BNP Paribas: Property Sales by Banks Amounted to €73.5bn in 9 Months to September

30 October 2018 – Eje Prime

Financial institutions are continuing to put their real estate on the market. The sale of portfolios of real estate assets by banks is expected to amount to €16.5 billion between October and December, according to the latest report published by BNP Paribas Real Estate.

The entity’s latest report reflects that sales amounting to €73.5 billion were made during the nine months to September. “The pressure that the European Central Bank is exerting on the financial entities to ensure that they do not speculate with the assets they hold on their balance sheets is generating a wave of sales of large portfolios of residential assets”, said David Alonso, Director of Research at BNP Paribas España, according to reports from Cinco Días.

The largest operations undertaken so far this year relate to Banco Santander, with the sale of Project Quasar to the investment fund Blackstone for €30 billion; the sale by the bank BBVA of Project Marina to Cerberus for €13 billion; and the sale by CaixaBank to LoneStar of 80% of its real estate business for €12.8 billion.

Despite the eye-wateringly large figures highlighted in the report, the funds acquiring the properties tend to obtain an average discount of 65% and so the final prices are considerably lower than the nominal value in each case. “The main buyers are opportunistic investment funds and when it comes to completing their purchases, they typically demand discounts of between 50% and 80% of the asset value”, explained Alonso.

The arrival of new players with an appetite for the Spanish real estate market, such as the Socimis, investment funds and joint ventures, has boosted the purchase of several debt portfolios from bank entities in recent years. “They are agents that were not present six years ago; with these purchases, they have helped the banks to significantly reduce the property on their balance sheets, and they have also increased the control over loans to property developers and the management of residential buildings for profit”, said Alonso.

Original story: Eje Prime

Translation: Carmel Drake

Sareb Sells 2 Portfolios To Deutsche For €160M

30 December 2016 – Expansión

Sareb has sold two debt portfolios to Deutsche Bank for €160 million. One, worth €80 million, called Sevilla, contains debt secured by residential assets (homes) located all over Spain. The other, called Marina, is a debt portfolio secured by industrial logistics assets located in Madrid and Toledo.

The two operations have been advised by Dentox and Copernicus. These sales come after Project Eloise, which was closed by Sareb earlier in the week for €600 million, for which it received legal advice from Ramón y Cajal. That operation was the largest in Sareb’s history. It was secured by homes, located above all in Cataluña, Madrid, Andalucía, Galicia and Valencia. The financial advisor in Sareb’s three sales has been CBRE.

The transactions have been made more challenging since the Bank of Spain introduced its accounting regulations, which oblige the bad bank to update its assets to market prices each year. In March, for example, the entity sold a package of loans whose collateral included industrial logistics assets, hotels and offices. In September, it divested another portfolio secured by residential buildings in Madrid.

The entry into force of the Bank of Spain’s new accounting circular forced Sareb to undertake a clean up of €2,044 million during the first half of the year, which was added to provisions amounting to €968 million from the previous two years. The four real estate companies that sell Sareb’s assets are Altamira Asset Management, Haya Real Estate, Servihabitat and Solvia.

Between January and September, the bad bank sold 8,930 properties, up by 12% compared to the same period last year. Of those, 5,109 were its own properties. Another 3,821 came from the balance sheets of property developers.

Original story: Expansión

Translation: Carmel Drake

Irea: Real Estate Transactions Tripled In 2014

5 February 2015 – Cinco Días

A study conducted by Irea validates renewed interest in the sector

More than €23,000 million was invested in the real estate sector in Spain in 2014, of which 84% was dedicated to direct investment in assets and the acquisition of real estate-backed debt portfolios. The remaining 16% related to transactions involving shares in real estate companies and servicers.

At a press conference on Wednesday, the CEO of Irea, Mikel Echavarren, explained that the increase in activity in 2014 “has helped to unclog the pipes of the financial sector and bring the sector out of its coma”. It is interesting to note that most of the investors that have shown interest in the Spanish real estate sector, are foreign: on the one hand, the main players included large funds, such as Blackstone and Lone Star, and on the other hand, listed real estate investment companies (Socimis) also played an active role, in particular Merlin Properties, which have a significant percentage of foreign capital.

In the specific case of investment in assets, Irea said that shopping centres accounted for 26% of all of the capital invested in assets in 2014 (€2,501 million), followed by offices (24%) and hotels (11%), with these last two segments in full ascent. Residential assets accounted for barely 8% of total investment, including both land and finished homes. Furthermore, 85% of those transactions related to finished assets, with land representing only 4%.

With all of this, Echavarren highlighted the “merit” of this low percentage of land sold, since it is an asset that will have to be sold at a later date. In the current context, 4% seems like an achievement, since although many developers “want to purchase land, they do not have sufficient capital to do so and it is very difficult for them to obtain financing”.

Irea’s CEO repeated that international investors accounted for 53% of all investment activity in assets, followed by Socimis, which were responsible for 24%. Developers accounted for only 3%. On the vendor side, investors sold 24% of all assets, whilst financial institutions disposed of a further 22%.

The appeal of debt portfolios

Although residential assets were not sufficiently attractive for investors in 2014, that was not the case for debt portfolios linked to residential assets. Overall, the volume of debt portfolio transactions amounted to €9,683 million, of which 48% related to the residential segment. Nevertheless, the majority of this amount related to the portfolio sold by CatalunyaCaixa to Blackstone. In this segment, international investors acquired 100% of the debt portfolios sold, and 91% were purchased by investment funds. On the opposite side, 90.6% of the vendors in this case were financial institutions and 9.3% were other entities. In addition, shares in Metrovacesa and Colonial (both listed) amounting to €820 million (22%) changed hands during 2014, whilst the remaining €2,866 million of shares in real estate companies that changed hands were not listed.

Original story: Cinco Días

Translation: Carmel Drake