Tag: GE

GE Finalises The Sale Of Its Banking Business In Spain

16 December 2015 – Expansión

GE Capital Bank is finalising its exit from Spain. The financial subsidiary of the US multi-national is holding negotiations with several investors to sell its entire loan business in the country. According to various financial sources, the business is primarily mortgage based and has a volume of almost €600 million.

The multi-national company has engaged PwC to manage this operation, known as Project Zágato.

There are three key candidates on the list to take over GE Capital’s portfolio, namely: Blackstone, which has experience in the management of banking mortgages after its acquisition of Catalunya Banc’s loans; Oaktree, which closed a similar operation with Bankia earlier in the year; and Evo Banco, owned by Apollo, which is looking to grow its assets through this type of portfolio, like it did with a portfolio from Citi in April.

The mortgages that GE Capital has put up for sale have a default ratio of 30% and the majority come from loans that the US entity granted through APIs (real estate agents).

The Australian fund Pepper Group is currently managing the portfolio. The other businesses that the Group has in Spain, mainly consumer financing, have been maturing in recent months.

GE Capital’s exit from Spain comes in response to a change in the multi-national company’s strategy at the global level. At the beginning of the year, the US group decided to divest the majority of its financial activity to focus on its industrial business involving turbines, aircraft engines and medical equipment, amongst others. At the time, the group had financial assets amounting to $500,000 million (€455,000 million).

Strategic shift

The multi-national took this decision due to the commercial risk that the financial arm of its business represented when the financial crisis hit in 2008, despite the fact that it generated half of the group’s profits.

Since then, GE Capital has been selling off parts of its business through agreements such as the one reached with Wells Fargo in October, for the transfer of assets amounting to $32,000 million. Just over a year ago, when its financial unit had not yet been dismantled, it sold part of its consumer business in Sweden, Norway and Denmark to Santander, for €700 million.

The group began to withdraw from Spain at the beginning of 2015, when it delisted itself from the Spanish banking register. At the time, it had negative reserves of €220 million as a result of the losses accumulated over several years, due to its high default rate.

The entity first started recording losses in 2008 with €13.6 million and did not manage to emerge from the red until 2014, when it recorded profits of €53 million.

At the end of 2014, GE Capital Bank held assets worth €524 million, according to data from the AEB.

Before the outbreak of the crisis, GE Capital had partnerships in Spain with CAM and BBK.

Original story: Expansión (by J. Zuloaga)

Translation: Carmel Drake

Meridia Finalises The Purchase Of Nine Buildings From GE

23 February 2015 – Expansión

For €100 million / Javier Faus’ fund will take ownership of the offices located in Barcelona, Sabadell and Madrid.

The fund manager Meridia Capital, led by Javier Faus, the Vice President of Barcelona Football Club, and Juan Barba, the former Director of Transactions at Sareb, is finalising a new acquisition in the Spanish market: a property portfolio currently owned by General Electric Real Estate.

The private equity fund manager has been negotiating the purchase (with GE) for more than two months. The target: a batch of nine office buildings that have a total surface area of 75,000 square metres. The properties are mainly located in Madrid and Barcelona, although there is also one building in Sabadell.

Most of the buildings are located on the outskirts of their respective cities and have an occupancy rate of almost 70%, which means that the fund manager could generate value by increasing the number of tenants and therefore, its rental income.

According to sources close to the process, Meridia will pay General Electric’s real estate division €100 million for the batch.

GE’s real estate arm will present the transaction to its shareholders for approval at the shareholders’ meeting to be held on 4 March in Madrid. GE’s advisor, Cushman & Wakefield, has declined to comment.

A new fund

The fund manager will undertake the transaction through its new fund, Meridian Iberian Real Estate Fund (Miref), the second investment vehicle launched by the company, which it hired Juan Barba to lead.

The previous fund, launched by Faus, was exclusively dedicated to investments in hotels. It purchased eight high-end properties, all over the world; almost all of them have now been sold, with the exception of a hotel in Paris, managed by Starwood’s W brand.

Miref has a budget of €150 million, which could equate to an investment volume of €400 million after accounting for bank financing. The fund seeks to invest in all segments in the real estate market, from offices, to commercial assets, to logistics facilities to hotels.

Miref’s first transactions have included the purchase of Henkel’s former headquarters in Barcelona for €14.4 million, which it plans to convert into a hotel, and the acquisition of a batch of ten Consum supermarkets. Last year, it purchased the Albufera Park shopping centre in Madrid for €21 million, also from GE Real Estate.

Meridia’s acquisition of these nine office buildings is just another example of the interest being shown in offices, which together with commercial assets, are the properties in highest demand. In 2014, investment in these types of properties amounted to €2,500 million (triple the amount invested in 2013), with 67% of the assets located in Madrid and 33% in Barcelona, according to Aguirre Newman.

Original story: Expansión (by R. Ruiz and M. Anglés)

Translation: Carmel Drake