Cerberus Negotiates To Buy At Least 51% Of BBVA’s RE Risk

14 November 2017 – Expansión

Cerberus and BBVA are moving forward with their conversations. The US fund is negotiating to buy at least 51% of the bank’s real estate risk. Financial sources indicate that BBVA is weighing up whether to sell a majority stake in Anida, the bank’s real estate manager, or to structure the deal around a newly-created company.

BBVA’s real estate activity is grouped around Anida. The bank is one of the few that still retains full control over its real estate business.

The operation with Cerberus would follow the model adopted by Santander for the deconsolidation of Popular’s real estate risk. In fact, some sources indicate that Cerberus decided to intensify its negotiations with BBVA after missing out on the bidding for Popular’s toxic real estate; it fell at the first hurdle.

The two entities have been holding negotiations since the summer and, according to sources, the parties are going to set the perimeter of the operation on the basis of the price that the fund is willing to pay.

For the time being, Cerberus has already made it known to investors that the negotiations are very advanced. Those sentiments were expressed by the representatives of the asset manager Haya Real Estate, a subsidiary of Cerberus in Spain, during the road show that they held recently with investors in London to issue €475 million in guaranteed bonds, according to sources in the know.

The operation to deconsolidate some of BBVA’s real estate risk is expected to be closed this year.

BBVA’s gross real estate exposure in Spain amounted to €17,774 million as at September. The entity had an average coverage ratio of 56% at that date, and so the net risk stood at €7,828 million. The entity has reduced its net exposure to property by 23.3% since the end of 2016.

Original story: Expansión (by R. Sampedro)

Translation: Carmel Drake

Haya Real Estate Issues €475M In Guaranteed Bonds

10 November 2017 – Expansión

Debt market debut / The real estate and financial asset manager Haya Real Estate is reconfiguring its liabilities with its first bond issue

The real estate and financial asset manager Haya Real Estate, owned by the private equity fund Cerberus, has debuted on the debt market by placing €475 million in guaranteed senior bonds.

The operation has been divided into two tranches. The first, amounting to €250 million, has been placed at a fixed rate of 5.25% and the second (amounting to €225 million), has been placed at a variable rate, linked to three-month Euribor +5,125%. The floating coupon has a zero clause for Euribor in such a way that negative interest is not computed. Currently, three-year Euribor is at minimum levels of -0.32%. The firm guarantees the payment of these issues with shares in the company itself and its service contracts.

Haya Real Estate has been assigned a B- rating by S&P and a B3 rating by Moody’s, which means it is considered high yield. Market sources maintain that demand for the issue was equivalent to more than twice the amount awarded in the end. The strong investor appetite has allowed Haya Real Estate to increase the amount of the issue, given that initially, it was planning to raise €450 million. To bring the issue to a successful conclusion, the firm engaged the services of Morgan Stanley, JPMorgan, Bankia and Santander.

Haya Real Estate will use the funds to repay a syndicated loan, to distribute a dividend to Cerberus, to hold onto cash and to pay the commissions and fees associated with the issue. In addition, it will return money that Cerberus lent it to acquire Liberbank’s real estate asset manager, for which it paid €85 million.

“Cerberus lent us the money until we were able to close the bond issue because the syndicated loan terms were more restrictive”, explained Bárbara Zubiría, Financial Director at the company.

Original story: Expansión (by Andrés Stumpf)

Translation: Carmel Drake