Värde Has Invested €800M In Spain’s RE Sector Since 2013

1 March 2017 – Eje Prime

Värde’s latest acquisition, Vía Célere, is going to be incorporated into the plans that the group has for Dospuntos, through which it intends to invest €2,000 million over the next six years, buying up land and building homes.

The US firm Värde Partners has set itself the goal of revolutionising the real estate business in Spain. Following its purchase of the real estate property developer Vía Célere earlier this week, the company has now invested more than €800 million in the real estate business in Spain. Since its arrival in the country in 2013, the fund has closed multiple operations, such as the purchase of Banco Popular’s real estate fund and the acquisition of assets in Madrid and Barcelona. Now, Värde Partners is taking another step forward in its objective to redraw the property developer map in Spain.

Founded in 1993 and headquartered in Minneapolis (USA), Värde Partners invests its capital all over the world, through multiple strategies. (…). The group works with a wide range of assets and regional headquarters in Minneapolis, London and Singapore. It also has secondary offices in other cities around the world, including Barcelona.

Värde Partners is an alternative investment fund manager, with more than $10,000 million in assets under management and more than $50,000 million invested around the world. (…).

In December 2012, the investment fund fired the starting gun on its investments in Spain by joining forces with Anchorage to formalise the purchase of five buildings in Madrid and Barcelona for €100 million. Under the name Operation Copernicus, this package of assets used to belong to the former German bank Eurohypo, but was put up for sale in conjunction with the real estate company Monteverde. (…).

Then, during 2013, on its path to seek out good opportunities in the real estate business in Spain, Värde Partners seduced Banco Popular into the purchase of Aliseda for €815 million, together with Kennedy Wilson. The alliance formed by the two groups competed with lower offers from other groups such as Fortress, Willbur Ross and Lone Star.

After two years organising its business portfolio in Spain, Värde Partners finally took control of San José Desarrollos Inmobiliarios, where it already owned almost 25%. The US fund purchased Banco Popular’s 25% stake for €90 million, which allowed it to take ownership of 51% of that firm’s share capital.

From its newfound position of power, Värde Partners immediately carried out a €60 million capital increase, a move aimed at propping up the company and laying the foundations necessary to start building homes. In this way, Värde Partners prepared the basis of what would later become Dospuntos.

More recently, Värde has closed its last two purchases in Spain just a few months apart. In 2016, the group acquired the property developer Aelca from the Avintia group for €50 million. Meanwhile, it announced on Monday, that it is going to take control of Vía Célere for €90 million.

In this way, Vía Célere will form part of the plans that the group has for Dospuntos, through which it intends to invest €2,000 million over the next six years (…). The company already owns a vast land bank on which it plans to build more than 7,000 homes. In addition, the company wants to continue expanding its stock of land. In this way, its business plan for 2016-2021 includes new acquisitions with the aim of creating “the best land portfolio in Spain”.

Following its purchase of Vía Célere, Värde will integrate this real estate company into Dospuntos, which will operate under the Vía Célere trading name and which will have a land portfolio measuring more than 1 million m2. (…).

Original story: Eje Prime (by C. Pareja)

Translation: Carmel Drake

Banks Have Put €2,000M In RE Assets Up For Sale In 2017

6 February 2017 – Idealista

Real estate assets are still treated like a hot potato in the banking sector. In order to reduce the default rate (which still exceeds 25% in the case of loans to property developers) and avoid more provisions, entities such as Bankia, BBVA and Liberbank are continuing in their efforts to accelerate the sale of portfolios of unpaid secured loans, as well as packages of real estate assets. 2017 has started with almost €2,000 million in properties up for auction. (…). They include homes, premises, offices, industrial warehouses and land.

Most of the operations have been on the market for several months, since no buyers have yet been found. Some are well known, such as BBVA’s Project Vermont, a portfolio of loans to property developers secured primarily by newly built homes and worth almost €100 million. Several funds were interested in acquired this lot: Oak Hill, Fortress and AnaCap.

And it is BBVA that has the most packages on the market, including: Project Buffalo, which contains homes worth €400 million; and Project Boston, which comprises 16 office buildings located in Madrid, Barcelona and Valencia, worth €200 million. (…).

Liberbank has put Project Fox on the market. It is a portfolio of real estate debt worth around €200 million and is the entity’s first (but not its last) portfolio of unpaid mortgages.

Other operations have also made their debuts in 2017. Such is the case of Project Tour, a package being sold by Bankia, one of the most active players in the sale of real estate portfolios. It comprises 1,800 properties (…) and is worth €166 million.

Funds start to divest their purchases

The market has also started to see how some of the international funds that have invested in our country in recent years are starting to sell some of the assets they have purchased. Last year, Lone Star made its debut as a vendor (…) when it put Project McLaren on the market. It comprises two portfolios: one containing more than 1,000 mortgage loans worth €102 million and secured primarily by homes, although there are also some commercial assets in the mix. The other portfolio, comprising more than 600 homes, has a combined appraisal value of €51 million. The firm Cabot, which specialises in managing bank loans, has expressed its interest in that portfolio.

Another fund that wants to divest some of its real estate investments in Spain is the US firm Ares Management, which has put Project Firefox onto the market: real estate debt worth around €160 million.

Bankia, Caixabank and Sareb were the most active at divesting real estate in 2016 (…).

Sareb has been one of the key players in the market (in recent times), having managed to place €1,565 million of real estate debt of all kinds with international investment funds (during its three year life). Its largest non-performing loan portfolio (Project Eloise) had a nominal value of €553.3 million and it was purchased by Goldman Sachs. (…).

In 2016, Bankia had several portfolios up for sale, including Project Ocean, Project Tizona and Project Lane.

Caixabank become one of the most proactive entities in the sale of Spanish property last year. Its most high profile sales included Project Sun, with hotel debt worth around €1,000 million; Project Carlit, with around €750 million of real estate debt; and Project More 2, containing €200 million of owned properties (REOs). (…).

Other players with more limited activity included Abanca (formerly Novagalicia) and Cajamar.

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

Translation: Carmel Drake

UniCredit Sells €17,700M In Doubtful Loans To Pimco & Fortress

15 December 2016 – Expansión

The Italian bank has €360,000 million of doubtful loans on its balance sheet.

UniCredit, the largest bank in Italy, has taken its first major step in the long awaited clean up of the transalpine financial sector, with the sale of €17,700 million in doubtful loans to Pimco and the Fortress Investment Group. Experts believe that Italy’s other financial institutions will find it harder than UniCredit to clean up their balance sheets.

Massimo Famularo, analyst at Frontis, considers that “UniCredit is playing in a league of its own and its capacity to absorb losses is enormous compared with that of the smaller Italian banks”, reported the Bloomberg news agency.

The sale of doubtful loans forms part of UniCredit’s new strategic plan, which also includes a €13,000 million capital increase and the cutting of 14,000 jobs. “The inclusion of Pimco and Fortress in the sale agreement for the doubtful loans gives credibility in the market and encourages other players to make the step forward”, says Federico Montero, analyst at Evercore Partners, referring to the other Italian financial institutions with doubtful loans on their balance sheets.

UniCredit will divest these doubtful debt portfolios at a discount of 77%. That is higher than the 73% discount at which another one of the Italian banks in distress, Monte dei Paschi di Siena, is planning to sell its doubtful loans, amounting to €28,000 million, to Atlante, the Italian state fund for the bail out of the financial sector.

On average, Italy’s banks are valuing their doubtful debt portfolios on their balance sheets at a discount of 57%, according to data compiled by Reuters. UniCredit’s share price fell by 6.4% on the stock exchange (yesterday) and has fallen by 48% so far this year.

Monte dei Paschi

Monte dei Paschi, the oldest bank in the world and the third largest in Italy, confirmed yesterday that the ECB has rejected its request to extend its capital increase amounting to €5,000 million until the middle of January. The entity’s Board of Directors met yesterday and will convene again today to announce their definitive plan, according to sources quoted by the Reuters news agency. The market takes it for granted that the entity will need public aid for its recapitalisation.

Original story: Expansión

Translation: Carmel Drake

Axactor Buys Its Fifth Debt Portfolio In Spain For €565M

2 August 2016 – Cinco Días

The Norwegian company Axactor is continuing with its commitment to Spain. Yesterday, it announced the purchase of a new debt portfolio in the Spanish market for €565 million, which represents the company’s fifth operation this year. In this way, Axactor is pushing ahead with its growth strategy in Spain and is strengthening its position as one of the main operators in the debt management sector. Juan Manuel Gutiérrez (pictured above right), Head of Axactor in Spain, confirmed that “ we are totally focused on growth: this acquisition forms part of our plans to continue increasing our presence in the Spanish market, through both the purchase of portfolios and the management of debt for third parties”.

The new debt portfolio acquired by Axactor comprises secured and unsecured loans amounting to €565 million. The portfolio includes almost 30,000 accounts held by individuals and small and medium-sized companies. This acquisition comes after the firm closed another deal in July in the primary market, when it purchased a debt portfolio for €144 million from Banco Mare Nostrum.

Since December 2015, the company has tripled the number of cases under management (from 250,000 to 780,000) and it has quadrupled the total volume of debt under management (from €2,140 million to €9,035 million). Spain has become the fastest growing market for the group and is at the centre of its strategy to become the leader of the debt management market in mainland Europe. Its progress was boosted by the acquisition of Geslico, an operation that allowed the Nordic firm to become the second largest operator in this business segment.

In addition, the incorporation of that company into the group has allowed Axactor to cover the entire value chain of the debt business and has facilitated operations involving collections and debt purchases thanks to a complex IT system to which Axactor has obtained access as a result of the integration of Geslico.

Axactor bought the management company of the former savings banks from the opportunistic fund Fortress, following the US firm’s withdrawal from the country. In this way, Axactor began its international expansion several months ago and chose Spain for that purpose. Its strategy involves becoming the leader of the debt management market in mainland Europe. “Spain has become the launch pad for this strategy and a key market for the Norwegian group”, said the firm, which is listed on the stock exchange.

Original story: Cinco Días (by A.G.)

Translation: Carmel Drake

Banks & Funds Bid For Citi’s Real Estate Legacy

31 May 2016 – Expansión

Citi’s real estate legacy in Spain is up for auction. Two US funds, Ares Management and York Capital, have put real estate loans and foreclosed assets amounting to €180 million up for sale, and banks and opportunistic investors are bidding to acquire the portfolio.

Around half of the portfolio comprises mortgages, of which the majority are up to date (in terms of their repayments), whilst the rest are homes and other assets that the funds have acquired as a result of non-payment (by borrowers).

Ares Management and York Capital purchased these assets from Citi in Spain at the beginning of the crisis, as they took advantage of the fact that the US entity was withdrawing from certain activities. That was further reflected last year with the sale of its credit card and retail banking business to Banco Popular.

Resale of assets

The strategy to resell assets is common amongst the opportunistic funds, either because they have already obtained the expected returns or because they believe that they can obtain a higher price by selling the portfolio at a particular time.

For example, that is exactly what Fortress did recently, with the sale of Geslico, the former recoveries platform of the savings banks, to the Norwegian group Axactor. The same fund has been selling off other assets in Spain, just like other funds that arrived in Spain and purchased assets between 2011 and 2012.

The operation is being advised by N+1, under the name Project Firefox, and the first offers are expected to be received within the next few days, according to sources at the funds.

In addition to this portfolio, last year, Citi sold another portfolio to Evo Banco from the fund Apollo, containing €370 million of mortgages and 200 properties.

In parallel, the US bank sold its retail banking and credit card business to Popular for €240 million. The Spanish entity acquired a portfolio of 1.2 million clients, around €2,300 million assets under management, €2,000 million in deposits, a network of 45 bank branches and a workforce comprising 950 employees. Moreover, it acquired 1.1 million credit cards, which have a total outstanding loan balance of €1,400 million.

Project Firefox will have to compete with the avalanche of real estate asset portfolios that the Spanish banks have put on the market in the last month, with Bankia, CaixaBank, Sabadell, BBVA, Santander, Cajamar and Abanca, amongst others, all offering up assets for sale.

Original story: Expansión (by J. Zuloaga)

Translation: Carmel Drake

Norwegian Group Axactor Buys Geslico From Fortress

13 May 2016 – Expansión

On Wednesday, the US fund Fortress signed the sale of Geslico, the recovery firm of the former savings banks, to a new player in the Spanish market, the Norwegian group Axactor.

Through this agreement, Fortress has almost completely withdrawn from the financial sector, where it now only owns Lico Leasing. The opportunistic fund decided to backtrack because of the administrative obstacles that it came up against when it tried to take control of the savings’ banks financial company – 15 months. In recent months, it has also sold part of the stake that it held in Paratus, the former financing arm of General Motors, GMAC, to the British firm Cabot Financial.

The acquisition by Axactor represents the arrival of another Norwegian specialist firm in Spain. The financial crisis that the Scandinaivan countries experienced in the 1990s forced them to specialise in this type of business, something that they are now taking advantage of in the face of the accumulation of troubled banking assets in markets such as Spain.

Alongside Axactor, Lindorff has been one of the most active players in Spain in recent years. In fact, Axactor’s team in Spain originated in Lindorff, with executives such as Juan Manuel Gutiérrez Alcubilla (pictured above, right), the former Finance Director of Lindorff, now leading Axactor as the Country Manager.

Through the purchase of Fortress’ stake, Axactor España hopes to generate revenues of more than €40 million in 2016, compared with €10 million in 2015. The Norwegian group will employ a workforce of almost 500 people, more than twice the current number, across 9 operating centres. In addition, the operation will allow it to increase the volume of debt under management to €3,600 million. This investor has purchased portfolios from Oaktree – a Bankia portfolio – and York – from Ibercaja – in recent months. The advisors to this operation were N+1, on the side of Fortress and KPMG, on the side of the Norwegian group.

Original story: Expansión (by J. Z.)

Translation: Carmel Drake

Lindorff Buys Aktua From Centerbridge For c. €300M

21 March 2016 – El Confidencial

Aktua, the real estate services company created by the former Banesto, which was acquired by the opportunistic fund Centerbridge Partners in 2012, is about to change owners once again. The Norwegian company Lindorff has reached an agreement to complete the acquisition for almost €300 million, which will turn it into one of the largest landlords in Spain. The Scandinavian company has fought off competition from Apollo Capital Management, the toxic property management arm of Banco Santander, as well as the German firm Activum SG Capital Management.

According to several sources, Lindorff has won the auction led by Barclays, Bank of America Merrill Lynch and Linklaters against those two opponents, and is now putting the finishing touches to the legal conditions so that it can close the operation. It has not been simple because, whilst Aktua was on the market, its parent company, Centerbridge, acquired the real estate arm of Ibercaja – on 2 February – which meant that it had to recalculate the numbers for the potential buyers.

Aktua manages around 42,000 properties worth almost €7,000 million; those assets will be added to those that Lindorff already manages in Spain. The Scandinavian company was one of the pioneers to invest in the real estate and recovery services sector when the crisis first began. In fact, in 2012, it bought Reintegra for €100 million, the subsidiary of Banco Santander dedicated to the recovery of doubtful debts, and in December 2014, it acquired Sabadell’s recovery arm, for which it paid €160 million. Along the way, it also acquired several non-performing debt portfolios, including several from the bank led by Ana Botín.

Currently, Lindorff España, which last year appointed Alejandro Zurbano as its CEO, employs more than 1,100 professionals and has a presence throughout the country, with offices in Madrid, Valladolid, A Coruña, Alicante, Barcelona, Granada, Jerez de la Frontera, Santa Cruz de Tenerife, San Sebastián and Valencia. The multi-national company from the North of Europe has almost 4,000 employees in total, located in its 11 countries of operation, including Norway, Finland, Sweden, Denmark, Russia and Germany.

Although the amount of some of its operations have not been made public, Lindorff has invested almost €1,000 million to become one of the largest landlords in the country. Its work involves managing homes and retail premises, owned by the various real estate companies that it has acquired, claiming the payment of unpaid loans from their owners and negotiating the debt to obtain a spread. Once the last details of the purchase have been finalised, Linforff will manage non-performing loans, homes, retail spaces and land owned by Banesto, Ibercaja, Banco Mare Nostrum (BMN), Santander and Sabadell.

The sale of Aktua was essential for the main overseas funds that have become the largest landlords in Spain, because it is a volume-based business that is currently still very atomised. Sources in the market expect to see a process of concentration in the sector, in which almost €10,000 million has been invested, mainly on the purchase of non-performing loan portfolios. Some are already leaving, such as Elliott, which recently sold its recovery management platform to Cabot, and Fortress, which has now put its main businesses in Spain up for sale: the financing company Lico Leasing and the loan management platform Paratus.

For Centerbridge, the sale of Aktua is going to generate a sizeable profit, given that it acquired the platform for around €100 million in 2012 and is now selling it for almost €300 million. The real estate platform of the opportunistic fund employs 400 people and generates a gross operating profit or EBITDA of around €50 million.

Original story: El Confidencial (by Agustín Marco)

Translation: Carmel Drake

Fortress Finalises Its Withdrawal From Spain

17 November 2015 – Expansión

Strategy / The US fund will close the sale of Paratus to Elliott and Cabot Financial this week. It will also complete the ERE affecting more than 50% of Lico Leasing’s workforce.

The opportunistic fund Fortress is continuing its withdrawal from the Spanish financial sector. The US investor is finalising the sale of one of its financial businesses in the country, namely, Paratus, a platform that specialises in the management of problematic banking assets, which Fortress has controlled since 2009.

According to several financial sources, the sale of Paratus will be signed this week with the fund Elliott Advisors and the British group Cabot Credit Management Group, owned by JC Flowers and Encore Capital, taking ownership.

Each of the investors will take over a different part of Paratus’ business. Elliott is most interested in the real estate division and in the team. At the beginning of the sales process – known as Project Coast and advised by N+1 – Paratus held loans amounting to €152 million, secured by 866 properties; 500 homes worth just over €100 million; and a team comprising 43 professionals.

Meanwhile, Cabot is interested in acquiring the unsecured loans, which Fortress is selling for €426 million. The British group is looking to build upon its recent entry into the Spanish market, following its purchase of the Gesif platform from Elliott.

In addition to this possible sale, Fortress is also reducing its exposure to the Spanish financial sector by conducting an ERE at Lico Leasing. At the end of 2014, this subsidiary of Fortress had 130 employees. Through the restructuring, the fund has got rid of the commercial divisions of Lico Leasing, its other major financial business in Spain, which it acquired from the savings banks just one year ago; this means that it will no longer capture any new loans.

Complex operation

Fortress will continue to manage Lico Leasing’s existing portfolio and will continue to operate Geslico, its subsidiary that specialises in problem loans. That company recently integrated two of Fortress’s other companies in Spain: Auxiliar de Servicios y Cobros and Gestión de Activos de Aragón.

Fortress’s commitment to Lico Leasing was cut short due to the time required for its approval – almost two years – and by the re-opening of the credit tap by banks following the measures introduced by the ECB.

The US fund will continue with its other activities in Spain, by providing financing to companies and the real estate market.

Original story: Expansión

Translation: Carmel Drake

Centerbridge Could Raise €200M-€300M From Sale Of Aktua

6 November 2015 – Expansión

The consolidation has begun of the banks’ former real estate companies, also known as servicers. The US fund Centerbridge has put its subsidiary Aktua up for sale, which it acquired from Banesto in 2012. The operation – known as Project Pegasus – has been entrusted to the investment banks Barclays and Bank of America, and to the law firm Linklaters, and has been valued at between €200 million and €300 million, according to various sources.

Aktua currently employs around 400 people and manages real estate assets worth €6,000 million. Alongside the assets that originated from Banesto – whose management it maintained following that entity’s integration with Santander – Centerbridge also manages properties and debt from BMN and several recovery contracts for other entities.

Centerbridge’s withdrawal from the market was first triggered when Aktua lost the contract it had held with Sareb, following that entity’s tender to select new managers in 2014. Since then, those assets have been managed by Altamira, owned by Apollo and Santander, which seems to be the likely candidate to take over Aktua.

Sources in the sector do not rule out the possibility that Aktua will end up in the hands of one of the other servicers that are part-owned by funds operating in Spain, such as Altamira; Aliseda, owned by Värde, Kennedy Wilson and Popular; Haya Real Estate, owned by Cerberus; Servihabitat, owned by TPG and CaixaBank; and Anticipa, owned by Blackstone. They have also not ruled out the possibility that Solvia, owned by Sabadell, will enter the process, since it was awarded one of the Sareb contracts.

With these kinds of operations, international funds are looking to obtain scale and efficiency in order to make their platforms more profitable. These investors spent almost €2,300 million buying servicers from the banks.

According to Reuters, new funds, interested in entering the sector for the first time, may also join the bidding, such as the private equity firm Permira.

In addition to these possible mergers, experts in the sector also expect that some of the entities that have not outsourced the management of their assets may do so. In fact, Ibercaja is progressing with Project Kite, which includes 6,900 residential units, 1,300 commercial premises and industrial warehouses and 600 plots of land, worth €800 million, and a team of professionals specialising in the segment, comprising around 50 employees.

Centerbridge’s exit from this business comes at a time when other opportunistic funds are also leaving the market, such as Elliott, which recently sold its recovery management platform to Cabot; and Fortress, which has put two of its main businesses in Spain up for sale: the financing company Lico Leasing and the loan management platform Paratus.

Original story: Expansión (by J. Zuloaga)

Translation: Carmel Drake

Slim Set To Acquire Realia After Hispania Withdraws Its Bid

24 July 2015 – Expansión

The Mexican businessman, who already owns 25% of the real estate company, has now been given free rein to make an agreement with Realia’s creditors.

The takeover war for Realia came to an end on Wednesday, one day before the deadline for its approval. The Socimi Hispania Real, a subsidiary of the listed company Hispania, announced on Wednesday that it was withdrawing its public bid to acquire Realia’s shares, which it had launched in November 2014.

Hispania’s Board of Directors have decided to withdraw, rather than improve, their bid of €0.49 per share, despite the offer (€0.58 per shares) submitted by their competitor, the Mexican businessman Carlos Slim, through his real estate company Carso.

Hispania’s decision leaves Realia’s shareholders with just one alternative, the one presented by Slim, who already controls 24.9% of the real estate company, after he purchased the stake previously owned by Bankia.

Nevertheless, it seems unlikely that this bid will be successful either. According to sources close to the process, the percentage of shareholders agreeing to Carso’s bid did not exceed 1% of the capital on Wednesday, a situation that would not only not harm Slim’s interests, but that would actually benefit him by preventing the creditors from executing Realia’s debt.

Lower price

The offer presented in March by the Mexican businessman falls well below the listed price of the real estate company. The company’s shares closed trading on Wednesday at €0.705, despite having fallen by 2.08%, to place the market capitalisation of the company at €216.7 million. Slim’s bid price values Realia at €30 million less.

The change in control of Realia would result in the early repayment of the €1,170 million debt held by the real estate company. Almost €800 million of that amount was loaned by the funds Fortress, King Street and Goldman Sachs. Those three creditors had made an agreement with Hispania to not enter into negotiations with any other candidate regarding the purchase of Realia for 10 months. Now that the Socimi has withdrawn its takeover offer, that agreement is void.

That loan is due to be repaid at the end of 2016. If Slim does not acquire more than 30% of Realia, then the change of control clause will not be invoked and no early repayment will be required.

Even if he does not manage to buy more shares, Slim may still be able to control Realia with the support of FCC, in which he is primary shareholder, with a 25.6% stake. The construction company, which owns 36.9% of Realia, has said that it would not sell its stake in the event of a takeover.

In his takeover prospectus, Slim – who is being advised in this process by the law firm Ontier – considered the possibility of negotiating with the creditor funds to capitalise some of the loan, amongst other options – he also considered undertaking a capital increase, whereby allowing new shareholders to enter and diluting his own shareholding.

During the first quarter of 2015, Realia generated turnover of €23.3 million, i.e. 33.9% less than in 2014, whilst its net profit amounted to €170,000, compared with a loss of €7.6 million in the previous year.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake