BBVA Sells its Last Large Problem Portfolio to CPPIB

17 December 2018 – El Confidencial

The Canadian fund CPPIB has been awarded BBVA’s last major portfolio of problem assets. The investor, which manages the money of the public pensions in the North American country, is negotiating the final details of its purchase of €2.5 billion in unpaid real estate loans from the Spanish entity, according to financial sources consulted by El Confidencial. BBVA declined to comment.

The sale, framed as Project Ánfora, is going to close within the next few days.

CPPIB has won the bid, fighting off competition from two major US investors: Cerberus and Lone Star. The auction has been coordinated by Alantra and, according to average market prices, must have been closed for a price of around €1 billion.

For BBVA, this same represents almost the conclusion of the clean up of its real estate inheritance. Together with Project Ánfora, the entity, which is still chaired by Francisco González, agreed to sell €12-13 billion in property to Cerberus (Project Marina) a year ago. The final details of that operation are still being closed with the Deposit Guarantee Fund (FGD).

Before the sale of Ánfora and Marina, BBVA had a net real estate exposure of €5.5 billion, based on data as at September 2018. The aim is for the real estate inheritance to be reduced to almost zero by the end of the year.

The Ánfora portfolio also contains refinanced loans amounting to €900 million, a new type of asset in this type of process.

For CPPIB, this is the second batch of problem assets that it has purchased from BBVA this year. It already acquired Project Sintra, containing €1 billion in unpaid loans to property developers.

The Canadian fund broke into Spain a few years ago with the acquisition of Altamira, together with Apollo and the ADIA sovereign fund, the main investor vehicle of Abu Dhabi. CPPIB’s interest in Spanish real estate means that it cannot be ruled out that it will end up being the buyer of Altamira following the current sales process. Large vehicles such as the Canadian one use alternative assets such as properties to diversify their portfolios and reduce their dependence on stock market and bonds.

Original story: El Confidencial (by Jorge Zuloaga)

Translation: Carmel Drake

BBVA Repurchases 166 Bank Branches for €250M

17 November 2018 – Expansión

An unexpected decision from BBVA. The entity, which has made digital transformation the cornerstone of its strategy in recent years, has just repurchased 166 bank branches from Merlin Properties. According to comments made by the Socimi yesterday, the bank, which had been occupying these branches on a rental basis, is going to disburse €252 million to acquire the batch of offices.

The intention of the bank is to gain flexibility for the daily management of the 2,870 branches that it operates throughout Spain, according to sources at BBVA. Since 2007, the entity chaired by Francisco González has embarked on a policy to divest its main assets, such as its former headquarters in Madrid on Paseo de la Castellana, and other iconic buildings in the capital. Between 2009 and 2010, the entity sold more than 1,000 branches to investment funds.

As one of the conditions of those operations, BBVA committed to remain as the tenant of the branches for between 20 and 30 years, with the possibility of extending those rental terms and ultimately repurchasing the properties.

Economic sense

“Some of the branches that have been repurchased are closed and even so, we have still been paying the rent”, explain sources at the bank. That was one of the reasons that caused BBVA to take a different step in its strategy.

In the sector, experts believe that BBVA’s new course of action with the repurchase of branches may respond to a double objective: to reduce recurring costs due to the payment of rent and to take advantage of the upward cycle in the real estate sector with the subsequent ale of these premises. In fact, the bank has just closed the operation to transfer around €13 billion in foreclosed assets to a new company.

The fund Cerberus controls 80% of that joint venture, of which BBVA will retain the remaining 20% in order to obtain possible gains. With the ownership of the branches, the bank could also save time to expand or reduce the size of those premises, according to sources at BBVA.

The Socimi is still the owner of almost 700 BBVA branches. The entity rules out returning to repurchase a new batch from that portfolio, at least in the short term. The bulk of the branches repurchased from Merlin are located in cities with medium-sized populations.

To accelerate its digital transformation, BBVA is planning to close 179 bank branches in Spain at the end of this year. Based on data as at September, the most recent audited information, the entity has already completed more than 80% of the planned adjustment. BBVA’s commitment to digitalisation translates into more business, given that it sells 34% more to those clients considered as online.

The distribution model has changed drastically since 2009 and has focused on digital transformation. In fact, the network is the smallest it has been for 16 years, the latest available data, with fewer than 3,000 branches (…).

Original story: Expansión (by R. Sampedro)

Translation: Carmel Drake

Project Newton: Bankia Puts €450M Toxic Asset Portfolio Up for Sale

21 September 2018 – Voz Pópuli

The insatiable appetite of the opportunistic funds for Spanish property is never ending and the banks are taking advantage to reduce their exposure to real estate assets and whereby clean up their balance sheets. The latest to come to the market is Bankia, which has put a €450 million portfolio up for sale comprising primarily property developer loans, although Project Newton, as the operation has been baptised, also includes a small proportion of foreclosed assets, according to financial sources consulted by Vozpópuli.

Newton’s sale is expected to be completed this year and will be followed by two other asset portfolios that the bank plans to sell soon, according to reports from Bloomberg. The operations disclosed by the US agency include a €1,500M portfolio comprising unpaid mortgages and a €2,000M portfolio comprising foreclosed assets.

At the end of the first half of the year, the entity chaired by José Ignacio Goirigolzarri held €15.2 billion in toxic assets, after reducing its balance by €1.7 billion between the months of January and June.

Strategic plan

With the sale of the three aforementioned portfolios before the end of the year, the bank would more than exceed its annual objective in terms of asset sales, which amounts to €2.9 billion per year for the next three years. In fact, if Bankia divests all three portfolios, its real estate exposure would decrease to €11.25 billion, and so it would follow in the footsteps of the other entities that have accelerated the sale of these types of assets in the last year.

The most recent example is Santander, which on Wednesday closed the sale to Cerberus of a portfolio of properties worth around €2.79 billion with a 45% discount. The initial perimeter of the operation was €5.1 billion, but in the end, the commercial premises and land that had been included in Project Apple were left out of the final portfolio.

The entity already transferred Popular’s property last year to a joint venture with Blackstone, and so its real estate exposure will decrease to around €7.3 billion once the Apple sale is completed.

Meanwhile, BBVA, which also sold €13 billion in foreclosed assets to Cerberus, has entrusted the sale of €2.5 billion in problem loans to Alantra. That operation will reduce the real estate exposure of the bank chaired by Francisco González to almost zero.

Moreover, Sabadell and CaixaBank have also completed significant operations in recent months. The former sold €9.1 billion in foreclosed assets to Cerberus, whilst the latter divested almost all of its real estate business: €12.8 billion in real estate assets, which were acquired by Lone Star.

In this way, the banks are complying with the guidelines set out by the European Central Bank (ECB) and are generating returns from their businesses in Spain, which have been weighing them down since the economic crisis.

Original story: Voz Pópuli (by Pepe Bravo)

Translation: Carmel Drake

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

Project Sintra: BBVA Engages PwC to Sell €1bn of Toxic Loans

13 March 2018 – Voz Pópuli

BBVA does not want to waste any more time on the real estate clean-up exercise. In the last few days, the entity chaired by Francisco González has launched a €1 billion portfolio on the market: Project Sintra, according to financial sources consulted by Vozpópuli. It is being advised in the operation by PwC. Neither the bank nor the consultancy firm wanted to comment.

This portfolio is the penultimate step for BBVA in the reduction of its real estate exposure to zero, after the agreement it reached with Cerberus to transfer €13 billion of foreclosed assets, as this newspaper revealed. That sale, Project Marina, is still pending the necessary authorisations and is scheduled to be closed in the middle of this year.

The balance of BBVA’s divestments is as follows: before Project Marina, the entity had a gross exposure (not including provisions) of almost €16 billion, which will end up at just over €3 billion. Of that figure, two-thirds relate to unpaid loans linked to land and completed developments, with a coverage ratio of 54%.

With this new operation, BBVA wants to be crowned as the first major entity to get rid of its inheritance from the crisis. Last year, Santander closed the sale of €30 billion from Popular to Blackstone, but it still has €11.7 billion left to divest.

The same stars

With Project Sintra, BBVA has now awarded the mandate for three consecutive operations to PwC. It did so with Project Jaipur, worth €600 million, which was acquired by Cerberus; and Project Marina, which had the same advisor and buyer.

The latter operation generated unease amongst certain funds, which complained to the bank because it had not opened a competitive process, but instead chose to negotiate one on one with Cerberus. Sources close to that operation defended that a bilateral sale could optimise both the price and an auction, thanks to the threat of opening the process to more rivals.

In this way, BBVA is one of the entities that has decided to accelerate the sale of portfolios during the first quarter, like Sareb, which is finalising the sale of between three and four packages: Nora, Bidasoa, Dune and Slap, with a combined volume of €3.2 billion.

One of the most fashionable assets and one that entities are increasingly including in their portfolios is land. In this way, Sareb is preparing an operation containing land only and Kutxabank is evaluating a similar process.

Original story: Voz Pópuli (by Jorge Zuloaga)

Translation: Carmel Drake

BBVA Sells Majority Stake in its Real Estate Portfolio to Cerberus for More Than €5bn

28 November 2018 – Voz Pópuli

BBVA has closed a real estate mega operation. The entity chaired by Francisco González has agreed to sell the majority of its problem assets to Cerberus, in a deal worth between €5 billion and €6 billion, according to financial sources consulted by Vozpópuli. The Spanish group will receive a cheque for between €3.5 billion and €4 billion for the majority stake in a new company that will be controlled by the US fund. After months of intense negotiations, the bank and the fund decided to seal the deal at the beginning of this week. Whilst we wait for the official figures to be made public, financial sources indicate that the real estate package for sale amounts to between €13 billion and €14 billion (as this newspaper revealed) and comprise around 70,000 properties. The assets sold are valued with a discount of around 60%. The parties involved all declined to comment.

The discount is lower than that agreed for the sale of Popular’s property, which amounted to 67%. Santander sold €30 billion with a valuation of €10 billion. Blackstone paid €5.1 billion for 51% of that company.

After signing the agreement, the two parties will request time to review the small print of the contract and to obtain the necessary authorisations. In this case, approval must be given by the Deposit Guarantee Fund (FGD).

According to the latest figures, BBVA has real estate exposure amounting to €17.8 billion on its balance sheet. Of that amount, foreclosed assets (€11.9 billion) and doubtful loans (€3.4 billion) account for €15.3 billion. Those loans and properties have a coverage ratio of more than 61%.

A sale like the one that Cerberus has agreed will leave BBVA as one of the largest groups with the smallest real estate exposure in Spain, something that investors and regulators have been demanding for years.

This agreement arose as a result of a meeting between González and the President of Cerberus worldwide, John W. Snow, at the beginning of July. The US banker – and former US Treasury Secretary, under the presidency of George Bush junior – proposed this operation to the President of BBVA after his firm was left out of the sale of Popular’s property.

The operation has been managed by the operations team at PwC, led by Jaime Bergaz. The law firms Linklaters and Ashurst have worked alongside him, and on the buy side, the consultancy firm Deloitte. All of the parties involved have been working on this operation non-stop for several months. The deal only came close to dying during the worst moments of the Catalan crisis, given that a lot of BBVA’s real estate assets are located in that region.

Following this acquisition, Cerberus consolidates its position as one of the largest real estate investors in Spain, alongside Blackstone. The fund controls Haya Real Estate, which manages assets on behalf of Sareb, Bankia, Cajamar and Liberbank. With BBVA’s assets, it takes on one of the most sought-after portfolios in the sector.

Original story: Voz Pópuli (by Jorge Zuloaga and Miguel Alba)

Translation: Carmel Drake

Blackstone & Apollo Vie For BBVA’s Remaining RE

18 October 2017 – Expansión

BBVA’s real estate portfolio is sparking a lot of interest in the market. The bank is holding exclusive negotiations with Cerberus to sell its real estate manager Anida along with around €4,000 million in foreclosed assets and non-performing real estate loans. But, other investment funds do not want to miss out on the assets that they consider to be juicy and so are setting their sights on the rest of the portfolio.

Financial sources indicate that other funds, such as Apollo and Blackstone, have expressed their interest in the loans and assets linked to the property that do not end up being included in the perimeter of the portfolio sold to Cerberus. BBVA has a gross exposure to the real estate sector in Spain of €20,190 million, and so Cerberus will be acquiring around 20% of the total. The entity currently has a coverage ratio of 57% over its real estate exposure after recognising provisions amounting to €11,431 million in total, according to data as at June, the date of the most recent audited accounts. Moreover, according to sources familiar with the deal, during the negotiations, Cerberus has communicated to BBVA its intention to purchase more than the aforementioned €4,000 million in doubtful loans and foreclosed assets.

Advanced phase

The conversations with Cerberus began before the summer and are now in a very advanced phase. The operation is expected to close before the end of the year, explain sources in the sector.

BBVA’s real estate activity is grouped around Anida. The bank is one of the few entities that retained full control over its real estate business. During the crisis, several banks sold their managers to specialist funds to accelerate the divestment of their problem assets. BBVA’s plans now involve the deconsolidation of its real estate risk.

Some of the sources indicate that Cerberus decided to bid aggressively to acquire Anida after failing to get past the first round of the bidding for Popular’s toxic real estate. Its desire is so great that even the most senior figure at the firm, John Snow, met with the President of BBVA, Francisco González, to make their interest clear. In fact, Cerberus is hoping to acquire 100% of Anida, according to sources in the sector.

More than a dozen large international funds are currently buying real estate assets and loans in Spain. They include Blackstone, which reached an agreement with Santander to acquire 51% of the company created for shelving Popular’s problem assets. Meanwhile, Bain Capital is holding exclusive negotiations with Liberbank to purchase a portfolio of property worth €700 million.

Original story: Expansión (by R. Ruiz and R. Sampedro)

Translation: Carmel Drake

Project Buffalo: BBVA Puts 4,000 Homes Up For Sale

16 November 2016 – Voz Populí

BBVA is stepping on the gas with the sale of its real estate assets. In recent weeks, the entity chaired by Francisco González (pictured above) has put up for sale its largest real estate portfolio since the outbreak of the crisis. The portfolio in question, known as Project Buffalo, contains around 4,000 homes worth between €300 million and €400 million, which the entity hopes to sell to international funds, according to financial sources.

The Spanish group is still one of the entities most weighed down by the property on its balance sheet, which amounts to €22,700 million, according to its results as at September 2016. €6,000 million of that figure relates to unpaid loans (doubtful and sub-standard credits) and almost €15,000 million corresponds to foreclosed assets. Even though it has a high coverage ratio (51%), BBVA has made a commitment to having an “immaterial” real estate exposure by 2018, according to its CEO, Carlos Torres.

Alongside this promise to investors, BBVA, like all of the other entities, needs to get rid of its real estate as soon as possible in order to make its business profitable again. (…). The bank chaired by González lost €315 million due to the Spanish property sector during the first nine months of this year, down by 24% compared to a year earlier.

In this context, “the strategy is to sell this exposure as quickly as possible, provided we do not destroy any value”, said Torres, speaking a few weeks ago. And for this reason, the entity has launched Project Buffalo.

This portfolio is the third largest, containing foreclosed properties, to be launched by a Spanish bank in recent years. The largest portfolio, Project Big Bang, was launched by Bankia and contained almost 40,000 homes worth €4,800 million, but in the end it was withdrawn after negotiations with Cerberus and Oaktree broke down. Subsequently, Sabadell sold 4,500 rental homes, worth €600 million, to Blackstone.

Now it is BBVA’s turn to whet the appetitive of the large international investors. Cerberus, Oaktree and Blackstone are all expected to study the operation, as well as Apollo, owner of 85% of Altamira and the purchaser of a small portfolio of homes from BMN last year; and Bain Capital (Sankaty), which acquired 2,500 properties worth around €350 million from Bankia a few months ago.

Project Buffalo is the sixth portfolio that BBVA has launched in the market this year, as part of a new drive from the new leader of the area, Javier Rodrígeuz Soler, Director of Strategy and M&A. He has taken over this role following Pedro Urresti’s move to HSBC.

The other portfolios include Project Vermont, containing €100 million of unpaid loans to property developers; Project Boston, with 16 offices buildings located in Madrid, Barcelona and Valencia; Project Coliseum, whereby BBVA sold its consumer business to Link Financial for €100 million; Project Detroit, with 441 warehouses and industrial plots of land; and Project Rentabliza, for the sale of real estate developments.

Original story: Voz Populí (by Jorge Zuloaga)

Translation: Carmel Drake

The PP Stops ‘Operación Chamartín’ Dead In Its Tracks

14 May 2015 – El Confidencial

Ana Botella has met with opposition from several members of her own party regarding the progress of the largest urban development in Spain, which was due to involve an investment of almost €6,000 million.

“I would like to settle the future of Operación Chamartín…it would be a real shame if the project does not go ahead”. Those were the statements made by Ana Botella in an interview with El País on Sunday, in which the now almost former Mayoress (of Madrid) summed up her legislature. With this assertion, she responded to a question about what was left for her to do and what she would like to finish before leaving. However, despite recent attempts by BBVA, the main shareholder, to push ahead with the largest real estate development in Madrid, the project that has been renamed Castellana Norte does not seem to be able to get off the ground.

According to sources at the capital’s Town Hall and shareholders of Dutch (the property development company), an extraordinary council meeting will not be held on Thursday to approve what was going to be the largest urban development in Spain. That is because 14 May is the last logical day from a political point of view for the authorisation of the new partial urban plan that would have to include the extension of the Paseo de la Castellana, promoted by BBVA and Construcciones San José.

Botella, has tried to the end to convince other members of the PP to approve a project that has been blocked since 1993 and which, was going involve an investment of €5,974 million. Of that amount, €3,300 million was going to flow to the coffers of the three Public Administrations involved in the project – the Town Hall of Madrid, the Community of Madrid and the Ministry of Development – and so the interest of all of these parties was evident.

Those figures were announced at the launch of the operation, an act that was blessed with the presence of the Chairman of BBVA, Francisco González, the Minister for Development, Ana Pastor, the Mayoress, Ana Botella and the President of the Community (of Madrid), Ignacio González. From that photo, two of the politicians are no longer in their roles and the owner of the infrastructure is waiting to see what happens in the general election. “There is no other project like this anywhere in the world”, said the Chief Executive of BBVA, the primary shareholder with 75% of the developer’s share capital, who added that “I don’t know if it will be profitable for the bank, but it will be for Madrid”.

The Director of Real Estate at BBVA, Antonio Béjar, has been putting pressure on Botella until the last minute to obtain authorisation for the project despite the opposition from various members of the PP and the reluctance shown by the Minister for Development. (…).

From the ranks of the municipal Government, they say that the 2,000 complaints made by various groups less than two weeks before the municipal and autonomous community elections make the approval of Operación Chamartín impossible. The authorisation would have been used by the opposition parties to link the PP to the financial system and the so-called “casta”, especially if we take into account that some voices link the arrival of Francisco González as the President of BBVA with that of José María Azar to the Government.

Sources at Dutch are confident that Castellana Norte will receive support from the new local government that emerges from the municipal elections on 24 May. Above all, because they consider that it will represent a significant economic boost for the capital, something which, in theory, no one should oppose. That has been recognised half-heartedly by the various opposition parties, such as the PSOE and Ciudadanos. But at the same time, they recognise that the (likely) diversity of the next local government will make any agreement more difficult, especially if we also take into account that there will be general elections in November and that the project also needs to be approved by the Ministry for Development.

The Castellana Norte District project involves extending the capital’s main thoroughfare by 3.7 kilometres and creating a new area where 17,000 new homes would be build, thanks to the burial (move underground) of the train tracks at Chamartín Station. The macro-project includes a green area measuring 24 hectares, two business areas with the construction of several skyscrapers of up to 320 metres tall and a new stop on the local train network.

Original story: El Confidencial (by Agustín Marco)

Translation: Carmel Drake