Haya Real Estate Prepares for its Stock Market Debut

23 January 2018 – Cinco Días

Haya Real Estate is another player in the real estate sector that is heading towards the stock market. The firm manages property developer loans and foreclosed real estate assets on behalf of Bankia, Sareb, Cajamar, Liberbank, BBVA and other financial institutions, worth €39.884 billion.

The company is owned by the private equity fund Cerberus, which created it back in October 2013 after acquiring a firm dedicated to real estate management from Bankia, called Bankia Habitat, in light of the need for the Spanish financial sector to get rid of its property-related toxic assets in a professional way.

Sources at the investment bank indicate that Haya’s debut on the Spanish stock market has been sketched out and will follow the format of the debuts of the property developers Neinor and Aedas, in 2017, and the upcoming debuts of Metrovacesa and Vía Célere. No decision has yet been taken regarding the valuation or percentage of the stake that Cerberus will sell. The news of Haya’s possible stock market debut was published by Bloomberg on Monday night. A spokesperson for Haya declined to comment on the news.

Haya, led by Carlos Abad Rico (formerly of Canal + and Sogecable) offers services throughout the entire chain of the real estate sector, but it is not a property developer: it manages, administers, securitises and sells assets but does not own them. The company mainly focuses on two businesses. Firstly, the advice and subscription of loans and guarantees, the management and recovery of debt and the conversion of the obligations on property developer loans into foreclosed real estate assets. And, secondly, the recovery and management of property through its sale or rental. The firm employs 680 professionals and has a sales network comprising 2,400 brokers. The value of the firm’s property developer debt portfolio amounts to €28.719 billion and of its real estate assets is €11.165 billion.

Haya recorded EBITDA of €89.9 million during the first nine months of 2017, up by 54% compared to the same period a year earlier, with sales of assets worth around €2.5 billion and an effective turnover (essentially commissions) of €165.8 million. The average management fee during the first nine months of last year was 4.25%.

Competitors

Haya has been growing with aplomb since 2013, but it has several major rivals. Blackstone, which purchased 51% of Popular’s real estate assets from Santander last summer for more than €5 billion, created Anticipa Real Estate, under the structure of the former Cataluña Caixa Inmobiliaria. That platform acquired 40,000 mortgages from the extinct Catalan entity for €4.123 billion in 2015. Since then, it has acquired those types of mortgage debt portfolios, with an investment that amounts to around €7 billion.

Meanwhile, Servihabitat belongs to the fund Texas Pacific Group, (TPG), which has held a 51% stake in the servicer since September 2013, when CaixaBank sold it that percentage, holding onto the remaining 49%. It manages assets worth around €50 billion. Altamira is owned by Santander (15%) and the fund Apollo (85%), which acquired its stake in November 2013. Its assets in Spain are also worth around €50 billion. Solvia, owned by Sabadell, manages assets linked to real estate worth more than €31 billion.

Original story: Cinco Días (by Pablo Martín Simón, Laura Salces Acebes & Alfonso Simón Ruiz)

Translation: Carmel Drake

Deutsche Bank: BBVA & Unicaja Cut Their Toxic Assets By 15% In 2017

14 November 2017 – Expansión

Deutsche Bank report / Sales to institutional investors of non-performing loans and properties allowed BBVA to reduce its stock by €4,589 million. Meanwhile, Unicaja has decreased its load by €818 million.

The clean up of the banks’ balance sheets is picking up speed thanks to the increasingly common sales of large property portfolios to specialist funds.

Between January and September, the average decrease in the stock of the large banks amounted to 6%; moreover, that figure reached 15% in the case of BBVA España. The next entity in the ranking was Unicaja, with a decrease of 14%.

During the third quarter, Santander España distorted the statistics with the sale of 51% of Popular’s toxic assets (€30,000 million) to Blackstone.

Project Jaipur

BBVA has closed several institutional sales in recent months. One of them, Project Jaipur, was sold to Cerberus, the fund with which it is now negotiating a macro-operation, which would include the sale of its real estate platform Anida. That portfolio comprises loans to property developers backed by real estate guarantees and has a gross nominal value of €600 million.

In February, BBVA sold a batch of 3,500 properties to the fund Blackstone. Another one of the representative operations of the year was the sale of 14 office buildings to Oaktree for €200 million.

Unicaja has sold several plots of land to various real estate developers in recent months. “Unlike in other quarters, during the third quarter of the year, most of the reduction in the banks’ problem assets came from the sale of foreclosed properties, despite the substantial decrease in activity in August”, says the recent report from Deutsche Bank.

Between June and September, CaixaBank was the most active entity, with sales worth €380 million.

The report cites several factors to explain the intensification of this real estate clean up. The first is the increase in the coverage ratio of these toxic assets on the banks’ balance sheets. “The volume of sales is directly linked to the coverage ratio”, it says.

The second is that many of these sales are generating capital gains. According to the data compiled by Deutsche Bank, Unicaja made €40 million in the third quarter and CaixaBank and Sabadell earned €6 million and €7 million, respectively. “These gains will allow them to accelerate future sales”, says the report.

Final quarter

The last quarter of the year tends to be the strongest for these types of operations. Sareb has put a package of doubtful loans up for sale, the vast majority of which are unsecured, for €2,600 million. “We expect to see an additional effort from the banking institutions to reduce the stock at year end. Having said that, the political uncertainty in Cataluna and the upcoming elections may affect prices and/or cause delays in institutional sales”, says Deutsche Bank, which forecasts further stock decreases of 15% in 2018 and 2019. According to its data, CaixaBank, Santander and BBVA are the banks with the highest volume of toxic assets. Since 2015, BBVA has decreased its real estate balance by 27% and Unicaja by 24%.

Original story: Expansión (by R. Lander)

Translation: Carmel Drake

ECJ Puts An End To The Eviction Of Family Guarantors

21 October 2016 – Cinco Días

The European Court of Justice (ECJ) has ruled that mortgage guarantees from individuals to companies are protected by the European directive on unfair terms. In this way, the EU judges have opened the way for the cancelation of this kind of guarantee and its most draconian conditions, when the contracts favour financial institutions in an unfair way. The ruling also jeopardises the execution of guarantees between individuals, which are very common in the case of house purchases.

In less than a year, and thanks to one case in Italy and another in Romania, the European Court of Justice has revolutionised the treatment of mortgage guarantees, many of which will be protected by the European directive on unfair terms from now on. Until now, it was assumed that the guarantors of a company were responding to a professional relationship and therefore, they were not covered by the rules governing consumer protection.

However, that interpretation did not consider numerous guarantors whose relationship with the company was of a family or friendly nature, without any commercial interest whatsoever. And so, the European Court of Justice has put an end to the gap by classifying these types of guarantors as consumers.

In November 2015, the EU judges indicated and they have just reiterated (14 September 2016) that the European Directive 93/13 governing unfair terms should protect people who guarantee the credit of a company that they do not manage or hold majority shares in.

In such cases, the new European legislation considers that the guarantor is acting as a consumer and therefore, the national courts may cancel the guarantee if they consider that the contract did not inform them properly about the risks or if the contract grants an unfair advantage to the financial institution.

The lawyer Juan Ignacio Navas, Partner-Director of the law firm Navas & Cusí, classifies these types of guarantees, which do not generate any economic benefits for the guarantor, as “altruistic”. And he says that they are granted regularly, particularly in the case of small and medium-sized companies. (…).

Navas believes that the new legislation will not only affect guarantees for loans to companies but will also be extended to all types of individual guarantors. (…).

The lawyer said that many mortgage loans are signed with these altruistic guarantees: “Cousin, brothers, daughters, parents and friends, in other words, people linked by family or friendship ties, without any economic interest”.

Legal sources stress that in these types of contracts “the guarantor is risking something as important as his/her home without gaining anything in return and he/she does so because of the pressure exerted by financial institutions”. (…).

Nevertheless, other lawyers, such as the Partner of the law firm Jausas, Jordi Ruiz de Villa, warn that the rulings from the European Court only ensure that the conditions of these guarantees will be reviewed from the perspective of consumer protection and that even if a contract includes an unfair term, a judge may decide to just cancel that term or amend the commission charged without the need, for example, to cancel the entire guarantee.

As a result, some Spanish judges have already declared some mortgage guarantees to be null and void as they considers that they include unfair terms, which means that the rulings from the European Court may help halt the evictions of these kinds of family or friend guarantor.

Original story: Cinco Días (by Bernardo De Miguel and Juande Portillo)

Translation: Carmel Drake

Petrus Builds More Luxury Homes In Madrid & Barcelona

26 September 2016 – Expansión

The adventures of the property developer Petrus in Colombia are bearing fruit. In 2013, faced with the slow recovery of the Spanish real estate market, the Rabassa family decided to expands its borders and try its luck on the other side of the pond. It landed in Barranquilla (Colombia), a country that did not promise the best growth prospects, but did offer the best guarantees in terms of business security, thanks to obligations such as a fiduciary for the duration of the construction work.

Following the success of the first development, containing 64 homes, Petrus has now started to construct a second building in the city, containing 56 homes and is already making plans for a third residential block, which will house another 64 flats. The total investment in these three projects will amount to €22 million.

Petrus, founded by Luis Rabassa in 1964, is currently owned by three members of the third generation: Luis and Sergio Rabassa, and their cousin, Bruno Rabassa. Last year, the company recorded revenues of €25.4 million and this year it expects that figure to grow by 6.6% to €27.1 million.

Meanwhile, in Spain, the property developer is continuing to start new projects, although “we are studying the behaviour of consumers and the market very closely”, said Luis Rabassa.

In Madrid, Petrus has started to build a 22-home development in the neighbourhood of Salamanca, which will be sold for €5,500/sqm. In Barcelona, it is also constructing an 18-home development in L’Hospitalet de Llobregat.

Original story: Expansión (by Marisa Anglés)

Translation: Carmel Drake

Iberostar Refinances Its Debt & Releases Guarantees

11 December 2015 – Expansión

New financing conditions / The hotel group owned by the Fluxà family is restructuring its debt and postponing its repayments until 2021. Its profits remained stable in 2014.

Iberostar is refinancing its debt for the second time in less than three years. In April this year, the hotel group controlled by the Fluxà family restructured the majority of its financial liabilities, according to the 2014 annual accounts of the parent company, Iberostar Hoteles and Apartamentos, filed with the Mercantile Registry. At the end of last year, the group’s short and long-term debt amounted to more than €400 million – most of which was held with financial institutions – and the liabilities between the group’s companies amounted to €533 million.

The agreement establishes a new timetable, which runs until 2021 – three extra years – and reduces the guarantees provided by Iberostar. Under the previous refinancing agreement, completed in 2012 and amounting to €768 million, the hotel chain offered a personal guarantee against the obligations of a €285 million loan, as well as mortgage guarantees over Spanish assets and the pledge of its 5% stake in ACS.

Percentage in ACS

The Fluxà family is the shareholder of the construction group that has been chaired by Florentino Pérez since 2006, when Iberstar sold its tourism division to Carlyle and Vista Capital for around €900 million to focus on the hotel sector. The private equity companies created Orizonia – which no longer exists as it filed for bankruptcy in April 2013 – and the Fluxà family invested almost all of the resources obtained on the purchase of ACS.

Iberostar paid €46.82 for each share – €826 million in total. Yesterday, ACS closed trading with a share price of €28.49, representing an increase of 2.76% during the session. In 2012, Iberostar was forced to recognise an impairment on its shareholding amounting to €147.12 million, which meant that the company recorded losses that year. At the end of 2014, the company recognised its shareholding in ACS at €36.41 per share and set its recoverable value at €40 per share. Despite this difference, Iberostar has not reversed the impairment recorded in previous years.

Iberostar is represented on the board of ACS by Sabina Fluxà, the Executive Co-Vice-President and CEO of the hotel chain, and it received dividends amounting to €20.34 million on its shareholding.

In 2014, the parent company’s turnover amounted to €43.47 million, down by 6.36%. The operating result decreased by 76.4% to €7.97 million, due to a reduction in other operating income and an impairment for the transfer of tangible assets and financial instruments. Iberostar expects to improve that figure this year, by maintaining stable turnover and cutting down its expenses. Nevertheless, the net result remained stable – at around €15.7 million – due to the positive effect of the lower tax charge on its profits.

As a whole, Iberostar and its subsidiaries invoiced €1,435 million in 2014, up by 29.6%, to place it in fourth position by turnover, surpassed only by Grupo Barceló – which also includes its tourism business – , RUI and Meliá.

Dividends

In 2014, the parent company allocated its profits to offset its negative results from previous years, but it distributed €55.7 million in dividends distributed against reserves. Moreover, it repaid debt amounting to €18.78 million owing to the Tax Authorities for Corporation Tax for the years 2007 and 2008.

Meanwhile, Iberostar has the option to purchase an additional 29.15% stake in Royal Cupido, in which it already holds a 29.5% shareholding, for €44.54 million. Pontegadea, the investment arm of Amancio Ortega, controls 45.5% of Royal, which owns five hotels in Spain and earned €3.43 million in 2014.

Original story: Expansión (by Yovanna Blanco)

Translation: Carmel Drake