Tag: divestment

Popular To Put 15,000 More Properties Up For Sale

16 July 2015 – Expansión

Popular is strengthening its strategy to achieve one of the main objectives it has set itself for the coming years, namely to accelerate the divestment of its non-productive assets. This mainly relates to its real estate portfolio, which includes €15,000 million of problem loans to developers, SMEs and individual borrowers, and a further €14,600 million of foreclosed assets.

One of the initiatives that the bank has set for 2015 is to increase the number of finished properties available for immediate sale through its web channel, by 15,000. It is looking to boost its web channel and thinks that it has great potential. This increase of 15,000 assets represents an increase of almost 50% to the portfolio that the bank currently has available for sale (taking the total to around 30,000 properties).

Channels

Currently, Popular sells 73% of its assets through its network of branches, another 21% through commercial agents and only 6% online. In the rest of the sector, digital channels account for 50% of such sales.

The entity, in turn, is accelerating the sale of large portfolios to wholesale investors. In the last two quarters, Popular has closed four such transactions amounting to €333 million, with a 9% discount on the net book value. These operations have included various assets, from residential land to commercial properties and garages.

As a result, the bank has doubled its volume of property sales in the last year. During the first quarter, Popular closed divestments amounting to €534 million, compared with €249 million recorded between January and March 2014, an increase of 115%. In this way and in just one quarter, Popular sold assets with a value very similar to the total amount sold in the whole of 2013, when sales amounted to around €700 million.

Popular’s strategy to dispose of its problem assets has been boosted in the last year and a half, following the partnership agreed in 2013 with the funds Värde Partners and Kennedy Wilson. That transaction, structured through the joint venture known as Aliseda, is not only generating capital to strengthen the bank’s balance sheet, but is also seeking to take advantage of the funds’ extensive experience in this business to accelerate the sale of assets, reduce the length of the recovery process and maximise divestment prices. Kennedy Wilson and Värde Partners, which control 51% of Aliseda, have almost €25,000 million in assets under management. (…)

Original story: Expansión (by M. Martínez)

Translation: Carmel Drake

Sareb Unlikely To Meet Its Property Sales Goal In 2015

14 July 2015 – Expansión

The President of Sareb acknowledged today that the bad bank will probably need the entire 15-year period originally granted to it, to sell all of its assets.

Speaking at a briefing organised by Europa Press and Servihabitat this morning, Jaime Echegoyen recognised that it will be hard for Sareb to meet the goal it had set for 2015 of selling 15,000 properties to individuals. During the first half of the year, the bad bank only sold 5,400 homes, i.e. 33% fewer than during the same period in 2014.

Sareb’s President insisted that the entity is selling its assets slowly (on purpose) to protect the capital of its investors. 51% of the bad bank’s capital is owned by private investors – all of the major banks except for BBVA, insurance companies and other entities – and the remaining 49% is held by the State.

Echegoyen has said that Sareb will probably need the entire 15-year period originally granted to the entity to sell all of its assets. “I would go as far as to say that we will end up needing all of the time originally granted to us. We are planning to use up the entire period, but if we manage to sell all of the assets sooner, then we will”, he said.

Carmena and Colau

The head of the bad bank also said that he wants to hear the proposals that the mayoresses of Madrid and Barcelona, Manuela Carmena and Ada Colau, respectively, are going to make. Echegoyen confirmed that he is meeting Carmena tomorrow and Colau next Friday and that his position ahead of those meetings is to be “flexible and listen carefully”.

Echegoyen also repeated the message he delivered to Congress’s Economic Committee last week, saying that Sareb has made 2,000 (social housing) homes available in several autonomous communities, and he reaffirmed that he hopes to sign more agreements in more regions soon.

Original story: Expansión

Translation: Carmel Drake

Ibercaja Has 3 Portfolios Up For Sale With Assets Of €2,300M

14 July 2015 – Cinco Días

The Aragonese entity is currently managing three separate divestments

Ibercaja wants to clean up its balance sheet and diversify its business before it goes public at the end of 2016. The entity currently has real estate assets worth €2,300 million up for sale under three separate transactions. Ibercaja wants to retain its independence by listing on the stock exchange. The deadline for the presentation of non-binding offers for the portfolio known as Project Kite is this week.

Ibercaja has its mind made up. It does not want to participate in any mergers and is even less willing to be absorbed by another, larger entity. “A few years ago, they tried to include us in mergers through the SIP, but we were not at all convinced. We wanted to retain our independence and that is still our plan”, say sources at the bank when asked about a possible merger with the other medium-sized banks (such as Unicaja, BMN, Ibercaja, Kutxabank, Abanca, Liberbank, Cajamar and Bankinter). The entity chaired by Amado Franco plans to go public at the end of 2016, and it has already engaged KPMG to conduct the relevant studies with that objective in mind. The decision to go public is closely linked to the “Law on Banking Foundations”, which forces the former savings banks to go public if they do not want to be penalised with a reserve fund because their foundations control more than 50% of their capital. The ECB is also putting pressure on these entities to list and or/merge.

One of the main objectives of Ibercaja’s strategic plan for 2015-2017 is the divestment of unprofitable assets. A few days ago, it sold a portfolio of non-performing loans amounting to €200 million, for which it pocketed just over €10 million. Now it has out Project Goya on the market, with assets amounting to around €900 million, in the form of debt to property developers, secured by homes, according to reports from Idealista.

This transaction comes just a few weeks after the entity put Project Kite on the market, which includes mortgage loans from 124 property developers, amounting to around €800 million. In fact, this week sees the deadline for interested investors to submit their non-binding offers. Moreover, during the first six months of the year, the entity sold 1,971 properties through its real estate platform, Salduvia.

Those sales were generated in a homogeneous way across the whole country. The figure represented a 12% increase on the sales recorded a year earlier and represented the divestment of 25% of the stock that the entity had for sale. These transactions have been closed with an overall discount of 4% on the appraisal value of the assets and have generated a positive result on the net book value of €6 million. Salduvia’s sales forecasts for this year stand at 4,300 homes, i.e. 75% of the stock that is currently available for sale and an increase of 20% on the sales recorded in 2014, which amounted to 3,558 units. That sales figure would represent a reduction in real estate risk of €650 million.

Original story: Cinco Días (by Ángeles Gonzalo Alconada)

Translation: Carmel Drake

Merlin To Sell Testa’s Hotel & Residential Portfolios

7 July 2015 – Cinco Días

Merlin wants to focus on its core business, specifically offices and shopping centres, and so it will divest all other kinds of assets from its portfolio. That was the announcement made yesterday by Ismael Clemente, the Chairman of the Socimi Merlin Properties, at an event in Barcelona.

Clemente revealed that Merlin will sell off Testa’s residential and hotel portfolios, which represent around 15% of the company’s total assets. However, it will retain Torre PwC, which houses the Hotel Eurostars Madrid Tower, since that is an iconic mixed-use building, which is also home to the offices of the consultancy firm PwC.

At a lunch meeting in the Círculo Ecuestre in Barcelona, about the challenges facing the real estate sector, Clemente said that following the Testa transaction – which has been structured in phases to compete before June 2016 – Merlin will continue to focus on offices, logistics assets and shopping centres.

Last year, Testa’s annual report valued its hotels at €430 million and its residential assets for rent at €276 million, from a total asset portfolio of €3,180 million.

Merlin Properties’ acquisition of Testa will create the largest Socimi and one of the largest real estate companies in Spain. The new company will have assets amounting to €5,500 million, which will generate gross rental income of around €290 million per year. The total consideration for the transaction will amount to €1,793 million, which will be disbursed in three phases until mid-2016.

AC, Tryp and NH

Sources at the company say that they have not yet decided any of the details about the divestment plan for the assets, which include, amongst others, the AC Forum, the Eurostars Grand Marina, the Tryp in Barcelona and the NH Sanvy, as well as the Eurostars Gran Madrid in Spain’s capital. However, they did confirm that Torre PwC will remain in the hands of the new company following the acquisition of Testa, because it would not make any sense to sell almost half of the building that houses the Eurostars Hotel.

In the residential business, the company will divest developments available for rent, both social housing, as well as “free” homes, primarily in the municipal districts of the Community of Madrid.

Moreover, the CEO from Extremadura considers that the acquisition of Testa will place Merlin firmly on the map, as one of the leading real estate companies in Spain, barely a year after it was founded as a Socimi.

He also predicted that the Socimi sector in Spain will grow from its current situation, of four listed companies, with a combined market capitalisation of €8,000 million, and will undergo a five-fold increase, with mergers between companies driving this growth, like has happened in the UK (22 companies with a market capitalisation of €69,069 million), France (33 with a market capitalisation of €75,041 million) and the USA (231 with a market capitalisation of €825,493 million).

Original story: Cinco Días

Translation: Carmel Drake

Apollo, Oaktree & Elliott Buy 1,000 Homes & 5,000 Mortgages

7 July 2015 – Expansión

Overseas funds are becoming the new owners of banks’ problem homes and mortgages. In recent weeks, Bankia, BMN and Bankinter have all signed deals – or are close to doing so – to transfer almost 5,000 mortgages and 1,000 homes to five international funds.

According to financial sources, Apollo, Oaktree and Elliott have invested the most in the transactions, although the funds Chenavari and Ellington are also close to finalising agreements.

These sales could just be the tip of the iceberg, since many of the banks currently have divestment projects underway, with the aim of transferring more than 50,000 homes to large investors.

The largest transaction to have gained momentum in recent days is Bankia’s Project Wind – the portfolio contains 4,300 mortgages to individual borrowers and it will be sold to the funds Oaktree and Chenavari. This sale is just awaiting its formal signing and the investors are expected to pay between €250 million and €300 million for the portfolio.

New transactions

BMN has also finalised agreements in recent days, for the transfer of two portfolios. The first is Project Coronas, which contains 550 homes located all over Spain, but primarily in coastal (beach) regions. The US fund Apollo has acquired this portfolio for €16 million. It represents the fund’s first major purchase of this kind since it purchased 85% of the Altamira platform from Santander.

Moreover, the entity chaired by Carlos Egea (BMN) has also sold a portfolio of problem loans, including almost 500 mortgages, of which three quarters relate to individual borrowers and the remainder to SMEs. This project, known as Pampa, has been awarded to a fund that has so far had little presence in Spain: the US fund Ellington Management, which specialises in the purchase of overdue mortgages. This investor bought a small portfolio from Barclays in Spain a few years ago.

Meanwhile, Bankinter has closed the sale of 300 homes to the US fund Elliott. The portfolio was initially valued at €60 million. It is Elliott’s first property-related purchase; until now the fund had focused on the NPL segment through its Spanish platform Gesif.

With these kinds of transactions, overseas funds are looking to capitalise on their purchases of large real estate platforms, for which they have so far paid around €3,100 million.

With that in mind, the Spanish financial institutions have initiated the sale of other large foreclosed asset portfolios, such as Bankia’s Big Bang portfolio, with 46,000 real estate units. Sabadell and Popular will also sell portfolios of homes in the near future.

Besides the sale of mortgages and foreclosed assets, Spanish entities are selling large portfolios of loans to property developers and hotel debt, as part of their objective to continue divesting property from their balance sheets. Financial institutions such as Santander, BBVA and CaixaBank all have sales projects of this kind underway.

Original story: Expansión (by Jorge Zuloaga)

Translation: Carmel Drake

Bankia Sells €1,300M Loan Portfolio To Oaktree & Chenavari

6 July 2015 – Idealista.com

As the summer approaches, many financial entities are stepping down on the accelerator to sell their unwanted real estate portfolios as soon as possible. To this end, Bankia has just sold a portfolio known as ‘Project Wind’ to the funds Oaktree and Chenavari, in a mega-transaction worth €1,300 million, which primarily contains doubtful mortgages to individual borrowers.

The transaction actually comprises three different portfolios, which have been shared between the US fund Oaktree and the British fund Chenavari, although according to financial sources, the signing of the sale is still pending:

  1. Portfolio Mast: €918 million of unpaid mortgages from individual borrowers, which has been shared between Oaktree and Chenavari.
  2. Portfolio Board: €178 million of debt backed by real estate collateral, which has been awarded to Oaktree.
  3. Portfolio Find: €216 million of unsecured debt without any real estate collateral. There are lots of lines of credit in this package. It has been awarded to Chenavari.

This transaction follows Bankia’s sale of another portfolio, containing hotel debt, to Bank of America at the beginning of June. That operation, known as ‘Project Castle’, comprised 91 operations, in total, linked to 45 assets. 56% of that portfolio related to doubtful debts.

But Bankia also has another packet of real estate assets up for sale, the so-called ‘Project Big Bang’, which includes a portfolio of residential and commercial assets, as well as land, worth €4,800 million. The bank is very keen to accelerate the sale of that portfolio, which would represent the largest sale of real estate assets since the real estate bubble burst.

CaixaBank is also selling off property

2015 is turning into the year of the large real estate transactions. CaixaBank has put several portfolios up for sale. One of those contains new-builds, known as Project ‘Tourmalet’ and it contains loans secured by 271 completed new residential developments, 160 plots of land and work-in-progress residential developments. The packet is worth close to €1,000 million.

Another package up for sale is the so-called ‘Eurostars’ portfolio containing 1,091 assets, including 807 homes, 253 parking spaces, 26 storerooms and 5 commercial premises. It is worth almost €103 million and the transaction is being managed by the real estate consultancy JLL.

Original story: Idealista.com (by P. Martínez Almeida)

Translation: Carmel Drake

Ibercaja Sells €210M NPL Portfolio To Seer Capital

6 July 2015 – Expansión

On Friday, Ibercaja closed the sale of a portfolio of non-performing loans, worth €210 million, to the US fund Seer Capital. The operation generated gross profits of almost €10 million for the Aragonese entity.

The portfolio contained doubtful unsecured loans, which were all fully provisioned, as well as non-performing loans.

Like other institutions, Ibercaja has accelerated the sale of problematic loans in recent years to devote its resources to productive assets and obtain profits on loans that it has already written off.

Ibercaja sold a similar portfolio in 2013, worth €540 million, to the US fund Yorvik and Savier Asset Management, owned by Javier Botín.

This is the first transaction that Seer Capital has undertaken in Spain. The fund was created in 2008 by Philip Weingord, former director of Deutsche Bank. The US firm manages assets worth €1,806 million, including mortgages, syndicated loans, SME loans and consumer finance with some kind of default (non-payment).

Other divestments

Moreover, Ibercaja Banco has refocused its strategy in recent months to take on a more active role in the market. Thus, the entity has engaged KPMG as an external advisor to perform the preparatory work towards an IPO in the coming years. The entity has until the end of 2018 to list on the stock exchange and so it has recently begun to explore that option in more detail.

In addition, a few weeks ago, the entity began a process to transfer the majority of the properties on its balance sheet. In total, the Aragonese group has put €800 million of foreclosed assets up for sale, including 6,900 residential units; 1,300 commercial premises and industrial buildings; and 600 plots of land. The transaction, known as Project Kite, is being advised by N+1.

Original story: Expansión (by J. Z.)

Translation: Carmel Drake

BBVA Gauges Investor Appetite For Two Big Portfolios

29 June 2015 – WSJ

Banco Bilbao Vizcaya Argentaria SA is sounding out investor appetite for two large portfolios of non-performing debt and real estate assets, according to sources briefed on the potential deals, as Spain’s economic recovery helps banks shed more of their bad loans.

BBVA, Spain’s No. 2 bank by market value, has spoken with investors in recent weeks to gauge their interest in the purchase of a portfolio that could contain around €1 billion worth of non-performing real estate loans and repossessed property assets and another portfolio that could contain between €500 million to €1 billion worth of nonperforming consumer, business and real estate loans.

BBVA has not sent investors “teasers”—documents that lay out details of an operation—because the parameters of the potential deals are still being designed, and the portfolios may not materialize, some of the sources said.

One source said that BBVA could formalize the sale of the two portfolios in September, and that the large size of the potential deals indicates that the portfolios could be partitioned and sold to various investors.

A spokesman for BBVA declined to comment.

Amid strong demand for Spanish real-estate assets, BBVA has hired KPMG LLP to oversee the sale of its loan-recovery unit. (…). A spokesman for KPMG also declined to comment.

Background

The potential sale by BBVA follows efforts by other Spanish lenders to sell real estate assets. They are encouraged by an economic growth rate—forecast by the Bank of Spain to reach 3.1% this year—that is outpacing that of other major eurozone countries.

Bankia SA has recently received non binding offers for €4.8 billion of property, including 38,545 residential units, 4,938 commercial units and 2,589 plots of land throughout Spain, according to a deal document sent to investors by Credit Suisse Group AG in April. Spain spent €22.4 billion in European Union funds to bail out Bankia in 2012. (…)

Spanish lender Banco de Sabadell SA sold its unpaid debt management and collection unit last July to Norwegian debt collection company Lindorff Group.

Major investors, such as Apollo Global Management LLC and TPG Capital Management, have stepped up their presence in Spain’s property market, as the economic recovery has helped to buoy real estate prices in some cities. (…).

Blackstone Group also bought the real estate servicer of bailed-out lender Catalunya Banc SA, and paid €3.6 billion to buy €6.4 billion of home loans issued by the bank.

Apollo, TPG, Cerberus Capital Management LP and Sabadell were selected in December by Spain’s “bad bank” to market and sell billions of property assets on its behalf, a contract that brings commissions and insight into the real-estate market.

Investors and analysts expect the real-estate servicers to consolidate in coming years as investment funds continue to seek high returns while they whittle down the amount of foreclosures and bad loans they oversee.

Original story: WSJ (by Jeannette Neumann)

Edited by: Carmel Drake

Project Big Bang: Bankia Selects Contenders For Final Phase

26 June 2015 – Expansión

Bankia has launched the final phase of the sale of its remaining assets, worth €4,800 million. The process is expected to be completed in July. Blackstone, Apollo, Cerberus, Deutsche and Oaktree are amongst the investors that have been selected to proceed to the final round.

Bankia’s Project Big Bang is entering the final phase. In the last few days, the entity chaired by José Ignacio Goirigolzarri has announced the names of the investors that have passed the first round of non-binding offers. Around five funds have overcome the hurdle, including: Blackstone, Deutsche Bank, Apollo, Cerberus and Oaktree.

At stake is the largest sale of real estate assets – excluding debt operations – since the economic crisis hit: foreclosed residential assets, commercial premises and land worth €4,800 million.

From next week, the selected funds will deploy their real estate teams, and those of their consultants, to undertake a more accurate valuation of the reality. This is a highly complex project because Project Big Bang comprises 46,000 real estate assets scattered all over Spain. The funds and their advisors will select the broadest samples possible to try to obtain the most accurate valuation.

The investors are going to have to work against the clock, since the next date marked in the calendar is 31 July, when theoretically, they should submit their binding offers. According to financial sources, Bankia wants to settle the transaction as soon as possible so that it is not hampered by the political uncertainty that will only increase as the general election moves closer.

Dividing up the portfolio

Even so, the competitive auction is not expected to be finalised until after the summer, since following the receipt of the final offers, Bankia and its advisors – Credit Suisse and KPMG – will have to analyse them and prepare the documentation necessary to complete the sale.

According to various funds, all indications suggest that the Big Bang portfolio will end up being divided up, since Bankia and its advisors believe that they will maximise its value that way.

The foreclosed assets amounting to €4,800 million…are recorded on Bankia’s balance sheet at around €2,900 million. That would be the base price that Bankia would expect to receive, since a lower price would mean it would have to recognise new provisions.

The portfolio for sale mainly comprises residential assets (apartments, houses and garages) – 38,500 assets in total, covering 3.6 million square metres. Around 65% of the homes are located in Valencia, Cataluña and Madrid, and 5% of them are currently rented out. The residential portion of the portfolio is worth €3,300 million.

In addition, Bankia is selling 5,000 commercial assets (offices, shops, hotels, warehouses and industrial buildings) worth €1,100 million; and 2,600 plots of land – of which 65% may be developed – worth €400 million.

Of the candidates, it seems that Cerberus is the best positioned – it purchased Bankia Habitat – now Haya Real Estate – in 2013 and therefore, knows the portfolio first hand, according to financial sources.

Apollo is also expected to bid hard for the portfolio, through Altamira. After acquiring 85% of Santander’s real estate arm, Apollo has not yet acquired any significant asset portfolios to generate returns from its platform, although it was one of the asset managers chosen by Sareb to handle some of its portfolio.

Original story: Expansión (by Jorge Zuloaga)

Translation: Carmel Drake

Deutsche Will Invest €200M In 2015 Through Its RE Fund

1 June 2015 – Expansión

Following the arrival of the first investors, which had a more opportunistic profile, the Spanish real estate market is now starting to show the first signs of stability, with the arrival of more conservative investors. That is the case of the German institutional funds, which manage the savings of wealthy investors and insurance companies in the European country.

These German funds include Ara (Alternative and Real Assets), which is the real estate division of Deutsche Bank. “There is a clear commitment to the recovery of the Spanish real estate sector. In 2014, investment in the non-residential sector amounted to €8,000 million, but we should remember that at the peak of the boom, that volume amounted to €11,000 million. We believe that there are still a lot of good products that have not yet come onto the market”, explains Carlos Manzano, head of Real Estate España at Deutsche Asset & Wealth Management.

For this year, Ara has set a target of investing around €200 million in property in Spain. “We have the capacity to invest twice as much as we (currently) hold (in the portfolio)”, he says.

Change of course

The former Reef has focused its activity in recent years on managing its portfolio, which has included a few divestments. “Pre-2006, we made a lot of investments but then we stopped investing due to the crisis and focused on managing. Now the market has changed and we believe that there is still a lot of good property that has yet to come onto the market”, he explains.

One of their recent major transactions included the purchase of a batch of 1,350 branches from BBVA in the summer of 2009. Those properties, managed by Magic Real Estate, ended up in the hands of the Socimi Merlin Properties. “We decided to sell BBVA’s branches even though there was a business plan (for them) until 2018. But we wanted to take advantage of the opportunity in the market and in the end we obtained a better return than we initially expected. In December, we also sold an office building in Las Rozas (purchased in 2011). But we do not want to be sellers in the Spanish market, but rather buyers. We have now divested everything that we wanted to”.

Currently, Ara is on the look out for good assets. “There are lots of German funds and private clients that are expressing their interest and their preferences have not changed. They are looking for good assets in central locations. It is a product profile that is hard to find”.

Its targets include offices, commercial assets and logistics warehouses; these products are “very much in vogue”, according to the head of the German fund.

Original story: Expansión (by R. Ruiz)

Translation: Carmel Drake