More than 85,000 Borrowers ask to Postpone their Mortgage Payments

Caixabank is the entity that has received the most requests for payment deferrals to date, with almost 50,000 applications.

Just one month after the Government approved a three-month mortgage moratorium for people who have seen their economic situation worsen due to Covid-19, more than 85,000 borrowers have already asked their banks to postpone the payment of their loans, according to reports from Expansion.

That figure includes not only those who have requested to take advantage of the extraordinary measure approved by the Government – whose requirements are very strict – but also those who want to benefit from a repayment holiday, of up to 12 months on the principal (not the interest), that is being offered by a large number of the member banks of the AEB and the Ceca. In both cases, the aid can only be requested for mortgages on habitual residences, although Santander is also offering it for second homes.

Villar Mir Group Puts Inmobiliaria Espacio Up For Sale

18 September 2019 – El Confidencial

According to financial sources, the Villar Mir Group has put its land and property developer subsidiary Inmobiliaria Espacio up for sale. The objective is to raise funds to repay the group’s creditor, the Monaco-based fund Tyrus Capital, and it follows the divestment of two other non-real estate entities, Fertiberia and Ferratlántica, in August.

Savills Aguirre Newman has been engaged to coordinate the sale after valuing the entity’s land and plots at €256.88 million as at 31 December 2017. The assets may be sold as a set or piecemeal. Moreover, the company has tax credits worth between €100 million and €200 million, which is where the real value of Inmobiliaria Espacio lies.

According to the latest available data, the company reported an EBITDA of €1.61 million in 2017 and sales of €46.77 million, up by 23.2% YoY. Moreover, it has an excellent and sizeable portfolio of land for development in good locations, for which planning permission has been granted, and therefore an improvement in sales is forecast over the next few years.

Last year, Tyrus Capital lent the Villar Mir Group €360 million to refinance the debt that the traditional banks did not want to extend. The conditions of that loan are onerous – it has a two-year term (of which one year has already passed) and it carries an interest rate of between 10% and 12%. As such, the group wants to sell off its assets in an orderly fashion to repay and reduce its financing, and so time is of the essence.

Original story: El Confidencial (by Agustín Marco)

Translated by: Aura Ree

Sareb Sets Itself an Online Sales Challenge: €1.8bn in NPLs

10 July 2018 – El Economista

Sareb has launched a new wave of non-performing loans for sale on its online marketing channel, aimed at investors and professionals, to boost the divestment of €1.8 billion, equivalent to 7.2% of its portfolio of financial assets, according to sources at the company speaking to Europa Press.

Since July 2017, Sareb has had a dedicated loan sales channel for investors and professionals, a pioneering initiative in the European market, which allows it to promote divestment and increase the visibility of these kinds of assets.

The aim of the so-called bad bank is to enhance the transparency of the sales processes of these types of assets, which are now in their fourth wave. At the end of 2017, it had managed to sell loans with a nominal value of €186 million, €35 million through its website and €151 million through its servicers, which also have specific platforms to market these portfolios.

The guarantees associated with these loans mainly constitute mortgages over properties of different kinds: finished residential homes, work in progress buildings and land.

With this channel, Sareb is continuing to push ahead with its divestment process and its commitment to a more dynamic and transparent loan market, according to Expansion.

The channel is aimed at investors and professionals who fulfil a series of minimum eligibility requirements. Sareb’s aim is to expand the number and profile of investors who can participate in its loan sale processes, whereby facilitating divestment in the segment. In this way, the players that may operate on the channel include international and domestic professionals, as well as local operators interested in the loans.

Sareb has a loan volume amounting to more than €25 billion proceeding from almost 14,575 debtors. All of them have a combined debt of €70.4 billion, including associated interest and expenses. In order to recover those amounts, the entity carries out an active management process that allows it to ensure the payment of interest on the loans and, where possible, their repayment or cancellation.

When it was constituted, Sareb received around 200,000 assets worth €50.8 billion, of which 80% were loans and property developer credits and 20% were properties.

After five years of life, Sareb has reduced its portfolio by more than €13.6 billion. Currently, its portfolio of assets comprises 67.3% in loans and 32.6% in properties.

Sareb issued debt backed by the Spanish State to pay the rescued entities for the assets that they transferred to the company. The company is complying with the repayment of that debt, and to date has repaid more than €12.9 billion.

Original story: El Economista 

Translation: Carmel Drake

BBVA Reduces the Property Portfolio that it will Transfer to Cerberus by 12%

17 May 2018 – Expansión

BBVA is not holding back in its strategy to reduce its exposure to the real estate sector ahead of putting the finishing touches to its agreement with Cerberus. The entity has already cleaned up some of the portfolio that it will transfer to the US fund in September.

Between the reference date for the operation – the end of June 2017, and March this year, the date of the most recent audited accounts -, the bank has decreased its foreclosed assets by 12% – those assets proceed from unpaid residential and property developer mortgages.

The bank is going to create a joint venture with the US fund to reduce its real estate exposure in Spain to almost zero. BBVA will sell 80% of that joint venture to Cerberus for an estimated price of €4 billion. But that amount may vary, depending on the volume of foreclosed assets that end up being transferred.

Initially, a portfolio with a gross asset value of around €13 billion was defined. By March, the entity’s foreclosed assets balance had decreased to a gross value of €11.541 billion. Most of the portfolio comprises finished buildings and land, which are easier to sell now thanks to the recovery of the real estate sector.

To cover its gross risk, BBVA has recognised provisions amounting to €7.073 billion, which reduces its net exposure to €4.468 billion. The coverage ratio of the foreclosed assets amounts to 61%.

Sources at BBVA explain that the portfolio that is going to be transferred to Cerberus also includes the ‘other real estate assets’ caption. The bank’s gross real estate exposure, including both concepts, amounted to €12.472 billion in March compared with €14.318 billion in June 2017.

Until the close of the operation, which is scheduled for September, the assets to be transferred to the joint venture will not be finalised. “Under no circumstances will transferring fewer assets result in a loss to the income statement. In fact, this operation is not expected to have a significant impact on the income statement”, explain official sources at the entity.

Solvency

The agreement with Cerberus will improve BBVA’s solvency. In March, the bank saw its core capital fully loaded ratio worsen to 10.9%. But the transfer of the real estate portfolio to the fund and the sale of its business in Chile will improve that metric to 11.5%.

BBVA has loaned Cerberus €800 million to finance part of its purchase of the real estate portfolio from the bank. The loan has a term of two years and will not accrue any interest. The fund will repay the debt in a single payment on the maturity date.

Spain’s financial institutions have stepped on the accelerator to clean up property from their balance sheets following Santander’s macro-operation to deconsolidate real estate risk amounting to around €30 billion proceeding from Popular (…).

Original story: Expansión (by R. Sampedro)

Translation: Carmel Drake

Sareb Still Faces Challenges Five Years After its Creation

27 February 2018 – Expansión

The bad bank was created with 200,000 toxic assets worth €50.8 billion, inherited from the rescued savings banks. In five years, it has divested 27% of that encumbrance. It has another ten years left to liquidate its remaining stock.

Just over five years ago, Sareb (…) was launched. The creation of the bad bank was made possible thanks to the participation of European funds in the bank rescue and the solidarity of the financial system, which had the capacity to resist the crisis and contribute its grain of sand to the process.

Sareb was created with private capital majority (contributed by the banks, with the exception of BBVA, which refused to participate, as well as insurance companies and a handful of real estate companies) and the remainder was provided by the State through the Frob, in such a way that any equity imbalances and losses that the new company would incur would not be accounted for in the public deficit (…).

The last five years have not exactly been a walk in the park for Sareb (…). Nevertheless, it has generated revenues from the sale of assets amounting to €12.9 billion, which have allowed it to cover its expenses, which, in addition to the cost of its 400 employees, involve: the payment of commissions to intermediary companies (€1.1 billion); the payment of interest (€4.0 billion (…)); taxes (€790 million (…)) and more than €400 million in maintenance costs and service charge payments.

The bad bank’s revenues proceed from the sale of its assets, whose composition has changed considerably since its creation. Currently, Sareb owns almost the same number of properties as it had at the beginning, but after having sold almost 65,000 assets. That is because some of the loans that were transferred to Sareb upon its creation have now been converted into properties through the execution of the guarantees that they secured. In this way, properties now account for 32% of the company’s total asset value, whilst the weight of loans has decreased from 80% to its current level of 68%. The entity’s assets have decreased by 27% to reach €36.9 billion and the debt issued by Sareb, which is guaranteed by the State, currently stands at €37.9 billion, down by 25%.

The company has generated positive margins during the course of its life, although it has only ever recorded losses. In 2016, the most recent period for which figures are available, its losses amounted to €663 million and, although its results for 2017 have not been published yet, the losses are expected to be similar. Reality has imposed itself on the initial business plans. Today, both the entity’s President, Jaime Echegoyen, and the company’s shareholders, understand that one possible objective would be for the entity to be liquidated within 10 years without having needed any new capital contributions and for some of the investment to be recovered, around 60%, with the remaining 40% having to be written off.

The President of Sareb understands that the company is fulfilling the basic purpose for which it was created, albeit with difficulties: the sale of damaged assets from the entities that received public aid, because, it does not have any other levers that would allow it to offset the possible losses that it would incur if it accelerated its sales.

Sareb only generates revenues from the sale of its assets and that is forcing it to adjust its sales prices a lot more so as not to incur losses. In this regard, it is totally different from the other financial institutions, for whom the damaged real estate assets account for only part of their balance sheets and, therefore, they can divest them at lower prices, since they receive other revenues that generate sufficient margins for them.

Original story: Expansión (by Salvador Arancibia)

Translation: Carmel Drake

JLL: RE Inv’t in Student Halls Soared to €560M in 2017

4 January 2018 – El Mundo

The volume of real estate investment in student halls soared in 2017 to reach €560 million by year-end, compared to €50 million in 2016, according to data from the real estate consultancy JLL.

That figure of almost €600 million was driven primarily by the sale of two large portfolios, known as Erasmus and Rio. The first related to the sale of Grupo Resa, the largest operator of student halls in Spain, whilst Project Rio corresponded to the sale of a portfolio of student halls that the fund Oaktree owned in Spain, which was acquired by funds managed by GSA in an operation advised by JLL.

Similarly, the investment volume recorded in 2017 also included other operations involving individual assets, such as the recent purchase by the European fund “Catella European Student Housing Fund” of the La Campana student hall, located in the centre of Pamplona (Navarra), as well as the acquisition in March by The Student Hotel of the former print house on Cuesta de San Vicente 28, in Madrid, to convert it into a hall of residence.

In terms of whether this trend will continue, according to Nick Wride, Director of Alternative Assets at JLL, “in 2018, we will not see the sale of large portfolios like in 2017, but we expect the market to continue to be very active, especially with respect to the purchase of land for the development of new student halls and also rehabilitation and change of use projects”.

“Moreover” – he adds – “although interest will continue in Madrid and Barcelona as the large cities, there will also be an increase in investment towards the main university cities outside of those two locations, above all in Valencia, Granada, Salamanca and Bilbao”.

Original story: El Mundo

Translation: Carmel Drake

Blackstone Puts €400M Of Catalunya Banc’s Mortgages Up For Sale

27 March 2017 – Expansión

The banks have put a red circle around 2017 in their calendars, as the year when the doubtful portfolios that have hurt them so hard in the past and that are still denting their balance sheets even now, will show signs of life. Some of the entities may end up generating more profits than they initially expected.

And Blackstone is leading the way. The US giant has created a securitisation fund containing some of the non-performing loans with a nominal value of €6,000 million that it purchased from Catalunya Banc in 2015 for almost €3,600 million. Two years later, and after restructuring many of the credits, the investment group has decided that the time has come to capitalise on its investment.

It will do so with the sale to investors of a portfolio containing €403 million of these formerly delinquent loans. It represents Blackstone’s second foray into this field. Last year, the firm opened fire with the first securitisation of structured loans in Europe, although now it is redoubling its efforts given that the volume up for sale is 52% higher.

The fund comprises 3,307 residential mortgages granted in Spain, with a loan to value (credit over the value of the home) of 60.9%. Almost 80% of these mortgages have been restructured and many of the borrowers are up to date with their repayments. Meanwhile, there has been no change to the rest, according to information that Blackstone has provided to Moody’s to allow the risk ratings agency to make its assessment.

Profits

Blackstone’s aim is to sell this portfolio to investors in order to materialise some of the gains obtained from the management of the non-performing loans. In all likelihood, the securitisation fund will be placed below its nominal value, but at a much higher level than Blackstone paid when it acquired the mortgages from Catalunya Banc, before the State intervened entity was acquired by BBVA.

In exchange, Blackstone will offer different coupons to investors, depending on the type of mortgages that they take on.

The fund has been divided into five tranches, depending on the risk. The first has a very high level of solvency and so will pay annual interest of 3-month Euribor plus a spread of 0.90%.

The second and third tranches, which still have high or intermediate solvency ratings, will pay premiums over Euribor of 1.9% and 2.5%, respectively. The fourth tranche is ranked below investment grade and will pay a return of 2.6%.

The objective of Blackstone and the three banks that it has engaged for the securitisation (Credit Suisse, Bank of America Merrill Lynch and Deutsche Bank) is that the operation will be completed next week.

A new market

This second securitisation by Blackstone is clear confirmation that a new market has opened up for buyers of delinquent portfolios from the banks. In fact, sources from several investment banks are confident that there will be a significant volume of secondary operations of this kind this year, where the new owners of the bank’s non-performing loans will sell their positions to other funds and to the market alike, through securitisations. (…).

Original story: Expansión (by Inés Abril)

Translation: Carmel Drake

Sareb Plans To Return €6,000M To Its Shareholders

16 June 2016 – Expansión

Sareb has a business plan on the table that involves returning its shareholders all of their investments, including an annualised return of between 1% and 2%. According to the explanation provided yesterday by the Chairman of the company, Jaime Echegoyen, these plans involve paying back €6,000 million to the banks and insurance companies that hold its share capital, together with the Fund for Restructuring (the Frob).

Between 2012 and 2013, those shareholders invested €4,800 million in Sareb – €1,200 million in share capital and €3,600 million in subordinated debt. The investors have already written off around three quarters of that amount.

Echegoyen, who was speaking yesterday at an event organised by UIMP, Apie and BBVA, did not specify whether the €6,000 million would be returned in cash or by handing over assets that the bad bank has not been able to sell by the time it has to be wound up, November 2027.

The Chairman of Sareb praised the role of the entities that supported the creation of the company, all of the major banks with the exception of BBVA. (…). The company’s most senior executive said that it was “time to help the whole country” (…).

Podemos’ plans

Echegoyen also made reference to the possibility that Sareb may be converted into a public housing stock, as proposed by (the political party) Podemos, something that in his opinion would have serious consequences for the Spanish economy.

“I don’t think we should forget that Sareb owes €43,000 million. If anyone wants to do anyhing with Sareb, they would have to deal with Parliament first and then Brussels”, he explained, before adding that “those €43,000 million would mean raising the deficit by 4 percentage points”.

Meanwhile, Sareb’s Chairman reported that the company has now sold 35,000 properties since it was created, although the rate of sales has decelerated slightly in 2016, to 25 homes per day, compared with the average of 27 since 2013. Despite that, he said that “we are performing in line with budget” and he maintained the goal to “stop losing money in 2017”.

This slight slowdown has happened despite the fact that the real estate market is experiencing a “sweet moment”, according to Echegoyen. This is reflected by the fact that new, more conservative, investors, “such as Socimis, family offices, insurance companies and private banks have covered the gap left by the opportunists”.

The importance of property

According to the executive, low interest rates are encouraging investors to pay attention to real estate assets. “Property is intrinsic to human beings, above all Spaniards”, he said. “Banks are still granting finance, but are no longer allowing any nonsense”, he added.

The Chairman of Sareb acknowledges that competition is being felt from other banks when it comes to selling properties, although he pointed out that the financial institutions are in more of a hurry to sell given the pressures (they face) from the stock market and capital requirements.

“We have time, a trump card, on our side, which lasts for the next 12 years. Furthermore, we are never going to be listed on the stock exchange, which means that we are not subject to pressure from the financial markets”, he noted.

Original story: Expansión (by J. Z. and S. A.)

Translation: Carmel Drake

Residential Investment: Which Are The Most Profitable Districts?

30 May 2016 – Expansión

Madrid and Barcelona are pulling the real estate wagon. The recovery is happening at two speeds, at least. On the one hand, house prices are rising in the large cities, where sales volumes are also increasing significantly, rental prices are growing, non-residential investment is on the up and there is a shortage of land available for sale.

Most of this improvement in due to underlying macroeconomic trends, but not all of it. The impact of private investors is playing a crucial role in the strengthening of the two large real estate regions, whose central areas are the most sought-after by investors, both businesses and individuals, and Spaniards and foreigners alike.

The prime districts of the Madrid and Barcelona offer the highest rental yields for those looking to buy homes as investments. If we also include the appreciation that these properties are experiencing in terms of price, then the total return on these homes exceeds the 10% threshold.

That is according to a report about rental yields, by district in Madrid and Barcelona, prepared by Fotocasa.

The analysis of the Madrilenian capital concludes that the districts that spark the most interest for rented housing are: Centro, Carabanchel, Tetuán, Puente de Vallecas and Latina. They currently offer an average yield of 6%, almost one percentage point higher than the average return in Spain, which stands at 5.3%. The yields offered from rents in these districts range from 4.9% in Centro to 7.4% in Puente de Vallecas.

In Barcelona, the gross yield from buying a home and putting it up for rent (excluding capital gains) is 5.3%, in line with the national average. The districts that are most sought-after by investors in Barcelona are: L’Eixample, Sant Martí, Ciutat Vella and Gràcia, which are currently generating an average return of 4.7%, i.e. 1.3 points below the yield being offered by an average home in the most sought-after areas of Madrid. In any case, the prime returns range between 4.2% in L’Eixample and 5.3% in Ciutat Vella. (…).

Double-digit price rises

In terms of prices, nine of the 10 districts in the Catalan capital recorded double digit increases in 2015. “Within the last few months, we have seen unheard of increases in rental prices in the city of Barcelona. Whilst historically, the Madrilenian district of Salamanca was the most expensive place to rent a home in Spain, now that ranking is led by the Catalan district of Ciutat Vella, after prices there rose by more than 20% YoY. In fact, Ciutad Vella is currently 11% more expensive than the Madrileñian district of Salamanca”, said Beatriz Toribio.

“The high demand for rental housing in the most central areas of the city, and the limited supply of homes, are combining to cause rental prices in Barcelona to rise to record breaking levels. They are even causing rental prices in less central areas, such as Sant Martí and the district of Horta Guinardó, to see double-digit YoY increases in rental prices”, added Toribio.

The most sought after rental properties in Madrid are smaller than the most sought after properties for purchase. Whilst to buy, the average home measures 80 sqm and has two or three bedrooms; to lease, the average home has a surface area of 57 sqm and two bedrooms. The same thing is happening in Barcelona: the average home to buy measures 80 sqm, and has between two and three bedrooms. Nevertheless, to rent the average house size is 60 sqm with two bedrooms.

Original story: Expansión (by Juanma Lamet)

Translation: Carmel Drake

BBVA Issues 5.5-Year Bonds Worth €1,250M

11 November 2015 – El Economista

Yesterday, BBVA completed the placement of mortgage bonds amounting to €1,250 million, with a five and a half year term, on which it will pay interest of 0.625%, the lowest coupon in the bank’s history for this kind of debt.

According to market sources, the strong demand from overseas investors allowed the bank to lower the price of the issue to 38 basis points above the midswap rate, the reference rate for this kind of issue.

The underwriting banks for the operation were BBVA itself, plus Commerzbank, Credit Agricole, HSBC and Natixis. The last time that BBVA carried out an operation of this kind was on 12 January 2015, when it also placed €1,250 million in mortgage bonds, although they had a 7-year term.

On that occasion, the entity paid interest of 0.75%, the lowest coupon on that kind of debt at that time, thanks to the fact that the operation attracted investors from all over the world, whose demand exceeded €2,500 million.

Following in the footsteps of CaixaBank

BBVA has launched this bond issue just one week after CaixaBank closed its own operation to issue 5-year mortgage bonds amounting to €1,000 million. Demand in that case almost doubled supply.

The price of that issue, which was closed on 4 November, amounted to 43 basis points above the midswap rate, and the bonds carry a coupon of 0.625%.

Original story: El Economista

Translation: Carmel Drake