Sareb Reduces Its Assets By Just 6% In 3 Years

9 May 2016 – El Economista

Sareb has reduced the number of assets it owns by just 6.1% since its creation at the beginning of 2013. In the last three years, the company chaired by Jaime Echegoyen has decreased its volume of properties and loans by 12,091 units, representing 6.1% of the total, and so still held 186,120 assets at the end of last year, according to its annual report approved by the General Shareholders’ Meeting.

The firm, which was created using the toxic assets of the entities that received state aid, has twelve years left to sell off its remaining assets, which are valued at €43,000 million, after the sales it has already completed and the impairment in its appraisal values as a result of price decreases.

The small reduction in the number of loans and properties is due, in part, to the transformation of the portfolio into more liquid assets. Since it was created, Sareb has been converting loans in homes and land, so as to bring them onto the market more quickly in the face of their non-payment. In this way, the volume of financing lines to property developers has decreased by around 10,000, to just over 80,000, whilst the number of properties has been reduced by around 2,000, despite the fact that its divestments since the creation of its semi-public capital exceed 30,000.

Sareb’s General Shareholders’ Meeting approved the accounts from last year, which are weighed down by the new provisioning circular. Moreover, it authorised the exchange of subordinated debt for capital to strengthen its solvency, after recording significant losses in prior years. The company will convert €2,170 million in total. Following this operation, the State – through the Frob – will slightly strengthen its stake, since it holds more debt that the other shareholders. It will go from owning 45% of the shares to 45.9%.

In addition, several insurance companies will acquire small stakes in the company’s share capital, given that, until now, they only held subordinated bonds. The remaining shareholders – the banks – will see their shareholdings diluted slightly. Santander will continue as the main private shareholder.

Original story: El Economista (by F. Tadeo)

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

CaixaBank Injects Another €1,900M Into BuildingCenter

6 April 2015 – Expansión

Over the last two years, the bank has invested €4,400 million in its subsidiary, which owns properties that have been foreclosed (by CaixaBank) following the non-payment of debt.

The property sector is still taking its toll on CaixaBank. In 2014, the entity had to inject another €1,900 million in BuildingCenter, the company in which the bank places all of the real estate assets that it forecloses in exchange for (the cancelation of) debt.

This new contribution of funds responds to the need for BuildingCenter to restore the equity balance of its balance sheet, due to the losses generated by these assets, which are managed and marketed by ServiHabitat, the real estate platform owned by TPG (51%) and CaixaBank (49%). BuildingCenter generated a loss of €1,280 million in 2014.

Typically, the bank chaired by Isidro Fainé, rebalances BuildingCenter’s (balance sheet) through capital increases. However, this time, the €1,900 million has been injected into the Catalan group’s bad bank in the form of a “non-refundable monetary contribution from the sole shareholder”. This means that the money forms part of its restricted reserve, and therefore, constitutes the own funds of the company, just like its capital. In 2013, CaixaBank also used this formula to transfer another €750 million to the real estate company.

The BuildingCenter’s last capital increase was also conducted in 2013, for €1,250 million, plus an issue premium of €500 million. Therefore, if we sum the three contributions, CaixaBank has invested €4,400 million in total in BuildingCenter in just two years.

In parallel, over the last two years, the bank has made provisions for the impairment (of its investment in) BuildingCenter amounting to €2,233 million. In 2013, it made provisions amounting to €1,101 million and last year, it made provisions for a further €1,132 million. The NPL ratio of the real estate company is 58.7%.

Financing

According to CaixaBank’s annual report, the financing granted by the bank to its subsidiary BuildingCenter, amounted to €9,268 million at 31 December 2014, i.e. 16% more (than a year earlier).

In total, the net book value of the BuildingCenter’s real estate assets amounted to €6,515 million, i.e. 8% more than in 2013. 73% of that figure related to properties that the company had foreclosed from construction companies and property developers in exchange for the non-payment of debt.

Homes resulting from the foreclosure of individual mortgages accounted for 15% of the portfolio, amounting to €1,000 million.

In 2014, CaixaBank (successfully) marketed 23,400 properties, including sales and rentals, for €2,512 million, i.e. 15% more (than a year earlier). The occupancy rate of the rental portfolio amounts to 87%.

Finally, last year, BuildingCenter took over General de Inversiones Tormes and the company VIP Gestión de Inmuebles, which it inherited from Banco de Valencia.

Original story: Expansión (by S. Saborit)

Translation: Carmel Drake