners at risk of social exclusion, which represent about 3% of Blackstone’s portfolio, will be allowed to remain in their property paying subsidized rents, the people said.

Original story: Bloomberg (by Sharon R. Smyth)

Edited by: Carmel Drake