CaixaBank Completes the Sale of 80% of its RE Business to Lone Star

20 December 2018 – La Vanguardia

Today, CaixaBank has completed the sale of 80% of its real estate business to two subsidiaries of the US fund Lone Star for around €4 billion.

The operation was formalised on Thursday, after the necessary approvals were obtained, according to reports from CaixaBank, which has specified that this real estate package primarily comprises assets available for sale as at 31 October 2017 and 100% of the company Servihabitat.

All of these assets have been transferred to a newly created company called Coral Homes.

The initial sales price for 80% of the share capital of this company is €3.974 billion, which corresponds to a valuation for 100% of the shares of €4.967.5 billion.

Nevertheless, the initial price will be adjusted up or down over the coming months depending on a series of variables that are typical in these types of operations, said the bank chaired by Jordi Gual and whose CEO is Gonzalo Gortázar.

In parallel to the sale of the real estate portfolio, CaixaBank and other companies in the group have signed a servicing contract with Servihabitat for their real estate assets, present and future, for a period of five years.

The global impact of the operation is estimated to be a loss of €40 million net of taxes.

Meanwhile, the impact of the deal on the fully loaded CET 1 capital ratio is estimated to be an improvement of 15 basis points.

Aura advised Lone Star on this purchase.

Original story: La Vanguardia 

Translation: Carmel Drake

CaixaBank Will Save €550M Over the Next 3 Years from the Sale of its Real Estate

27 July 2018 – La Vanguardia

CaixaBank estimates that the sale of 80% of its real estate business to the US fund Lone Star will result in a cost saving worth €550 million over the next three years, from 2019 to 2021.

On 28 June 2018, CaixaBank announced that it had reached an agreement with Lone Star to sell it a portfolio of foreclosed assets comprising real estate assets available for sale as at 31 October 2017 and the real estate company Servihabitat, worth around €7 billion in total.

The CEO of CaixaBank, Gonzalo Gortázar (pictured above), highlighted today that the operation, which is expected to be closed at the end of this year or the beginning of next year, will allow the entity to clean up its balance sheet of the foreclosed assets accumulated during the years of the crisis and to improve profitability.

“We have managed to reduce the volume of harmful assets sooner than we had expected, before the new strategic plan comes into effect” for the period 2019-2021 that CaixaBank plans to present in November, according to Gortázar.

The director added that the operation with Lone Star will not generate “a significant result” for CaixaBank, although it will allow it to increase its future profitability, thanks to cost savings of around €550 million over the next three years, given that having real estate assets on its balance sheet has an associated operating cost.

The completion of this sale will result in the deconsolidation of CaixaBank’s real estate business, which will make it “the bank with one of the most healthy balance sheets in the Spanish market”, he said.

Original story: La Vanguardia

Translation: Carmel Drake

CaixaBank Transfers Servihabitat & €6.7bn in Toxic Assets to New JV with Lone Star

28 June 2018 – El Confidencial

Caixabank has followed in the footsteps of Santander and BBVA, as expected, to create a joint venture company with a large international fund to which it is going to transfer a large proportion of its toxic real estate assets.

Specifically, the entity has reached an agreement with Lone Star to transfer to this new jointly-owned vehicle its entire portfolio of foreclosed assets, whose gross value amounts to €12.8 billion, and which in net terms is worth €6.7 billion, as well as the servicer Servihabitat, whose ownership it recovered on 8 June, when it acquired the 51% stake that it had sold to TPG five years ago, and which takes the final amount of the agreement to €7 billion.

Lone Star will own 80% of the share capital of the new company, whilst the financial institution will control the remaining 20%, a structure that will allow CaixaBank to deconsolidate the assets. The deal is expected to have a neutral impact on the bank’s income statement, but will allow it to improve its capital ratio, the ultimate motivation behind these kinds of operations.

Specifically, the agreement with Lone Star will allow the bank to increase its fully loaded CET 1 ratio by 30 basis points, but, given that the purchase of Servihabitat resulted in a hit of 15 points, the net outcome of these two operations will have a final impact of a 15-point improvement.

Pressure from the European Central Bank on Spanish entities to accelerate the real estate clean up have been the trigger for these kinds of operations, since they allow the immediate deconsolidation of million-euro batches of toxic assets, which will be sold gradually through the joint ventures that are being created with the funds, whereby avoiding the need for the entities to recognise greater losses now.

Gonzalo Gortázar (pictured above), CEO of CaixaBank, highlighted that this “operation allows us to fast forward by a couple of years with our strategic objectives of reducing non-performing assets, allowing CaixaBank to position itself as one of the banks with the most healthy balance sheets in the Spanish market”.

The agreement also stipulates that Servihabitat will continue to render services to the bank for five years and the final signing of the agreement with Lone Star still depends on approval from the CNMC – Spain’s National Competition and Markets Commission – for the repurchase of 51% of the servicer, at which point the financial institution will be able to sell the assets onto the new joint company.

For its 80% stake (equivalent to around €5.6 billion based on current numbers), the fund will pay the valuation that the assets have at the time the transfer is definitively closed, which is still pending the corresponding authorisations, in both Spain and Europe, which means that the parties will have to wait until the end of this year or the first quarter of 2019.

CaixaBank expects to achieve cost savings of €550 million before taxes over the next three years, an improvement that also includes the new servicing contract that will be signed with Servihabitat.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

Project Ágora: CaixaBank Sells €650M NPL Portfolio to Cerberus

21 June 2018 – Voz Pópuli

CaixaBank is getting serious with the digestion of its real estate. The Catalan bank has just closed its first major divestment of 2018 and is analysing another possible large-scale operation to be completed in the second half of the year, according to financial sources consulted by Vozpópuli.

The sale that has just been announced is Project Ágora, a €650 million portfolio whose transfer has been agreed with Cerberus. According to the same sources, the US fund and CaixaBank have already signed a pre-agreement and are now negotiating the small print of the deal. Cerberus could pay around €200 million, according to market estimates.

Project Ágora comprises around 150 unpaid loans from large companies backed by retail premises, offices, industrial land and residential assets.

Strategic revision

Following this sale, the market is expecting CaixaBank to close a macro-operation during the second half of the year. The repurchase of Servihabitat, announced two weeks ago, is seen as a preliminary step, since that is what Santander did with Aliseda before it sold Popular’s real estate to Blackstone.

The sources consulted indicate that no process is underway yet, although the entity is reportedly working on some numbers and doing some preparation work in that regard. The entity led by Gonzalo Gortázar (pictured above) is being advised by consultancy firms, including KPMG. The Madrilenian banker wants to know whether undertaking an operation such as Quasar (Popular-Blackstone) or Marina (BBVA-Cerberus) will require it to recognise any new provisions.

CaixaBank has €14 billion in foreclosed assets on its balance sheet, worth €5.8 billion. That represents a discount of 58%, according to its accounts for the first quarter. Santander sold Popular’s real estate at a discount of 67% and BBVA sold its assets at a discount of 62% (…).

Gortázar’s team wants to avoid the market fixating on CaixaBank following the sales undertaken by Santander and BBVA, and the operations that Sabadell has underway.

The commitment from Cerberus

With Project Ágora, Cerberus is continuing to grow its real estate business in Spain. The fund led in Spain by BBVA’s former Finance Director, Manuel González-Cid, already purchased a portfolio from CaixaBank at the end of last year – Project Egeo – and is completing the purchase of 80% of BBVA’s real estate for €4 billion. For this, the comments to be issued by the Deposit Guarantee Fund (FGD) in the next few weeks will be critical.

In addition to the portfolios that it has been buying, Cerberus has a large part of its Spanish real estate interests in Haya Real Estate. After trying, unsuccessfully, to debut that entity on the stock market before the summer, the fund is negotiating its key contract and/or a possible acquisition of assets with Sareb. The fund certaintly has a great deal at stake with that operation.

Original story: Voz Pópuli (by Jorge Zuloaga)

Translation: Carmel Drake