Criteria Cuts Ties With Servihabit & Will Manage Its Own Properties

2 June 2017 – Expansión

Criteria Caixa has taken another step forward in the process to deconsolidate itself from CaixaBank. The holding company that owns stakes in subsidiaries of the La Caixa Banking Foundation (Fundación Bancaria La Caixa) has decided to internalise the management of its real estate assets, a function that until now have been performed by Servihabitat.

That servicer is owned in part (51%) by the US fund TPG and the remaining 49% stake is owned by CaixaBank. According to sources, Criteria will have to indemnify Servihabitat for the early termination of the contract with a payment amounting to €34.5 million.

The original agreement between the two companies was signed in 2014 and the contract still has six years left to run, given that it is due to terminate in 2023. The document included a clause to cover the possibility of an early termination in exchange for the payment of compensation, which has now been agreed by mutual agreement between the two parties.

The properties owned by Criteria account for around 7% of the total volume of the portfolio that Servihabitat has under management. The company also manages the properties foreclosed by CaixaBank, but its aim over the last few years has been to increase its client base by incorporating new portfolios onto its platform. The servicer took a giant leap when it was awarded the management of several portfolios by Sareb, comprising real estate assets from Novacaixagalicia, Liberbank and Banco de Valencia.

In 2016, the assets managed by Servihabitat increased by 4.8%, to reach 239,132 units, with a value of almost €50,000 million. The company recorded turnover of €285 million, up by 14.8%, thanks to the sale of homes worth €1,645 million, up by 11%.

Portfolio of €2,842 million

Criteria, which is chaired by Isidro Fainé, considers the decision to move to directly managing its own real estate assets, worth €2,842 million, to be strategic. Of the total amount €515 million – 18% of the total – are assets allocated for sale; €1,021 (36%) correspond to the land portfolio – noteworthy plots include those adjoining Port Aventura park –; and €728 million (26%) relate to rental properties. Finally, another €578 million (20%) constitute assets allocated to La Caixa Banking Foundation’s affordable housing programs.

Original story: Expansión (by S. Saborit)

Translation: Carmel Drake

PortAventura’s Owner May Buy TPG’s Stake In Servihabitat

30 November 2016 – Voz Populi

The real estate arm of CaixaBank, Servihabitat, is preparing for a possible change in its shareholders. The Italian private equity group Investindustrial (which is headquartered in Barcelona) is holding conversations with TPG regarding the possible acquisition of the 51% stake that the Texan fund owns in Servihabitat. For the time being, no offer has been put on the table, but several financial sources consulted are convinced that a deal will be reached soon and that the group, owned by the Bonomi family, is well positioned to take over the reins of the real estate company.

Investindustrial already has a lot of roots in Spain and above all in Cataluña. The same sources add that Carlo Bonomi, the CEO of the firm, has a good relationship with Isidro Fainé. Both groups completed one of the largest private equity operations between 2009 and 2012, with the purchase of the PortAventura park from Criteria for almost €200 million.

The fund created by the Bonomi family also controls the rental car company Goldcar in Spain and the ambulance firm Emeru. In recent years, it has held stakes in Applus, Euskatel and Recoletos, amongst others. In fact, Investindustrial was one of the groups that submitted a bid for the takeover of RCS (owner of Unidad Editorial), but it was pipped at the post by Cairo Communication.

The possible acquisition of a stake in Servihabitat comes at a time when the financial sector is rethinking its real estate partnerships: Santander has engaged Citi to handle its purchase of Altamira; Popular is negotiating with Värde Partners and Kennedy Wilson to regain control over Aliseda; and Servihabitat has also been the target of rumours in the market. Nevertheless, the sources consulted explain that the Catalan group does not want to regain ownership of 100% of its real estate company, but rather is looking for a new partner whose plans for Servihabitat fit better with its own vision than that of TPG.

This change in strategy has not arisen due to personal differences, but rather due to the new circumstances in the financial sector. When the banks sold their stakes in their real estate companies in 2013, they did so because they needed capital; and they were very successful in this regard. In the case of Servihabitat, TPG paid €310 million for its 51% stake.

Change in strategy

Nevertheless, with the passage of time, the banks are seeing a slowdown in the rate of property sales and are incurring expenses on their income statements as a result of all of the commissions that they are having to pay their property managers.

A priori, the investment in Servihabitat does not fit with the type of investments that Investindustrial usually undertakes. It traditionally backs sectors such as services, consumer and industrial. But, sources in the sector regard Servihabitat as a classic private equity investment, since it is a cash generating machine with potential to grow through corporate operations. In fact, Servihabitat is one of the candidates in the running to buy Portugal’s largest bad bank.

The company generated EBITDA of €111 million last year. Its consolidated profit amounted to almost €44 million.

Original story: Voz Populi (by Jorge Zuloaga)

Translation: Carmel Drake

CaixaBank Places €1,500M 7-Year Mortgage Bond Issue

2 February 2016 – Cinco Días

The bank chaired by Isidro Fainé…has placed a 7-year mortgage bond issue amounting to €1,500 million. The entity has been helped by Barclays, Goldman Sachs, Société Générale and UBS.

CaixaBank has placed the debt issue at a price of 78 basis points above the 7-year midswap rate (the risk free interest rate corresponding to that term), slightly below the reference rate of 80 basis points sought at the beginning of the placement. The coupon has therefore been left untouched at 1%.

Demand for the issue has amounted to more than €2,500 million, with more than 125 investors expressing interest in it, of which a significant number were foreigners. This has allowed the entity to reduce the price of the issue. CaixaBank’s last debt issue, which was placed on 4 November 2015, amounted to €1,000 million. It had a five-year term and a coupon of 0.625%. The entity is strengthening its surplus liquidity, which amounted to more than €54,000 million at the end of last year.

Spanish banks are rushing to raise funds on the capital markets. In January, BBVA placed a 5-year senior debt issue amounting to €1,000 million; meanwhile, Bankia placed mortgage debt amounting to €1,000 million; Santander issued 10-year bonds for the same value; and Deutsche Bank issued bonds amounting to €500 million with a 7-year term.

Santander achieved a price of 65 basis points over the midswap rate – the reference index for this kind of debt issue – on its placement. It will pay a coupon of 1.5%. Mediobanca, Natixis and Nomura accompanied the Santander group in the management of the operation.

Javier González, Head of Debt Issues by Financial Entities at BNP Paribas, which participated in the placements of BBVA, Bankia and the Treasury, confirmed that the money invested in these operations has been coming from end investors, such as investment and pension funds.

Banco Santander and Bankia have chosen to issue mortgage bonds because the volatile environment makes this type of asset very popular with conservative investors.

Original story: Cinco Días (by Pablo Martín Simón)

Translation: Carmel Drake