Starwood Wins the Bid to Acquire the San Fernando Business Park for €120M

22 May 2018 – Eje Prime

Starwood Capital has sealed the purchase of a new asset in Madrid. The private equity fund has reached an agreement with Oaktree to acquire the San Fernando Business Park for €120 million. The operation, according to market sources, is pending the finishing touches, but technically has now been completed.

In this way, Starwood has broken into the Spanish office market by outbidding other international investors, such as the PE house Carlyle, which had expressed interest in the asset, according to Expansión.

San Fernando Business Park ended up in the hands of Oaktree three years ago. It was then that the US fund purchased a portfolio of unpaid debt worth €750 million from the German bad bank FMS Wertmanagement (FMS WM).

That portfolio included, in addition to this office complex, luxury hotels such as the Arts Hotel in Barcelona and another hotel in Cascais (Portugal); five shopping centres, including the Madrilenian Plaza Éboli and Heron City Las Rozas; several storeroom buildings; and some residential and industrial assets.

Original story: Eje Prime 

Translation: Carmel Drake

Oaktree Puts San Fernando Business Park on Sale for €120 Million

27 March 2018

The US fund intends to sell the Madrid office complex, acquired three years ago as part of the Gaudí Project. The deal could be finalised before the summer.

Oaktree wants to sell the San Fernando Business Park and is putting the Madrid office complex on the market. The fund acquired the property three years ago as part of the Gaudí Project loan portfolio, in which the Hotel Arts de Barcelona was auctioned, among other assets. The company’s objective is to net around 120 million euros for the asset in a deal that it expects to finalise before the summer.

The fund acquired the San Fernando Business Park from the German bank FMS Wertmanagement, in a large loan portfolio sale valued at €750 million and composed of assets from every real estate segment.

Oaktree took over the business park in Madrid, which was managed by Goodman at the time and had €180 million in debts. The firm negotiated an undisclosed reduction in the debt, though El Confidencial speculated that it could have reached 40%.

Gaudí consisted of 18 loans, two of which were linked to Portuguese assets, and Oaktree is now looking to turn a profit on one of them. The complex for sale, located in San Fernando de Henares, has 86,000 square meters of area and thirteen buildings, together with 2,750 parking spaces.

The deal comes a few weeks after Hispania put its portfolio of offices on the market. In total, the socimi aims to raise between 500 million and 600 million euros for a plot of land and 25 buildings.

Original Story: EjePrime

Translation: Richard Turner

Project Gaudí: Oaktree Acquires Reduced Portfolio For €260M

25 June 2015 – CoStar Finance

Oaktree Capital Management has finalised the purchase of a reduced non-performing loan portfolio from FMS Wertmanagement (Project Gaudi) paying around €260m in cash, after a back bid sale of a Bilbao shopping centre to Grupo Lar and the removal of two loans prior to transaction close.

According to CoStar News, Grupo Lar, the Spanish developer and investor, has acquired the 1.35m sq ft Megapark Barakaldo shopping centre in Bilbao, in a back to back bid for just over €150 million.

Megapark Barakaldo was previously owned by Resolution Property, who acquired the retail centre for more than €200 million in January 2006, from Arcona Iberia and its joint venture partners, financed by Hypo Real Estate Bank International and the Royal Bank of Scotland. Resolution Property sold Megapark Barakaldo to another investor in 2012, which inherited the encumbered debt.

In addition, FMS Wertmanagement removed two loans from the original €735 million portfolio, contraining 18 NPL loans (Project Gaudi):

1) The first was a loan securing the circa 333,700 sq ft Plaza Éboli shopping centre in Pinto in the south of Madrid. HIG Capital recently acquired Plaza Éboli from Doughty Hanson, the UK private equity firm, for €30m, repaying the loan back to FMS Wertmanagement at par.

2) The second was a combined €125 millioin investment, development and VAT financing facility, granted to Bluespace, formerly known as Blue Self Storage, in July 2007. It was used to fund the acquisition of 17 self-storage properties – in Barcelona, Madrid and Valencia. FMS Wertmanagement has retained that non-performing loan.

These two removed loans are thought to account for an unpaid loan balance of around €100 million in aggregate. This reduces the original nominal value of Project Gaudi’s NPL portfolio (€735 million) to an unpaid balance of €635 million.

CoStar News understands that Oaktree paid €410m for the slightly slimmer Project Gaudi, reflecting a discount of 35.4%.

Furthermore, the immediate back bid purchase of Megapark Barakaldo by Grupo Lar for circa €150 millions implies the net price that Oaktree paid was €260 million, which was likely paid on an all-cash basis by Oaktree given the final size of the deal.

FMS Wertmanagement closed the sale of Project Gaudi with Oaktree two weeks ago. This was the German bad bank’s maiden NPL portfolio sale in Europe.

CoStar News understands that FMS Wertmanagement is considering two further country-focused loan portfolio sales for the bad bank’s Netherlands and Italian sub and non-performing loans. (…)

Original story: CoStar Finance (by James Wallace)

Edited by: Carmel Drake

Project Formentera: Santander To Sell €170M Hotel Debt Portfolio

18 May 2015 – El Confidencial

A new portfolio of hotel debt has just come onto the market. At a time when investors’ interest in these transactions is at an all time high, Santander has put loans worth €170 million relating to 17 hotels up for sale.

A new portfolio of hotel debt has just come onto the market. At a time when investors’ interest in these transactions is at an all time high, Santander, the largest Spanish bank, has decided to pique the insatiable interest of international funds in this type of transaction through the launch of an operation known as: Project Formentera.

It involves a portfolio of loans worth €170 million, linked to 17 hotels. The majority are located in the Community of Valencia and the Canary Islands, which encourages operations with investors interested, primarily, in the holiday segment and in the (Canarian) archipelago.

The portfolio that Santander has just launched joins those being promoted by two of its main rivals, BBVA and Bankia, which have also decided to take advantage of the window of opportunity that has opened to try to offload some of their debts, which include loans that the financial entities are very keen to divest.

According to sources in the market, unlike what may happen in the residential market – a business the banks know very well, since historically they have had the best prepared teams to manage such assets when they fail – the hotel business is a very specialised segment, whose incident rate (casuística) is more difficult for financial entities to manage.

This means that their priority, in general terms, is to try and sell debt, rather than foreclose it and take ownership of assets that they are much less familiar with than residential. If we add the insatiable appetite of the large international investors for the hotel sector, fuelled by the perfect combination of low prices and a strong recovery in the tourism sector, now is the perfect time to carry out these kinds of transactions.

A string of transactions

In fact, at the end of last year, Bankia closed the sale of a batch of hotel loans to Starwood and Sankaty for €400 million (Project Amazona) and is now finalising the second part of that transaction, known as Castle, whose finalists are Apollo, Oaktree and Bank of America. BBVA has also just opened the bidding for 14 hotels it inherited from unpaid loans, a process known as Project Otelo; meanwhile Sareb has just engaged N+1 to manage the sale of a portfolio with a nominal value of €500 million, which is linked to the property developer Polaris World, in an operation known as Project Birdie.

And so the list goes on. A few weeks ago, the German bad bank FMS Wertmanagement sold the portfolio known as Gaudí to Oaktree for close to €500 million – a batch of problem loans linked to, amongst others, the iconic luxury hotel Arts de Barcelona, as well as another high-end property in Cascais (Portugal), five shopping centres, including Plaza Éboli and Heron City, several storage buildings, and residential and industrial assets.

Moreover, the large financial entities that signed the €152 million syndicated loan with the Basque property developer Urvasco, which, in turn, owns the hotel chain Silken, have spent the last few months selling their stakes both in this debt, as well as in those linked to certain establishments, including the Puerta de America hotel in Madrid; Bank of America is taking advantage of this window to enter through the ‘front door’ of what is considered to be the last great Spanish hotel chain up for sale.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

The ‘German Bad Bank’ Acquires Gran Vía, 68

18 May 2015 – El Confidencial

The building located at number 68 Gran Via, which used to belong to Carlyle, has a new owner: the ‘German bad bank’, FMS Wertmanagement, the equivalent of Sareb in Spain.

The building located at number 68 on the coveted avenue in Madrid has a new owner. FMS Wertmanagement, more commonly known as the ‘German bad bank’ – the equivalent of Sareb in Spain – has acquired the property, which was the first acquisition made by the private equity firm Carlyle in Spain at the end of 2005.

This asset used to belong to the real estate fund Carlyle Europe Real Estate Partners II (CEREP), which filed for bankruptcy in March 2012. It is estimated that the fund paid €45 million and so had to obtain a loan from the German entity Hypo Real Estate to finance the transaction – Hypo was taken over by the German Government in 2009 – and the debt has ended up in the hands of FMS. According to sources close to the transaction, this asset, which is currently worth around €21-23 million, has had lots of suitors.

In fact, in addition to FMS, the holding company that owns the investments of the businessman Manuel Jove (Inveravante) and the US fund, Autonomy, which has an opportunistic profile and arrived in Spain in 2013, both submitted bids.

In the context of the bankruptcy, the sale has been conducted by the bankruptcy administrator; and all indications suggest that FMS could have acquired the building for the amount of the debt, around €40 million. The sources consulted by this newspaper say that the German bad bank intends to seek a buyer for the property, at a time when the Spanish real estate market has taken off (again), and in an area (Madrid’s Gran Via) that has sparked so much interest and activity over the last year and a half.

Carlyle’s real estate ‘troubles’ in Spain

We have to go back almost ten years to see Carlyle’s first foray into the real estate sector in our country. At the end of 2005, the firm bought this property, which dates back to the beginning of the 20th century, from the Urconsa group – it was formerly owned by La Unión and Fénix Español – with a view to renovating it and turning it into luxury apartments. With a surface area of 7,600 m2, comprising three retail floors and eleven additional floors for residential use, it is totally empty at the moment.

Carlyle had intended to build 75 luxury apartments, preserving the original façade of the iconic building in the centre of Madrid. Its commitment to the real estate sector in Spain was clear and it expected to have the renovation completed within two years. However, its plans took a turn for the worse.

The Town Hall of Madrid did not grant the construction licence until April 2008, according to Cinco Días, and by 31 October 2010, only one of the commercial premises was leased out.

“We are delighted to have made our first investment in Spain. The residential market in Madrid is buoyant and we think that there will be strong demand for these new apartments in a building as impressive as this. We hope that this will be the first of many investments in Spain”, said Rachel Lupiani, Director of Carlyle Real Estate, after the deal was announced. She was responsible for closing the transaction, which was advised by the consultancy firm CB Richard Ellis and the law firm Clifford Chance.

In Spain, Carlyle also acquired land on Calle Alcalá in Madrid and the Telefónica headquarters in Barcelona – for which it paid €219 million in 2007.

The German bad bank is now looking for a buyer

The German bad bank, which operates in a similar way to Sareb, was created in 2010 with assets from the nationalised bank Hypo Real Estate. These included almost €900 million of non-performing assets and loans, including the debt relating to Gran Via, 68.

Just like in the case of Sareb in Spain, FMS is now looking for buyers for many of its non-performing assets and loans. In fact, at the beginning of this month, it sold the Gaudí debt package, which it had also inherited form the nationalised Hypo Real Estate, to the Californian fund Oaktree. That portfolio included debt relating to the Hotel Arts de Barcelona, a five-star property managed by Ritz-Cartlon, as well as another luxury hotel located in the Portuguese town of Cascais, five shopping centres, four office buildings, 17 storeooms and other residential and industrial assets.

Original story: El Confidencial (by E. Sanz and R. Ugalde)

Translation: Carmel Drake

Oaktree Enters Exclusive Negotiations On Project Gaudi For c.€500m

13 April 2015 – CoStar Finance

Oaktree Capital Management has entered exclusive negotiations with FMS Wertmanagement for the predominantly Spanish Project Gaudi commercial real estate loan portfolio for a price thought to equal just over €500m, CoStar News has learned.

Negotiations are ongoing and the Board of FMS Wertmanagement is still to approve the sale, but Colony Capital, the second finalist, is no longer in the running to acquire the bad bank’s prospective maiden European NPL.

Project Gaudi, named after the legendary Catalan architect, has an unpaid balance of €740m, and is expected to trade at around 68 cents in the euro.

Cerberus Capital Management and Orion Capital Managers made up the top four, as revealed by CoStar News at the turn of the New Year.

Project Gaudi loan portfolio, which is being sold by Cushman & Wakefield’s Corporate Finance team in London, is comprised of 18 loans with broadly an equal split of performing, sub-performing and non-performing loans.

Project Gaudi, comprised of 16 loans secured by Spanish assets and two loans secured by Portuguese commercial properties, includes:

  • two five-star hotels in Barcelona and Cascais;
  • five shopping centre and leisure centres;
  • four business parks in Madrid and Barcelona;
  • a portfolio of 17 self-storage assets; and
  • several residential and industrial development sites.

The marquee asset in Project Gaudi is the 483-bed Hotel Arts in Barcelona (pictured), managed by Ritz-Carlton.

A consortium comprised of Host Hotels & Resorts, Dutch pension fund Stichting Pensioenfonds ABP and Jasmine Hotels Pte, an affiliate of Singapore sovereign wealth fund’s GIC Real Estate paid €417m in July 2006 for Hotel Arts, which at the time was the largest ever single-asset real estate transaction in Spain.

FMS Wertmanagement, founded in 2010 after the German government nationalised Hypo Real Estate, brought the Project Gaudi loan portfolio for sale in October.

The four second round finalists all placed bids above 60 cents in the euro, which reflects a price of €444m or above.

First round bidders included Davidson Kempner in a joint venture with Värde Partners, Blackstone, Deutsche Bank, Marathon Asset Management, Sankaty Advisors, BAML, Colony Capital, Starwood Capital, Apollo Global Management and Lone Star.

FMS Wertmanagement had as much as €13.4bn in remaining commercial real estate loans, as at the end of 2013, including €5.8bn of German loans, €1.8bn of US loans, €1.7bn worth of UK commercial real estate loans and €0.8bn and €0.6bn of loans secured by assets in France and Netherlands, respectively.

Spain has returned to economic growth in 2014 following seven difficult years of rising unemployment, salary deflation and depressed consumer spending.

But an increase in business activity has led to unemployment reducing and consumer confidence has reached its highest level since 2001 with improvements in disposable income and recovering house prices reinforcing this optimism.

All parties declined to comment.

Original story: CoStar Finance (by James Wallace)

Edited by: Carmel Drake

Charles Blackburn Quits Deutsche Bank For Oaktree

13 April 2015 – CoStar Finance

Charles Blackburn, head of Deutsche Bank’s EMEA commercial real estate special situations group, has quit the investment bank after nearly 10 years and is expected to join Oaktree Capital Management later in the summer, CoStar News has learned.

Blackburn is thought to be taking up a senior role continuing a remit for distressed real estate debt and equity investments at the US private equity firm, having already left Deutsche Bank.

Earlier this morning, CoStar News revealed that Oaktree has moved to exclusive negotiations to acquire FMS Wertmanagement’s Project Gaudi CRE loan portfolio for a price thought to be just north of €500m.

At the turn of the year, Blackburn’s Deutsche Bank team won NAMA’s €287m Project Boyne, loans secured by property developer Willie Smyth, paying around €95m, and just before Christmas the team also won a €234m tranche of the Project Kaplan NPL from Sareb.

The most significant NPL win of last year by Blackburn’s team was the acquisition of around €1.5bn in tranches from IBRC’s giant €9.3bn Project Stone NPL, acquiring the two largest tranches by nominal balance and the highest quality of assets in the loan portfolio.

Deutsche Bank also won tranches of IBRC’s Project Quartz and NAMA’s Project Spring.

Blackburn joined Deutsche Bank in September 2005, prior to which he spent three years at O’Connor Capital Partners.

All parties declined to comment.

Original story: CoStar Finance (by James Wallace)

Edited by: Carmel Drake