Tag: digestion

BBVA Puts another €2.5bn Property Portfolio up for Sale

12 September 2018 – Voz Pópuli

BBVA’s exposure to the real estate sector will have been reduced to almost zero by the end of the year. Following the sale of almost all of its property to Cerberus, the entity chaired by Francisco González has decided to accelerate the divestment of its remaining delinquent loans. To this end, it has entrusted the sale of €2.5 billion in problem loans to Alantra, according to financial sources consulted by Vozpópuli.

The operation has not been put on the market yet but it is expected to be communicated to opportunistic funds within a matter of days, maybe even this week. The name of the operation is Project Ánfora.

The operation is expected to be completed during the last quarter of the year. In that case, the year-end accounts for 2018, the final set that González will present, will reflect the fact that BBVA will have become the first large Spanish entity to clean up all of its real estate inheritance, with the exception of Bankinter, which barely had any to start with.

The latest official figures, as at June 2018, show that BBVA had real estate exposure amounting to €14.9 billion: €2.5 billion in loans to property developers and €11.5 billion in foreclosed assets, whose transfer to Cerberus will be closed soon.

Sudden push

Another entity that has also accelerated its clean-up process in recent months is Santander, with Project Apple, amounting to €5 billion, whose sale is currently being finalised, also to Cerberus. Afterwards, it will be left with another €5 billion to divest. The exposures of CaixaBank, Sabadell and Bankia are still above that level.

With this sudden push, the banks are seeking to fulfil the mandate established by the ECB and make their businesses in Spain profitable, which have been weighed down over the last decade by the digestion of property.

The sources consulted explain that Project Ánfora includes relatively small loans, such as mortgages and SME credits, which received financing linked to properties.

In addition to Ánfora and Marina – the sale of foreclosed assets to Cerberus – this year, BBVA has also closed the transfer of the Sintra portfolio to the largest Canadian fund, Canada Pension Plan Investment Board (CPPIB), containing €1 billion in loans to property developers.

Original story: Voz Pópuli (by Jorge Zuloaga)

Translation: Carmel Drake

Santander Is Ready To Divest €7,500M Of Popular’s Problem RE

21 June 2017 – Cinco Días

Banco Santander acquired Popular last week, including its €30,000 million real estate exposure (comprising properties and problem loans), which the entity dragged into the new model of European resolution. That slab ended up taking out Popular’s new President, Emilio Saracho, after he proved himself incapable of finding a credible solution for unblocking the property on the entity’s balance sheet, despite taking over the reins in February.

By contrast, the President of Banco Santander, Ana Botín, needed just a few hours to appear publicly with a strong message to calm the market. “We are going to divest half of the real estate assets in 18 months”, she said. A challenge into which her entity will invest €7,200 million to clean up the bank that it purchased for €1. But that is just the first step.

The signal that Santander is going to give the market is one of an agile response to digest the real estate assets. Whilst it has already taken a decision to increase the coverage of those assets, which guarantees that it will be able to sell them with large discounts without having to record large losses, the bank is now in a position to sell both the secured debt portfolio and the real estate assets in an accelerated manner. In total, it has identified €7,500 million in assets that it could divest in a matter of months if it so decides.

Doubtful debt

Of the €12,100 million in doubtful loans inherited from Popular, the company presided over by Botín has a battery of up to €5,000 million that it has already identified that it could package up and sell as quickly as it wants, according to financial sources familiar with the portfolio.

These sources indicate that Santander will likely slice up the €5,000 million into several portfolios and put them up for sale. Although this is a significant amount, the financial sector considers that if the bank puts the packages on the market at a good price, it will receive quite a favourable response from the typical opportunistic funds that participate in these types of processes.

Strategy with subsidiaries

Moreover, it has been revealed that the entity presided over by Botín will likely use its real estate subsidiaries to digest the assets. That is the first scenario being considered by the team from Santander that is intervening in Popular. In fact, it has already come up with some provisional figures regarding how much could be transferred to the different companies: between €2,100 million and €2,500 million.

A large part of that amount, around €1,200 million, corresponds to land that can be transferred to Metrovacesa, according to the same sources. Santander owns a 70% stake in that company, in addition to the c.9% stake held by Popular. (…).

Santander is also currently evaluating the contribution of between €500 million and €800 million in high-quality tertiary assets (primarily offices) to the Socimi Merlin Properties, which is listed on the Ibex 35. That process – which could be approved before the end of the year – would be completed only after analysing the assets and evaluating whether they fit with the company’s current portfolio, which contains properties worth more than €10,000 million. (…).

Finally, the entity may also transfer rental homes worth between €400 million and €500 million to the Socimi Testa, which it plans to debut on the stock market in 2018 and which is currently negotiating the incorporation of Acciona’s buildings into its portfolio (…).

Sources at the bank warn that it is still too early to quantify the assets that it wants to put up for sale first, given that any sale would have to be preceded by a new valuation process. (…).

The team that is going to lead this process on Banco Santander’s side is being led by José Antonio García Cantera, the man that Botín has put at the head of Popular for this transition period until the full integration has been completed, and by Francisco Javier García-Carranza, the entity’s new CEO. (…).

Original story: Cinco Días

Translation: Carmel Drake

The Spanish Real Estate Sector Is Getting Ready For A “Digestion” Of The Investment Made In 2016

12 February 2016 – Expansion

After a record year in asset transactions, the Spanish real estate sector is getting ready for a “digestion” of the investment made in 2016, according to the the forecasts of the consulting company Irea, which considers that, despite the total volume of investments will decrease at around 15% -as it already happened in 2015-, the sector will maintain the pulse thanks to the strong activity in residential land and hotels.

Residential land and hotels shall lead the real estate sector

“It is not that the party is over but that, rather than a race for the massive investment, it will be a year of “digesting what was purchased “explains Irea CEO, Mikel Echavarren to EXPANSION.

Record year

By business segments, Echavarren emphasizes activity in hotels and residential land, which will remain as supports of the sector. The hotel investment volume reached 2,614 million euros in 2015, 142% more than in 2014. “It is not expected to be so high, but it will still be awesome, after consecutive years of tourists entry record, due to the euro devaluation, the instability of North African rivals and the price of oil hitting rock-bottom,” he explains .


Regarding residential land, Echavarren remarks that there are areas in Spain where demand is “undeniable” and prices are even rising. “Investment in construction, finalist and well located land at last has a controllable risk,” he added.

However, all in all, this year Irea foresees a reduction in assests investment (residential property, offices, shopping centers and hotels, among others). In 2015, the total investment volume of assets was 12.848 million euros, representing an increase of a 33%. “This year could be between 8,000 million and 9,000 million euros,” he anticipates. 
As for the sale of debt portfolios, which started strongly in 2013, the number of transactions is expected to be reduced, as well as its volume, following last year’s trend. Thus, if the volume of debt transactions decreased by 36% up to 8.117 million euros in 2015, for next year forecasts are that the figure does not to exceed 6,000 million. 
Echavarren explains that the reason for this reduction is that the assets backing the debt held by banks and SAREB are more fragmented so, to place homogeneous packages, these should be smaller.

Political concern

Regarding the political situation, Echavarren recognizes that some Spanish funds are already more reluctant to invest in some segments, such as city councils of “uncertain political management or high urban risk”. “They are not considering leaving Spain, but certainly being more selective,” he adds. In contrast, international investors are more concerned about the situation of the global economy, but “they are certainly not happy “with the current situation. 
With regard to the involvement of certain political decisions, such as the hotel moratorium, both in investment and real estate, Irea CEO recalls that in Barcelona, hotels prices have increased significantly. “Buying a five star hotel knowing you’re not going to have new competition for several years increases the interest of investors.” He says. 
As for similar measures in Madrid, “it makes no sense” to Echavarren, since the problem in the capital is not the  excess of offer but the demand attraction. “In Madrid we do have cruises coming in by the Manzanares” he jokes.

Original story: Expansion (by Rebeca Arroyo)

Translation: Aura Ree