Tag: EOS Spain

Axis: Spain’s Banks Will Divest At Least €40bn of Their Problem RE Assets This Year

30 March 2018 – El Mundo

Spain’s banks are still trying to lighten their balance sheets of the huge load left on them by the real estate crisis. Forecasts for this year indicate that they will manage to divest assets worth at least €40 billion including properties, foreclosed land and defaulted and non-performing loans.

Those are the estimates made by the consultancy firm Axis Corporate on the basis of operations that are currently being sounded out in the Spanish real estate sector. The figure includes transactions worth at least €9 billion by Sareb, sales of around €6 billion by Bankia and operations by CaixaBank and Banco Sabadell with a volume of close to €12 billion each. “To all of these operations, we have to add the retail operations that the servicers are currently undertaking”, explains José Masip, Real Estate Partner at Axis Corporate and coordinator of the Assets Under Management Observatory Report published recently by the company.

In 2017, sales of toxic assets linked to real estate exceeded €50 billion, “almost twice the €27.4 billion sold between 2012 and 2016”, says the report. Spanish entities are accelerating the clean up of this type of asset from their balance sheets to reduce their default rates and fulfil the European regulations that force entities to reduce the weight of non-performing assets to pre-crisis levels. Despite that and according to data from the consultancy firm JLL, the volume of non-performing assets with real estate collateral in the hands of the banks and Sareb amounts to around €200 billion: €80 billion in REOs (foreclosed assets) and €120 billion in NPLs (Non Performing Loans or doubtful credits).

Greater weight of funds

Both firms predict that the rate of sales seen last year will continue in 2018, above all due to the growing interest from international investment funds (…).

The main investment funds focused on the purchase of real estate assets in Spain are Bain Capital, Oaktree, EOS Spain, Apollo and Axactor, who are following in the footsteps of others such as Blackstone and Cerberus.

The latter two entities starred in the two most important operations of last year. In July, Santander sold a portfolio comprising 51% of the toxic property it had inherited following the purchase of Banco Popular to Blackstone in an operation worth €5.1 billion; meanwhile, in November, BBVA sold 80% of its real estate portfolio to Cerberus for around €4 billion. In a similar operation, also in 2017, Liberbank sold part of its toxic portfolio to the funds Bain and Oceanwood for €602 million.

The transactions were structured through the creation of joint ventures in all cases, in which the bank held a minority percentage of the company or servicer and the acquiring fund took over the bulk of the management. According to Emilio Portes, Director of the Portfolio Business at JLL for Southern Europe, “the structure offers entities a stake in the profits of the assets with upside potential at the same time as cleaning up their balance sheets and slightly improving their capital ratios. Similarly, it offers buyers more advantageous prices without limiting their strategy and management capacity”.

Indeed, in Axis’s opinion, those servicers are expected to be some of the main players in the market over the short and medium term. According to data from the consultancy firm, more than 80% of the assets under management are in the hands of five of them: Altamira (linked to Santander), Servihabitat (CaixaBank), Haya/Anida (controlled by Cerberus after the operation with BBVA), Aliseda/Anticipa (Blackstone) and Solvia (Sabadell). The outlook for this year points to greater concentration in the sector, “with the possible sale of some of the existing servicers”, in such a way that their specialisation and differentiation will be definitive.

Original story: El Mundo (by María Hernández)

Translation: Carmel Drake

Sabadell & Bankia Finalise RE Portfolio Sales To Sankaty

29 June 2016 – Expansión

Spanish banks and international funds are negotiating against the clock as they seek to close operations worth hundreds of millions of euros within the next few days. Entities have offers on the table for real estate assets worth almost €4,000 million. And some of them are expected to bear fruit today or tomorrow, so that they can be accounted for in the half-year results.

The negotiations are even more frantic than in previous years due to the slowdown caused by the electoral calendar, which caused opportunistic funds to be prudent with their offers. One of the most influential factors was the fear that Podemos would enjoy electoral success.

Now that the uncertainty (surrounding Podemos) has been resolved, Sabadell and Bankia have been particularly agile in reaching agreements.

Yesterday, the Catalan entity sold a portfolio containing €460 million of problem assets linked to property developers, as part of Project Pirene. The buyer is the fund Sankaty Advisors, a subsidiary of the US giant Bain Capital. Sources in the market estimate that the investor paid Sabadell between €150 and €200 million for these assets.

Dominant investors

Sankaty’s interest in Spain has not been limited to that portfolio, given that it is close to securing another deal that has attracted significant interest from other large international investors: Project Lane, sold by Bankia, comprising 2,500 homes worth €400 million. This is the first portfolio to emerge from the carved up Project Big Bang; the entity had wanted to sell all of its foreclosed assets together, but that plan was suspended at the end of last year. Sources expect to know whether this operation will go ahead within the next few days.

The sale of the other two asset portfolios that Bankia has on the market are proceeding more slowly: one contains non-performing mortgages – Project Tizona – worth €520 million; and the other contains non-performing property developer loans – Project Ocean – amounting to €400 million.

Sankaty expects the recovery of the Spanish real estate sector to go beyond Sabadell and Bankia’s portfolios, as indicated by the fact that it is one of the main favourites to acquire Project Baracoa, from Cajamar. That will be the first sale of bankrupt loans by a Spanish bank. In total, the rural savings bank is looking to get rid of €800 million of these types of loans, which account for 70% of all of its bankrupt assets. 85% of them are secured by real estate collateral.

Another operation that is generating significant interest is Project Carlit, launched by CaixaBank, through which the Catalan group wants to transfer €790 million of doubtful loans to property developers. The bid is in its final phase with two key favourites in the running: Cerberus, which according to sources consulted is “putting all of its eggs into one basket”; and the alliance between Goldman Sachs and TPG, two US investors who have joined forces in the past. The US fund D. E. Shaw is also through to the final round, but it has not participated in any operations in Spain for a long time and the market considers that it is less likely to win the portfolio.

CaixaBank has another major operation underway: Project Sun, through which it wants to sell 155 hotel assets worth almost €1,000 million.

Another one of the most active entities is Abanca, which recently sold €1,400 million in non-performing loans to EOS Spain and which will be negotiating the sale of €400 million property developer loans over the next few weeks.

Original story: Expansión (by J. Zuloaga)

Translation: Carmel Drake

Abanca Sells €1,400M NPL Portfolio To EOS Spain

14 June 2016 – Expansión

Two years after taking ownership of Abanca, the Venezuelan company Banesco has started to sell off the bank’s toxic assets. Yesterday, the financial entity headquartered in Galicia reported its first sale of non-performing loans, amounting to €1,385 million, which represents approximately 20% of its total NPL portfolio.

All of the loans were overdue and unsecured, which makes it one of the largest operations of its kind in recent years and also, concentrated in a single buyer.

EOS Spain, a company that specialises in collections management was the winner of the competitive process. It is headquartered in A Coruña and is a subsidiary of the international group EOS. The transaction generated profits of €57.4 million for the bank, according to a statement filed with the CNMV.

The auction generated significant interest, with participation from around twenty investment funds and entities specialising in the recovery of overdue debt. For this competitive process, Abanca was advised by KPMG, the same firm that audits its accounts.

The operation (…) will open a series of future transactions as part of Abanca’s strategy to divest of its non-performing assets. In fact, it says that it is already evaluating similar operations for its non-strategic assets, with the aim of focusing the business on providing credit to families and companies and to boosting the economy.

One of the upcoming operations will involve a portfolio of non-performing loans, secured by mortgaged assets, although that will be smaller than the portfolio just sold. By contrast, the bank will hold onto the other overdue unsecured loans so that they can be managed by Abanca itself.

For EOS, the purchase “represents the strengthening of its relationship with Abanca”, according to a statement from the bank, as well as an intensification of competition and an improvement in its position in the domestic market.

Improved capitalisation

The main effect of the sale has been on the solvency of the entity, given that it had fully provisioned all of the non-performing loans that it has now sold. Abanca calculates that with this transaction, it has improved its capital coefficient by five basis points since the first quarter of the year, when it stood at 14.8%, one of the highest in the sector. Meanwhile, the doubtful asset coverage ratio amounted to 60.8% during that same period. According to the annual accounts, Abanca had decreased its doubtful debt balances by 30% last year to €2,695 million as at December 2015; furthermore, it reduced the weight of foreclosed assets on its balance sheet to just 1%.

Of the total impaired asset balance, more than half (€1,900 million) are secured and only €114 million were overdue by three months or less (as at December 2015), according to details disclosed in the consolidated annual accounts for 2015.

Beyond its consolidated balance sheet, the entity accounted for €5,376 million of financial assets that it had written off. The bank explained that it was not including them on its balance sheet because it regarded (the likelihood of) “their recovery to be remote”, although it clarified that it has not stopped trying to collect the amounts due.

Original story: Expansión (by A. Chas and J. Zuloaga)

Translation: Carmel Drake