Sareb Renews its Management Contract with Haya for its Rental Assets

9 January 2020 – La Vanguardia

Haya Real Estate has succeeded in renewing its contract for the management of Sareb’s rental assets for another two years. The bad bank’s rental portfolio contains 3,300 assets in total, of which 1,800 are homes. The remainder are parking spaces, commercial premises and storage rooms.

This announcement follows Haya’s successful renewal in October 2019 of its contract with Sareb to manage a share of the bad bank’s real estate assets, worth €8.4 billion in total.

In both cases, the renewals include changes to the distribution of tasks as a result of Sareb’s new business strategy. The latest revised agreement means that Haya will continue to market and manage the bad bank’s rental assets, which are located all over the country.

Original story: La Vanguardia 

Translation/Summary: Carmel Drake

Cerberus Nears Sale of Haya Real Estate to Centricus

10 September 2019

The US-fund Cerberus is near to completing its planned sale of its servicer, Haya Real Estate. Centricus, a London-based fund backed by Softbank, is considered the leading contender to acquire the asset. Both firms declined to comment.

Market sources believe that the firms may finalise the transaction in the coming days. The amount of the sale partly depends on Haya’s renegotiation of its contract with Sareb. Cerberus had initially planned a stock market listing for its servicer, but doubts regarding that renegotiation led the US fund to shelve those plans.

The US fund then opted to sell the service, and in the early summer, Cerberus received three competing offers for Haya, estimated to be around ​​700 million euros, from doBank, Centerbridge and Centricus.

Original Story: La Información  – Pepe Bravo

Adaptation/Translation: Richard D. K. Turner

Sareb Opens Bidding to Other Servicers After Low Bids from Haya, Solvia, Altamira and Servihabitat

30 July 2019

Sareb has notified the four servicers that manage its €34 billion in real estate loans and assets that it will open up bidding on its management contracts to other potential bidders, after having received a round of offers that it considered insufficient. Haya Real Estate (Cerberus), Servihabitat (Lone Star), Solvia (Intrum) and Altamira (doValue) have been servicing the bad bank’s assets until now. Sareb mandated DC Advisory to manage the process as the bank looks to reduce the size of the commissions it has been paying to the four firms.

DC Advisory and Sareb have reportedly been in contact with smaller, specialised firms such as Hipoges, Finsolutia and Copernicus. The decision is a message to the four current servicers, letting them know that they may lose out on future contracts unless they improve their bids. Sareb is considering dividing some sections of its portfolio by geographical location, reducing the number of managers in each and streamlining its operations.

The process – known as the Project Esparta – sent shudders through the servicing sector and was a factor in the postponement of Haya Real Estate’s IPO last year.  Haya currently has the largest mandate, servicing 37% of the bad bank’s assets (2014). Altamira, in turn, manages 29%, while Servihabitat has 19% and Solvia 15%.

Original Story: El Confidencial – Jorge Zuloaga

Adaptation/Translation: Richard D. Turner

Haya Real Estate Looks to Expand into Italy & Greece to Grow its Business

27 May 2019 – Expansión

Haya Real Estate, the servicer controlled by the US investment fund Cerberus, is looking to grow its business. Following its merger with Divarian (formerly Anida), it is now the second largest servicer in Spain, after Altamira, with 1,200 employees and €47 billion in assets under management.

In order to diversify its portfolio, the servicer led by Carlos Abad (pictured above) is evaluating its expansion into Italy and Greece, two emerging markets in which multiple NPL investment and management opportunities are expected to arise in the short term. That would help alleviate concerns over Haya’s future, which currently depends heavily on the outcome of the servicer’s negotiations with Sareb, whose contract is due to expire in December.

The future of Haya Real Estate has been up in the air since its stock market debut was postponed last year. Cerberus has held its stake in the servicer for six years now and is keen to exit soon given that its typical investment rotation period amounts to five years. Following the postponed IPO, the US giant is now holding preliminary conversations with several other investment funds interested in acquiring its stake, but the price will depend on the servicer’s future with Sareb.

Original story: Expansión (by Rebeca Arroyo)

Translation/Summary: Carmel Drake

Sareb Hires DC Advisory to Overhaul its Servicer Contracts

15 March 2019 – El Confidencial

Sareb is determined to change track. The entity chaired by Jaime Echegoyen  (pictured below) has taken the decision to cut back the contracts that it currently has with its servicers (Haya, Altamira, Solvia and Servihabitat), in an overhaul of the work that is currently carried out by those platforms.

The timing is perfect, given that Haya’s contract is due to expire at the end of this year and the rest of the agreements mature in 2021. To this end, the bad bank has engaged the advisory firm DC Advisory (previously Montalbán) to help it redefine the servicers’ contracts. The business generates commissions of around €100 million per year.

Sareb is keen not to renew the existing contracts with lower commissions but rather to design a completely different model with new conditions and perimeters. The options range from assuming more of the work itself in-house to organising the out-sourcing of the portfolios by region.

The pressure is on for Sareb to divest its assets given that the entity itself has an expiry date and the current climate is ideal for undertaking operations.

Original story: El Confidencial (by R. Ugalde & J. Zuloaga)

Translation: Carmel Drake

Haya to Sell €188M in Secured Loans from Sareb

19 February 2019 – Expansión

Yesterday, Haya Real Estate put up for sale a package of non-performing loans (NPLs) with real estate guarantees, owned by Sareb, worth €188 million. The portfolio, baptised Project Marconi, comprises loans with an average value of €5.7 million, which are backed by around 1,445 properties.

Original story: Expansión

Translation: Carmel Drake

Cerberus, Intrum & DoBank Bid to Acquire Altamira

15 November 2018 – El Confidencial

There is still an appetite for the servicers’ business. The sale of the 85% stake that Apollo owns in Altamira is making its first cut of candidates, with some of the most high profile investors in the segment amongst the finalists. According to financial sources, the fund Cerberus (Haya Real Estate), the Swedish firm Intrum (Nordic Capital) and the Italian firm DoBank (Fortress) are the candidates that have progressed in the process, which is being coordinated by Goldman Sachs, and which was relaunched after the summer following months on the table.

Other players in the sector interested in Spain are also in the process, both at the domestic and European level. One of those new candidates is the US firm Davidson Kempner, which has a portfolio of USD 30 billion under management and with interests in the transformation of toxic assets in the United Kingdom and Ireland, according to sources involved in the operation.

Apollo is willing to take advantage of the hunger for this type of vehicle to make gains, although it does so after four years at the helm of the servicer and having not been awarded any of the large real estate portfolios that the banks have sold (Santander to Blackstone, BBVA to Cerberus, CaixaBank to Lone Star and the Sabadell-Solvia process, in whose final stretch it is not participating). In fact, this divestment comes after Apollo’s manager for the last few years – Andrés Rubio – left the fund.

The price of the management platform could reach €1.5 billion (debt included), a business for which Apollo paid €664 million in January 2014 in exchange for an 85% stake (the remaining 15% is still owned by Banco Santander). The agreement comprised the management of toxic assets (recovery of loans and sale of properties) until 2028, although the transformation of that perimeter has led to a change in the management conditions (commissions) and to the repayment of a €200 million dividend.

Altamira has assets under management amounting to more than €50 billion, compared with €26 billion in 2014, and a portfolio comprising more than 82,000 properties at the end of 2017, making it the largest servicer in operation in Spain. In addition to its contract with Santander, it also manages assets for Sareb (which account for 30% of its portfolio) and for third parties – international investors, financial institutions, family offices and institutional clients – as a result of the international expansion plan launched in 2017.

Original story: El Confidencial (by Carlos Hernanz)

Translation: Carmel Drake

Haya Reactivates its IPO After Protecting its Mega-Contract with Sareb

8 November 2018 – Cinco Días

One of the IPOs scheduled for this year is going to be executed next year, most likely in the window that will launch in May. The bane that was weighing down on Haya Real Estate, the end of its mega-contract with Sareb, has almost been lifted. The contract was signed in January 2015 and expires in December 2019, but financial sources are now certain that it is going to be renewed. Nevertheless, Sareb is likely to pay lower commissions to the real estate asset manager (servicer, in the jargon). The appraisal value of the firm ahead of its stock market debut amounts to around €1.2 billion.

Last May, Sareb put assets worth around €23.5 billion up for sale, comprising property developer loans and real estate assets. They accounted for 60.6% of the €38.8 billion that Haya had at the end of June.

That caused investors to panic about their bonds, whose yield soared to 8.5% (refer to the graph) and put in doubt Haya’s stock market debut this year, as Cinco Días published on 4 June. Now, the yield on that debt amounts to less than 7%. Haya has engaged Rothschild as its chief IPO advisor and Citi and JP Morgan as the coordinators.

But last summer, the so-called bad bank decided to suspend that operation and opt, in all cases, for smaller sales. Thus, the firm controlled by Cerberus was going to manage those assets until the end of the year. The sources consulted indicate that, after the divestment was ruled out, the negotiations between Sareb and Haya progressed at a good pace and the likelihood of the contract being extended now exceeds 90%. Barring a last-minute change of heart, the two entities will announce the extension of the agreement before 30 June 2019. Nevertheless, a spokesperson for Sareb clarified that a decision has not yet been taken. A spokesperson for Haya declined to comment on the information.

The final discussion points relate to the commission that Sareb is going to have to pay Haya. By contrast, the servicer is not going to pay any upfront payments, like it did in at the start of the current contract, for €235 million.

The other question that must be resolved in parallel to the stock market debut is that of a possible merger. Sabadell has put its asset manager, Solvia, up for sale for around €400 million, and Cerberus (Haya’s main shareholder) is the main interested party. In fact, Cerberus has already acquired 80% of Sabadell’s real estate assets with a book value of €9.1 billion. Santander and Apollo are also in the process of selling Altamira, and Haya is exploring possible business opportunities outside of Spain.

In addition to Sareb’s assets, Haya Real Estate is also likely to manage the majority of the assets that BBVA has sold to Cerberus for around €4 billion (with a book value of around €13 billion). It has also already been agreed that Haya Real Estate will manage the future flows of toxic property from BBBA. Haya will also add the so-called Ágora portfolio to its assets, comprising €650 million purchased by Cerberus from CaixaBank.

Until the amount of assets managed is increased, it already has a Bankia portfolio amounting to €5.5 billion under management, thanks to a contract signed in May, as well as portfolios from Cajamar (€5.9 billion), Liberbank (€2.9 billion) and other firms (€1 billion). Between January and June, Haya recorded revenues of €130.2 million, of which €64.9 million was converted into EBITDA. On Thursday 15 November, the firm will publish its accounts to the end of September.

Original story: Cinco Días 

Translation: Carmel Drake

Who are Spain’s Largest Residential Landlords?

11 October 2018 – El País

Every month, they receive rent from thousands of tenants who live in the thousands of flats that they own. They are the large landlords of Spain, although it is worth noting one important point: even though between them, they own more than 120,000 residential rental assets, that figure accounts for just 5% of all of the homes on the rental market. In Spain, the stock of rental housing – which exceeds 2.3 million properties, according to calculations from the Ministry of Development – is still dominated by individuals above all. At the other end of the spectrum, that of companies, it is not easy to draw a clear map of who’s who in the Spanish market. There are banks, investment funds, Socimis, real estate companies, servicers, managers…the difference is substantial: some are owners of houses whilst others specialise only in administering the properties.

The properties intersect between these two larges groups. The homes of a bank may belong to a real estate company owned by the entity itself and be administrated by its manager, which in turn, may be responsible for the houses of other companies. Or a fund may own several servicers, the name given to the platforms that, since the crisis, have absorbed a large proportion of the toxic assets (both properties and mortgages) owned by the banks, and that in turn, may be entrusted with the administration of some of the homes by the banks. The examples are simpler if we look at specific cases. What follows is a portrait of the main protagonists of the residential rental market in Spain. Seven companies that control portfolios that come close to or exceed 10,000 assets each, according to figures facilitated by them and by other sources in the sector.

Blackstone. This real estate investment fund is well on its way to becoming the largest owner of rental housing in Spain. It entered the market in 2013 with the purchase of a portfolio of social housing properties that the Town Hall of Madrid, led at the time by Ana Botella, put up for sale. Those 1,860 homes were just the start of a portfolio that now contains around 32,000 properties. Since then, Blackstone has acquired thousands of toxic assets from entities such as Banco Popular and Catalunya Caixa. From the real estate arm of the latter, CX Inmobiliaria, a subsidiary of the US fund emerged, which is now responsible for managing most of its rental homes. Anticipa is a specialist servicer in what is known as “fragmented management”. Its 15,000 homes do not form part of blocks of buildings, but rather they are scattered all over the country. In addition to that portfolio, Fidere manages 6,200 properties. That Socimi (…) was created specifically after the operation was closed with the Town Hall of Madrid and then continued to add other residential assets to its portfolio, which unlike Anticipa’s form part of blocks and urbanisations. The latest blow, in terms of the effect on the market, came last month, with Blackstone’s agreement to purchase 70.01% of Testa. With the control of that Socimi – which until then belonged to Santander, BBVA, Acciona and Merlin – around 32,000 rental assets are now under the orbit of the US fund, making it the largest landlord in Spain.

CaixaBank. Until recently, the Catalan entity was the largest owner of rental homes and it is still in the top three. Unlike the other banks, which succumbed to the pressure to sell to interested investors, the former Caixa owns 27,557 residential rental assets through its real estate arm Building Center. The entity’s own manager, Servihabitat, is responsible for managing those assets, and its portfolio also includes assets entrusted by other owners, taking its total to 42,163 assets. Of those 28,549 are homes (and the remainder are storerooms and parking spaces).

Banco Sabadell. A very similar example to CaixaBank. In this case, the entity’s own servicer, Solvia, is responsible for managing its residential rental assets. Its rental portfolio comprises around 32,000 residential assets and, of those, 74% belong to Sabadell, making it the third largest landlord in Spain with around 23,600 assets.

Haya. In fourth place on the list is the servicer owned by Cerberus. The investment fund created it after acquiring some of Bankia’s real estate portfolio. Then it increased it with purchases from other banks such as Santander. At the end of 2017, based on the most recent data provided by the company, it managed around 14,100 assets.

Azora. This manager administers around 11,000 homes on behalf of other companies and Socimis. Its main clients include Lazora, a company recently recapitalised by CBRE GIP and Madison, which owns 6,800 assets, and Encasa Cibeles, which has 2,500 assets and is owned by the investment bank Goldman Sachs.

Sareb. The (…) bad bank concentrated more than €50 billion in toxic assets during the crisis, including both mortgages and properties. Its objective was, and still is, to divest them, but in the meantime, it has been capitalising what it can. One of the ways is placing some of its properties up for rent. It has more than 10,000 in its portfolio, but it does not manage them directly: it has distributed the management of 5,223 units between Altamira, Haya, Servihabitat and Solvia. The 1,383 that form part of Témpore, a Socimi owned by Sareb, are administered by Azora. Finally, it has around 4,000 that it is reserving for social housing rentals and that it is handing over on a piecemeal basis as one-off agreements are reached with autonomous regions and large town Halls.

Altamira. Another servicer, which belongs to Apollo and Banco Santander. Its rental portfolio comprises 12,500 properties including tertiary assets. Most, around 9,700, are residential assets and belong to Santander or Sareb.

Original story: El País (by José Luis Aranda)

Translation: Carmel Drake

Sareb is Selling 33 Homes Per Day but still has 55,000 Properties on its Books

12 September 2018 – Expansión

Sareb managed to sell 5,926 properties during the first half of 2018, up by 7% YoY, for a total sum of €552.7 million. In other words, 33 units per day. Of the total, 86% of the properties were homes and garages, 9% were plots of land and 5% were commercial premises.

For the last four years, the bad bank has been helping delinquent property developers to market the properties that they placed as collateral for their loans to allow them to use those funds to settle their debts. Through that channel, it has sold another 4,692 units.

If this pace continues during the second half of 2018, the entity will exceed the sales figure registered in 2017 when 18,925 units were sold and a new record was set.

The bad bank was created with 107,000 properties and during its first five years of life, it has managed to divest 68,300 units. Nevertheless, we must bear in mind that Sareb has executed the guarantee for some of the 90,000 loans that it also took on when it started out and so that has led to an increase in the number of properties on its balance sheet.

Currently, the bad bank still has 55,000 homes and 34,000 garages and storerooms left to liquidate. Sareb is the largest owner of residential homes in Spain and the largest landowner in several autonomous regions, such as Castilla-La Mancha.

During the first half of this year, Sareb recorded revenues of €2.8 million in a special land sale campaign and another €13 million from the sale of other plots. It put 500 units on the market in each case. The managers are looking for a partner to build developments on the land.

Contracts under review

The senior management team at the bad bank is considering tearing up the expensive and exclusive contracts that the entity has with four specialists (Haya, Solvia, Altamira and Servihabitat), which cost it more than €200 million per year, equivalent to 35% of its operating costs.

Sareb lost €565 million last year and since its creation, has generated cumulative losses of €1.315 billion. In reality, the operating result is now positive. Nevertheless, the financial charges are so high – it had to take out a swap to cover itself in the event of an interest rate rise – that they completely determine its income statement.

The senior management team updated Sareb’s business plan in February, which forced the shareholders to recognise new write-downs. The review resulted in the recognition of a loss equivalent to 73% of the initial investment, which amounted to €4.8 billion.

Recently, the entity’s President, Jaime Echegoyen (pictured above) went further and warned that he thinks the shareholders will “struggle” to recover their investments.

Sareb has ten years left to liquidate all of its real estate stock. In reality, it is committed to returning the €37 billion in bonds secured by the State that it used to pay for the assets of the rescued savings banks.

The largest shareholder, the FROB, with 45.9% of the share capital, lost €950 million last year due primarily to the impairment of Sareb’s accounts due to its poor performance. The banks have also been forced to make significant adjustments. Sabadell, which has published its data, confirmed that its investment has generated an accounting loss of €321 million in five years.

The Minister for the Economy, Nadia Calviño, said yesterday, during her speech at a breakfast meeting organised by the New Economy Forum, that “for the time being, the Government is supporting Sareb’s strategic plan”. Nevertheless, she reminded listeners that the Administration is an important partner that participates actively in decision-making, “but it is not the only one”. 54% of the entity’s share capital is private.

Original story: Expansión (by Raquel Lander)

Translation: Carmel Drake