Tag: Hipoges

How Cerberus Became Spain’s Largest RE Company

3 December 2017 – Voz Pópuli

If you are thinking about buying a home over the next few months, statistically, it is likely that Cerberus will be the vendor. The US fund is one of the players that arrived in Spain at the height of the financial crisis (between 2010 and 2012), with the objective of acquiring banks and real estate companies, just like it had done in other countries. The former did not happen, despite several attempts to take over some of the former savings banks. But the conquest of the property sector went a lot better: so much so that the fund now controls more than €50 billion in assets and has just starred in the second largest operation in the Spanish real estate sector in recent years.

Those close to Cerberus define it as a fund that is meticulous, aggressive in its negotiating style and persistent. It has proven that last quality with the patience it has shown searching for major operations in Spain over many years. Last week, it finally was in a position to purchase BBVA’s property. It is the fund’s largest acquisition to date in Spain and it is going to cost €4 billion, most of which will be financed by Morgan Stanley.

Five key people inside the fund have been instrumental to the success of this operation, namely: Frank W. Bruno, one of the main directors of the fund at the global level; Lee S. Millstein, another key director of Cerberus, who has been overseeing the business in Spain for years; Manuel González-Cid, Senior Advisor to the fund and former Finance Director at BBVA, and his team; David Teitlebaum, head of the fund in Europe; and Daniel Dejanovic, head of the real estate business in Europe.

The Aznar junior factor

Several other people have also participated, although to a lesser extent: Carlos Abad, CEO at Haya Real Estate, the real estate servicer of Cerberus in Spain; Juan Hoyos, former President at McKinsey in Spain and President of Haya; John Snow, President of Cerberus, who met with the President of BBVA, Francisco González, to propose the deal in the first place; and José Maria Aznar Botella, son of the former Spanish President. The story of this fund in Spain has been inextricably linked to the incorporation of Aznar junior in recent years, at least from the point of view of the media. The bankers who have worked with him describe him as a “strong professional” who has been key to the fund’s success in Spain.

Both Hoyos and Aznar were most certainly instrumental during Cerberus’s first operation in Spain, in 2013, when it purchased Bankia Habitat, in the so-called Project Platform. It was a purchase that revolutionised the sector and paved the way for other similar deals, such as the sale of Altamira, Servihabitat and Anticipa.

Unlike what has happened with BBVA, Cerberus’s operation with Bankia did not involve an asset purchase, but rather the management of that entity’s assets. Like in other similar operations, the fund takes control of the workforce and the administration and sale of debt and foreclosed assets, in exchange for management commissions. Bankia Habitat became Haya Real Estate and subsequently expanded its perimeter after teaming up with Sareb, Cajamar and, this year, Liberbank. Those deals involved the disbursement of around €0.5 billion by Cerberus. Added to the €4 billion paid to BBVA and the fund’s other portfolio purchases, the total figure exceeds €5 billion.

The result of this strategy is that Haya Real Estate has reached a management volume of more than €40 billion, has almost 700 employees and recorded a profit of €31 million (in 2016).

Cerberus’s networks in Spain do not end there: it owns a doubtful debt management firm, Gescobro; a securitisation firm, Haya Tutulización; a stake in another manager of bank debt, Hipoges, whose sale it is currently negotiating with KKR; and dozens of companies where it keeps its real estate assets. As if they were not enough, it will soon be able to add the property developer Inmoglacier to this list.

And that is only one of the strings to Cerberus’s bow in Spain, it also engages in large business ventures such as Renovalia, which is currently up for sale. Operations such as the one involving BBVA reflect the fact that funds like this are still very interested in Spain, despite the uncertainties being generated by Cataluña. And beyond the foreign money that they bring, they should be seen as the new influential players, capable of moving markets such as the real estate sector. And they are here to stay. For the time being at least.

Original story: Voz Pópuli (by Jorge Zuloaga)

Translation: Carmel Drake

KKR Finalises Its Purchase Of Hipoges & The Pepper Group

24 October 2017 – Voz Pópuli

The investment giant KKR is multiplying its commitment to Spain. The US fund is on the verge of signing two operations, which will see it obtain real influence in the property and financial sectors. Moreover, it is participating in other major processes to purchase portfolios of banking assets, such as Project Invictus, although Bain Capital is expected to be victorious in that case.

The next operation to be signed in the market is the deal involving Hipoges. And according to financial sources consulted by Vozpópuli, KKR has imposed itself in the sales process of that recovery and real estate asset management platform, which was founded in 2008 by former directors of Lehman Brothers.

KKR’s offer has convinced the vendors – comprising the main directors and the fund Cerberus, which holds a 40% stake – ahead of the bid submitted by the British group Cabot. Sources in the market estimate that the price will amount to €25 million – €30 million in the end.

With the purchase of Hipoges, KKR will be able to compete on equal terms to acquire large portfolios of problem assets from the banks. In this regard, four large funds dominate the market: Blackstone, owner of the platform Anticipa and now Aliseda; Apollo, which controls Altamira; Cerberus, a shareholder of Haya Real Estate; and Lone Star, the main investor in Neinor. KKR is led in Spain by Jesús Olmos and Alejo Vidal-Quadras (pictured above).

Other funds in this league include TPG, which owns 51% of Servihabitat, although it has maintained a rather low profile in recent months; and Oaktree, which manages its assets through Sabal Financial.

What is Hipoges?

Hipoges is one of the main independent servicers, alongside Finsolutia, TDX Indigo and Copernicus. It has 200 employees across four countries and it manages loans and properties worth €8,000 million.

On the other hand, KKR is currently finalising the takeover of the Australian firm, the Pepper Group. That consumer financing institution has a lot of activity in Spain, through 300 employees, and has just made the leap into traditional banking with the acquisition of a small Portuguese entity, which also has a branch in Madrid: Banco Primus. As such, Pepper will soon start to grant mortgages in Spain.

Pepper was one of Banco Popular’s partners, in one of the last alliances to be signed by Ángel Ron; however, it only lasted for a few months until Emilio Saracho broke off the agreement.

The group will be an investee company and so the executives of KKR are not expected to get involved in the management of the company beyond sitting on the Board of Directors of the holding company in Australia. Even so, Vidal-Quadras has participated in the operation to value the business in Spain, and so his opinion will be taken into account when determining the financial entity’s strategy.

Original story: Voz Pópuli (by Jorge Zuloaga)

Translation: Carmel Drake

KKR & Cabot Compete To Acquire Hipoges

31 August 2017 – Voz Pópuli

KKR and Cabot Financial are competing in one of the processes that has generated the most excitement amongst overseas funds in recent months. The two Anglo-Saxon investors are the finalists in the bid to acquire Hipoges, a platform created at the end of 2008 by former directors of Lehman Brothers, the investment bank that went bankrupt in September of that year.

The platform is controlled by Cerberus, with a 40% stake, and by its CEO, Juan Francisco Vizcaíno, who owns 18.3%. It is not clear how much of the company is up for sale, although the various sources consulted by this newspaper explained that the initiative to launch the sales process has been taken by the directors. The final price of the transaction could amount to €25 million.

The bid is being led by Alantra as an advisor and funds such as Bain Capital have participated in it, in addition to Cabot and KKR.

Hipoges has a presence in four countries, although most of its business is concentrated in Spain. In total, it administers almost €8,000 million for 22 clients, above all overseas opportunistic funds and financial institutions.

Intense competition

The platform advises investors regarding the acquisition of portfolios and the subsequent management of the assets acquired. Hipoges is responsible for administrating debt, filing claims to recover it, going to court and in the event that a property is repossessed, managing and selling it. It also competes with the major real estate companies, such as Haya Real Estate, Altamira, Servihabitat, Aktua, Aliseda, Solvia and with other independent firms such as TDX, Finsolutia and Copernicus.

Of the €8,000 million that it administers, 72% are unpaid loans granted to property developers and mortgages. The remainder are loans to SMEs (14%), consumers (12%) and invoices (2%).

By entering this process, KKR wants to take another step forward in its real estate strategy in Spain. After purchasing a portfolio of mortgages from Abanca – formerly NCG Banco – the North American fund is negotiating the acquisition of a platform that will allow it to continue gaining experience in the property sector.

Meanwhile, Cabot is another of the foreign groups that is most committed to the purchase of banking assets. It arrived in Spain in 2015 with the acquisition of Gesif and is hoping to enter the real estate business with Hipoges.

Original story: Voz Pópuli (by Jorge Zuloaga)

Translation: Carmel Drake

Bain Buys c. €1,000M In NPLs From Ibercaja & Caixa Geral

13 July 2017 – El Confidencial

Bain Capital Credit has set its sights on Spain and Portugal and has purchased a total of €1,000 million in non-performing loans from Ibercaja and Caixa Geral. On Wednesday, the entity announced the acquisition of a portfolio of loans from Banco Ibercaja, which constituted the ninth acquisition of a portfolio in Spain by Bain Capital since 2014. The portfolio has a nominal value of €489 million and contains non-performing bilateral and low-yield loans with first ranking lien over property developer assets. The collateral behind the loans primarily comprises plots of land in the most reputed cities in the country for the development of residential properties and by real estate assets.

“We are excited about the opportunity to strengthen our position in the property development sector through this investment”, said the Director and Head of European Business at Bain Capital Credit, Alon Avner. Similarly, the firm has said that Spain is one of the most attractive markets in Europe in terms of unsecured non-performing loans and real estate assets.

In addition, for the acquisition to be successful, Bain Capital has engaged Hipoges and Altamira Asset Management, both loan management specialists; Basico, Deloitte Real Estate and JLL, as providers of real estate valuations; and Allen & Overy, as legal advisors.

On a roll with its European expansion

With the aim of strengthening its presence in the European markets, the US private equity fund has also just made its debut in Portugal. Its first operation there has involved the purchase of a portfolio of non-performing and low-yield loans with a total outstanding balance of around €476 million, as well as some recovered real estate from Caixa Geral de Depósitos, the most important bank in Portugal in terms of assets.

The offer has come after the Portuguese Government allocated €2,500 million to these types of assets as a stimulus measure. “We see great potential in Portugal, especially in the markets for real estate and low yield assets. We hope to close more operations in the future”, said the Director and Head of the Real Estate and NPL business for Europe, Fabio Longo.

The portfolio mainly consists of bilateral loans, backed by real estate guarantees, to small and medium-sized companies, as well as to larger companies. The loan guarantees span a wide range of asset classes, such as residential complexes, both finished and in progress, industrial and tertiary real estate assets, and land. “This investment demonstrates our expertise when it comes to carrying out complex transactions that require dedication and close collaboration with the vendor”, added Longo.

The following players participated in the operations: Hipoges and Finangest, as loan management specialists; Aura REE, JLL and CBRE, as suppliers of real estate valuations; and Uría Menéndez Proença de Carvalho, a local law firm.

Original story: El Confidencial (by Carmen Alba)

Translation: Carmel Drake

Santander & Apollo Call Off Altamira Negotiations

30 December 2016 – Vozpópuli

Santander’s repurchase of Altamira has run into trouble.

After months of to-ing and fro-ing, Banco Santander and Apollo have decided to call off their negotiations regarding the possible sale of the 85% stake that the US fund owns in the real estate company. And the reason is price, given that Ana Botín is not willing to meet the expectations of the asset manager chaired by Leon Black. Apollo will not drop its asking price below €1,000 million, whilst Santander’s informal offer amounts to around €800 million, according to several financial sources.

Unless there is a last minute change of heart, all indications are that Altamira’s share capital structure will continue as it is now: with 85% in the hands of Apollo and 15% controlled by Santander. The Spanish bank sold the controlling stake in the real estate company in 2013 for €664 million.

Santander’s intention was to repurchase its stake to create a world-leading property management firm, to administrate its assets in other countries where the default rate is rising, such as in Brazil. Santander engaged Citi to complete this operation. The possible repurchase has been on the table since Ana Botín (pictured above) took over as President of the bank, given that this sale was one of the things that she liked the least from her father’s inheritance.

Botín sees it as a much more expensive way of raising capital than would have been possible to obtain by other means. But unless she can afford a price that will allow Apollo to close this deal at a profit, it is unlikely to go ahead. This change in strategy comes at a time when Apollo is raising a new fund, amounting to more than €4,000 million, to invest in the south of Europe. Given that it has new ammunition to spend from now on, it will value a platform such as Altamira very highly

New strategy

Following this turnaround in negotiations, Apollo has decided to strengthen the future of Altamira be making acquisitions. Santander’s property management firm is well placed in two current acquisition processes: firstly for Unicaja’s real estate arm, GIA, where it is competing with Haya Real Estate; and secondly, for the first bad bank created by the Portuguese State, Oitante, which manages Banif’s problem assets – other players such as Servihabitat (owned by TPG and CaixaBank), Hipoges and Värde Partners (Banco Popular’s real estate shareholder) are also bidding in that tender.

If the latter operation bears fruit, it would be Altamira’s first international venture, and the ideal way for Apollo to generate value from this investment, and obtain more from its sale when it eventually decides to exit.

The fund chaired by Black (one of the 150 wealthiest people in the USA and owner of the painting The Scream) is putting all of its meat back on the grill in Spain after a couple of less active years. In 2013, it closed its largest two acquisitions in the country: Altamira and Evo Banco. Since then, its activity has been limited to the purchase of a small portfolio of homes from BMN and GE Capital’s mortgage portfolio in Spain. Moreover, Altamira was awarded one of the four management contracts by Sareb.

In recent months, Apollo has purchased one of the largest banking portfolios on the market, Project Sun from CaixaBank, containing hotel debt, and it is expected to soon close the acquisition of one of the aforementioned real estate platforms (Oitante or Unicaja).

Original story: Vozpópuli (by Jorge Zuloaga)

Translation: Carmel Drake

Bain Capital Raises €2,770M & Sets Its Sights On Spain

8 August 2016 – Expansión

Bain Capital wants to become one of the largest buyers of real estate in Spain. On Thursday, the US fund announced that it has completed the acquisition of three asset portfolios from Spanish banks, worth €1,146 million, over the last few months. The sellers are Cajamar, Sabadell and Bankia in three separate deals.

The acquisitions have been made through the fund’s Bain Capital Credit business unit, known until now as Sankaty.

And as if that weren’t enough, in the last few days, the US investor has completed the creation of a new fund in the USA worth $3,100 million (€2,769 million) for distressed investments (assets close to bankruptcy) and assets in special situations, according to Bloomberg.

“We see potential for making new investments in the Iberian Peninsula, especially in the real estate and overdue loan markets”, said Fabio Longo, CEO and Head of the real estate and overdue loan business in Europe at Bain Capital Credit. “We are excited about the opportunity to consolidate our position in the market for non-performing real estate assets in Spain through these investments”, added Alon Avner, CEO and Head of Bain Capital Credit’s European business.

Individual transactions

Of the three portfolios purchased, the largest was bought from Cajamar, containing €511 million of overdue syndicated and bilateral loans, granted primarily to real estate developers in different phases of bankruptcy. This deal, known as Project Baracoa, was the first major competitive sale of loans by a Spanish entity.

In addition, Bain Capital Credit acquired a portfolio of loans with a nominal value of €415 million from Sabadell, comprising overdue loans to property developers, mainly secured by residential and tertiary assets. This operation was known in the market as Project Pirene.

The most recent purchase by the US fund in Spain involved the Project Lane portfolio, comprising €220 million of foreclosed assets sold by Bankia. This was the first operation of its kind carried out by the nationalised group after the failed sale of Project Big Bang at the end of last year, through which it had wanted to sell all of the homes, developments and land on its balance sheet. In the end, Bankia was unable to reach an agreement with the investor who had expressed the most interest, Cerberus.

For all of these operations, Bain Capital has been advised by the asset managers Copernicus, HipoGes and Altamira; the consultancy firms Aura REE and CBRE; and the lawyers J&A Garrigues and Cuatrecasas.

Original story: Expansión (by J. Zuloaga)

Translation: Carmel Drake

Sabadell Puts €250m NPL Portfolio Up For Sale

29 January 2015 – Expansión

Opportunistic funds / “Project Cadi” includes non-performing loans that the entity once granted to real estate developers

Banco Sabadell is making progress in its strategy to reduce the volume of foreclosed assets and bad debt on its books. The financial group led by Josep Oliu, which today releases its results for 2014, has just put an NPL portfolio worth €250 million up for sale.

According to market sources, the so-called Project Cadi includes non-performing loans that were once granted to real estate developers. Through Solvia, Sabadell is taking a very active role in packaging these types of loans, in the face of strong buyer interest from opportunistic funds that are now active in the Spanish market. At the beginning of the month, the bank already disposed of another portfolio worth €435 million (Project Tritón), which included 630 non-performing loans to small- and medium-sized developers, as well as 700 foreclosed assets in Valencia, Andalucía, Cataluña and the Balearic Islands. This sale was put together through a bond issue, acquired by Deutsche Bank and Hipoges. Sabadell may already be sounding out the market with a view to selling other portfolios over the next few months.

This type of transaction reflects the confidence that funds have in the recovery of the real estate market in Spain. In parallel, banks are interested in this kind of transaction because they lighten their balance sheets and allow them to generate income from assets that are no longer productive and that have already been provisioned. According to sector sources, these transactions are closed with discounts of around 75%, which means that the funds are paying the financial institutions 25% of the nominal value of the loans.

The largest transaction of this kind in Spain was closed in 2014 by Blackstone, which acquired a €6,392 million mortgage portfolio from Catalunya Banc. Lone Star and JP Morgan also bought loans from Eurohypo amounting to €4,500 million. Other funds that have acquired portfolios include Aiqon, Lindorff, Cerberus and Starwood.

Original story: Expansión (by S. Saborit and J. Zuloaga)

Translation: Carmel Drake

Hipoges Receives the Real Estate Manager Title

Standard & Poor’s (S&P) has awarded Hipoges Iberia with “above average” rating as a residential mortgage asset manager. This is the first qualification that a Spanish company has received by a credit rating agency.

Hipoges is one of the main independent platforms managing toxic assets in Spain, holding 2.600 million Euros in mortgage and consumer credits administered. Such companies are more and more popular due to banks and Sareb´s need to externalize the management of the assets allocated because of the crisis.

According to Juancho Vizcaíno, the managing director of Hipoges Iberia, “thanks to Sareb´s activity, the investors got a guarantee of interesting assets flow in the future”.

  Source: Expansión