Tag: Jaime Echegoyen

Aelca Locks Horns with its Owner Värde Over Sareb Mega-Contract

12 June 2018 – Voz Pópuli

An underground war in the heart of Aelca, one of the largest property developers in Spain. The real estate firm founded by José Juan Martín and Javier Gómez is immersed in negotiations regarding a possible alliance with Sareb which has generated unease for its main shareholder, Värde Partners, which owns 80% of the share capital.

Sources at the US fund consider that their investee company is negotiating this agreement behind their backs, something that they are opposed to since it could mean that their stake in the property developer decreases to less than 50%, according to financial sources consulted by Voz Pópuli.

Sources at the property developer declined to comment: “Aelca is continuing to work on the project with Sareb. In this sense, we decline to make any comment”.

Meanwhile, Värde Partners has been assessing a possible merger between Aelca and Vía Célere, the fund’s other property developer in Spain, for some time. They see it as the best way to generate value from their investments in Spain ahead of a possible IPO when the market improves. But neither of the US fund’s partners like the merger option, they would both prefer to continue on their own.

Sareb’s process

The property development alliance with Sareb is making progress, with the recent selection of just two finalists: Aelca and Aedas. The President of the bad bank, Jaime Echegoyen, said yesterday that his entity is in no hurry to close an agreement and nor does it have any obligation to close a deal if the numbers do not work out in the end.

Sareb’s idea is to include land worth €800 million in the agreement. According to financial sources consulted, developments in progress worth another €500 million may also be included. And of all of that, Aelca would want to hold onto around €900 million, or 70% of the total.

One of the options being negotiated is that Aelca and/or Aedas acquire the plots in exchange for allowing Sareb into their share capital. The valuation of the property developer is around €1 billion, and so such an agreement would reduce Värde’s stake to below 50%. Even so, according to the same sources, Aelca would have to obtain approval for the operation at the General Shareholders’ Meeting, which would be tricky if the fund is not in agreement.

Moreover, sources at Värde do not think that the valuations that they are seeing for the possible agreement with Sareb are justified, and they fear that the negotiations will dilute their stake (…).

Original story: Voz Pópuli (by Jorge Zuloaga)

Translation: Carmel Drake

Aelca & Aedas Enter Final Round of Sareb’s Property Developer Venture

1 June 2018 – Eje Prime

The bad bank is gradually outlining what its property development venture in Spain is going to look like. Aelca and Aedas Homes are the final candidates in the bid to take over the land portfolio that the bad bank has put on the market in exchange for entering the share capital of one of the house builders. By contrast, Vía Célere has abandoned the competition, leaving the path clear for the other two operators.

According to sources familiar with the process, Vía Célere has decided not to submit a final proposal to Sareb. The property developer, controlled by Värde Partners (51%), together with other funds, decided against going forward to exploit the bad bank’s €1.2 billion portfolio.

The bet by the entity chaired by Jaime Echegoyen is also happening because its property developer partner is listed on the stock market, such as in the case of Aedas, or has the intention of doing so, such as Aelca. That means that the financial institution will be able to divest its shares easily in the future and make a gain. That point is likely to have been one of the reasons that led Vía Célere to back out of the deal, given that it has put the brakes on its stock market debut following the postponements announced by Testa and Azora.

Original story: Eje Prime

Translation: Carmel Drake

Changes Afoot: Sareb Considers Modifying the Management of its €35.5bn Portfolio

29 May 2018 – Eje Prime

The bad bank is rethinking its future. The company is analysing the possibilities that the current servicer market offers it in terms of restructuring the approximately €35.5 billion that it has on its balance sheet in a completely different way. The objective of the move, according to sources close to the group, is to generate more profitability.

When at the end of 2014, the bad bank launched the so-called Project Ibero, it awarded the management of its portfolio to four servicers: Haya Real Estate, Altamira, Servihabitat and Solvia, and it distributed the work between the entities, according to El Economista.

Now, the company is analysing what would be the most efficient way of segmenting the assets, and the possibilities that it is considering include the option to “regionalise” the portfolio by geographical area. Likewise, it could organise its catalogue by asset type, given that more sophisticated operators now exist that were not on the scene in 2014, and they specialise by market segment focusing on areas such as logistics, retail and hotel.

In the review of its new strategy, the entity chaired by Jaime Echegoyen (pictured above), is also considering bringing some of the management activity in-house, like it has been doing to date with the large bankruptcy cases, such as for example Martinsa Fadesa. Another example is the property development department, for which it is now looking for an industrial partner, in a process that includes finalists of the calibre of Vía Célere, Aedas Homes and Aelca.

The first contract that Sareb has started to review, which expires at the end of 2019, is the portfolio currently in the hands of Haya Real Estate, with a net value of around €12.5 billion at the end of 2017. The next contracts are not due to expire until 2021, since the duration of the agreements that Sareb signed range between five and seven years from the date they entered into force.

Original story: Eje Prime 

Translation: Carmel Drake

Sareb Gets Tough & Demands €9bn through c.3,800 Creditor Bankruptcies

26 March 2018 – Voz Pópuli

Spain’s bad bank Sareb has run out of patience. After spending more than four years negotiating extrajudicial agreements with debtors and putting into order its presence in thousands of real estate bankruptcies in Spain, the semi-public body is getting tough. “When you have been negotiating with a debtor for years and you know he’s not going to pay you…he doesn’t want to pay you, you are left with no other option than to go to court”, says the President of Sareb, Jaime Echegoyen.

Sareb is present in approximately 3,800 real estate bankruptcies, declared since 2008, when the property bubble burst and the Spanish economy entered the worst crisis of its young democracy. According to sources at the organisation, Sareb is demanding a total debt of €9 billion through these bankruptcy proceedings.

The company has a portfolio of loans worth €26 billion and is present in 12,200 legal processes in total, all of which involve loans to property developers (there are no mortgages to individuals). Of that total amount, 7,500 are for mortgages and 3,800 are creditor bankruptcies.

“We cannot give our blessing to people who don’t pay”, warns Echegoyen, who presented Sareb’s results for 2017 last Friday. The company has started a legal offensive on two fronts to accelerate the sale of its loan portfolio: it will boost the bankruptcy processes in which it is present as a creditor; and it will go to court to request payments from those companies that still have not responded to the debt demanded.

“We have spoken with the debtors and we will continue to do so”, said the President of Sareb. “We prefer to find an amicable solution rather than play hardball, but if we have to resort to other means, we will go to court”, he said, admitting that it is probable that the number of litigation cases involving Sareb will increase in the near future.

In recent months, a more decided approach from Sareb has been noted in certain bankruptcy processes. Like in the case of the bankruptcy of Reyal Urbis, one of the largest corporate failures in Spain’s history, where, after years of negotiation to reach an agreement, which seemed unfeasible from the beginning, Sareb’s proposal to continue reassessing the matter resulted in the liquidation of the company last September. The debt of Reyal Urbis with Sareb alone exceeds €800 million.

Sareb’s presence has also been felt in the bankruptcy of the company that used to own the In Tempo skyscraper in Benidorm, the tallest residential building in Europe, which was sold to a fund last year. And in the case of the bankruptcy of Nozar, where Sareb recently requested greater agility in the process, almost ten years after the bankruptcy was declared.

“Sareb is involved in the bankruptcies of the most well-known real estate companies; but also in thousands of other much smaller bankruptcies, each one in its own province, judged by its own bankruptcy administrators and its own idiosyncrasies”, say sources at the organisation. “Over the last few years, we have had to put in order our positions in all of these processes”, they add.

During Sareb’s five-year life, the entity, known increasingly less as the bad bank, has liquidated 27% (around €13.6 billion) of the portfolio that it was created with. The management and divestment of loans and properties has generated €20.7 billion of revenues. During the same period, the entity has paid off 25.4% of its debt, €12.9 billion. Last year, it recorded losses of €565 million, down by 15%.

Original story: Voz Pópuli (by Alberto Ortín)

Translation: Carmel Drake

Sareb Seeks Partner(s) to Create Joint Venture With NPLs Worth €10bn

20 March 2018 – Expansión

Sareb has decided to emulate the large financial institutions and find a partner to help it digest its portfolio of foreclosed assets. The entity chaired by Jaime Echegoyen (pictured below) has decided to create a vehicle into which it will place loans with real estate guarantees (known as NPLs) and in which it will retain a minority stake.

Into this joint company, Sareb will place loans with a gross value of €10 billion, although the definitive figure has not been finalised yet, explain sources in the sector. It would be the largest sale ever made by the company that was itself created with assets proceeding from the intervened banks, and loans with all different kinds of real estate guarantees would be included: from land to tertiary assets. Sareb’s objective is to open up this new company to one or more financial partners and it has engaged the firms EY and CBRE to lead the negotiations. The process is still in a preliminary analysis phase, but the aim is to close it during the second half of the year or at the beginning of 2019.

Contacts

In making their preliminary contacts, the consultancy firms have approached the main international funds and managers with investments in the Spanish real estate sector to gauge their possible interest in this portfolio, which will initially be called Project Ebro. Once investors have confirmed their interest in the vehicle, thought will be given to defining how the alliance will be forged, say sources in the sector. Possible interested parties include investment giants such as Cerberus, Bain Capital, Blackstone, Apollo, Kennedy Wilson and Goldman Sachs. With Project Ebro, Sareb would be following in the footsteps of entities like Santander, which has reached an agreement with Blackstone to create the company Quasar, with real estate assets proceeding from its purchase of Popular.

In that case, the US fund owns a 51% stake, whilst Santander retains 49% of the shares.

This is not the only loan portfolio that Sareb currently has up for sale. The company has three other processes underway, although Ebro, given its size, is the star project. In this regard, it has engaged Arcano to sell the Nora portfolio, comprising non-performing loans (NPL) backed by residential collateral worth around €400 million; the Vilasoa portfolio, which includes €300 million in loans secured by land; and project Dune, a portfolio that has been relaunched in 2018 comprising €2.6 billion in unsecured loans. In that case, Sareb has engaged PwC to coordinate the sale.

These processes are happening in parallel to the search for a partner to strengthen its property development business. In that case, Sareb is holding talks with large real estate companies and funds with activity in the residential sector with the aim of working together on the development of buildable land and construction projects in progress.

In total, that portfolio is worth around €800 million and Sareb would contribute those assets to a company in which its partner would hold a majority stake.

Original story: Expansión (by Rocío Ruiz)

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

Témpore Properties Secures Sufficient Minority Shareholders Ahead of its MAB Debut

23 February 2018 – La Información

The team at Sareb has overcome the penultimate obstacle to enable the Socimi that it has created, Témpore Properties, to take the final step towards starting to trade on the Alternative Investment Market (MAB), as set out in the initial plan drawn up by Jaime Echegoyen (pictured above) almost a year ago. According to sources familiar with the process, Témpore has now successfully completed the incorporation of around twenty minority shareholders into its share capital, as required by the MAB, so that the Socimi can trade on that market.

And this latest milestone is no mean feat. Sources in the sector say that around half a dozen Socimi projects, driven by large fortunes and family offices, have run aground due to their inability or lack of interest in fulfilling that requirement. Specifically, the MAB requires at least €2 million of a company’s share capital (or 25% of the equity if the company has a share capital of less than €8 million) to be owned by around twenty minority shareholders. The managers of the MAB also require that those minority shareholders have no family or business links with the owners of the company and that no single shareholder holds a participation equivalent to more than 5% of the total or worth less than €60,000. The reasons? On the one hand, to emphasise the nature of Socimis as collective investment instruments; but also, to prevent any kind of activity that seeks to use investors as “mariachis”, which is what triggered the inspections against Sicavs back in the day.

Over the last two months, Nicolás Díaz Saldaña, the Director General of Sareb and person responsible for the Témpore Properties project, and his team have maintained permanent contact with investment banks, funds and offices representing large fortunes to search for the most appropriate and most interested profiles to form part of Témpore. That process has also been supported by Ázora, Sareb’s advisor in everything relating to the Socimi’s stock market debut.

Offers to buy Témpore

According to financial sources, investors have welcomed the presentation of the Témpore project with enormous interest, and not only with a view to participating as minority investors. Sareb has received several offers from investment funds and even from other Socimis to acquire Témpore Properties, an investment vehicle in which the so-called bad bank has placed 1,554 of its best rental assets (mainly homes) with an aggregate value of €175 million.

Sareb’s Management has even been seriously considering some of the offers received, according to sources familiar with the contacts, but in the end, it has opted to go with the initial plan and push ahead with the project to have the Socimi debut on the MAB independently, at least to begin with. The next step in this process will be the presentation of the prospectus, which will mark the beginning of the final phase of the stock market debut of Témpore Properties.

The debut of Sareb’s Socimi on the stock market has taken longer than originally planned. Initially, Témpore Properties was expected to make its debut before the end of 2017 and, in fact, in September last year, Sareb formally requested the mandatory authorisations from the MAB and the Ministry of Finance to make its debut in 2017. Nevertheless, the turbulent political panorama and the difficulties that have marked the configuration of the project have delayed the timeframes initially established and now the only objective is for Témpore to make its debut before the end of June 2018.

Original story: La Información (by Bruno Pérez)

Translation: Carmel Drake

 

Sareb Sold Loans Worth €186M Online in 2017

11 January 2018 – Expansión

Sareb sold loans with a nominal value of €186 million through its online channel in 2017, according to a statement issued by the entity.

Last summer, the so-called bad bank, launched an initiative to sell non-performing loans through its website, whilst three of the servicers (Haya, Altamira and Solvia) implemented a similar plan through their respective “shop windows”.

By the end of 2017, Sareb had closed agreements to sell loans amounting to €35 million through its own online channel, plus €151 million in loans that the company sold through specialist managers.

In a pilot phase in July 2017, Sareb published a preliminary batch of non-performing loans on its website for an aggregated amount of €400 million and invited 30 professional investors to participate. It received non-binding offers for all of the loans up for sale and, in the end, 70% were converted into binding offers.

Now that the channel has been tested, Sareb has published a new batch of loans amounting to €550 million, with an average value of €13 million. The company hopes to receive non-binding offers from investors already registered on the platform during January.

During 2018, Sareb is expected to launch five more sales processes through the platform, of at least €500 million each, aimed at investors and professionals in the sector, as reported last summer.

In term of Altamira, Haya and Solvia’s shop window activities, almost 95% of the loans sold are backed by finished homes or land located in Cataluña, Andalucía, Madrid, the Community of Valencia and the Balearic Islands. The other loans are secured by offices in Madrid and hotel establishments in Gerona.

As at June 2017, the Spanish financial system accumulated non-performing loans amounting to €127.31 billion, equivalent to 16% of the total figure for the Eurozone, which amounted to €794.1 billion, according to data from the European Central Bank (ECB).

For the President of Sareb, Jaime Echegoyen (pictured above), the company has “the obligation” to innovate and contribute to boosting these types of transactions through the creation of new channels “accessing new kinds of investors and giving these assets more transparency”.

Original story: Expansión

Translation: Carmel Drake

Sareb Puts Spain’s Largest Ever NPL Portfolio Up For Sale

7 November 2017 – Voz Pópuli

Sareb wants to star in the largest sale to date of non-performing loans in Spain. The company chaired by Jaime Echegoyen has put a portfolio of unpaid loans worth €2,600 million up for sale, according to financial sources consulted by Vozpópuli. It hopes to sell the portfolio before the end of the year and since it contains NPLs that are recognised off-balance sheet, all of the consideration paid will correspond to profits.

This operation has been baptised as Project Dune and is being advised by KPMG. Until now, the largest sale of an unsecured non-performing loan portfolio was completed by BBVA in 2014, when it sold a portfolio worth €1,700 million to Deutsche Bank.

Non-performing loans are credits that have been written off by the banks, which remove them from their balance sheets after recognising 100% provisions against them. In the case of Sareb, they are what is known in the market as mortgage tails: essentially, they are loans that remained uncollected following the execution of a real estate loan. These loans are purchased by opportunistic funds at significant discounts, of between 95% and 97%, which try to recover the maximum amount by taking the debtors to court. Since they are fully provisioned, the entire amount that Sareb receives from this sale will be recognised as profits.

Project Dune actually comprises two sub-portfolios: Pilat, containing 2,261 unsecured non-performing loans to 1,500 small- and medium-sized property developers, worth €2,442 million; and Kirbus, containing 115 loans secured by real estate, with a combined nominal value of €176 million.

In this way, the second sub-portfolio has almost 1,000 properties as collateral, of which around half are apartments, located primarily in Barcelona, A Corñua and Madrid. Half of the Dune portfolio is located in Cataluña, the Community of Valencia and Aragón.

On the basis of the prices that tend to be paid in this market, Sareb could end up generating revenues/gross profits of between €125 million and €175 million from this sale, depending on the degree of interest that the portfolio sparks amongst the funds and the level of competition between them.

Project Dune is not the only deal that Sareb has underway since it also has other portfolios worth more than €1,000 million on the market. The largest process currently in progress is known as Project Inés, containing €400 million, whose purchase is being finalised by Deutsche Bank. The bad bank typically uses these types of operations towards the end of the year to balance its budget and generate higher revenues to allow it to pay off some of its debt.

This sale is being coordinated by the prestigious portfolio team at KPMG, led by Carlos Rubí. Most of the team came from PwC and joined the firm in 2014.

Original story: Voz Pópuli (by Jorge Zuloaga)

Translation: Carmel Drake

Aedas, Neinor & Aelca Start Building New Homes in Valencia

4 November 2017 – El Confidencial

(…) A sign that a new wave is coming to the real estate sector can be seen in the Nou Campanar neighbourhood of Valencia, one of the city’s areas of expansion, which was left frozen in time by the burst of the real estate bubble. For many years, an enormous plot of land measuring 12,000 m2 was a symbol of the indulgences of one of the leaders of the Valencian real estate sector, Juan Armiñana. He used to build his spectacular ‘fallero’ monument that won the Fallas competition year after year on that site (…)

Nevertheless, Arminñana, like many other local property developers, went bankrupt. And although he has now timidly returned to the sector, almost all of his assets ended up in the hands of the financial institutions. The large plot of land described above ended up on Sareb’s balance sheet, as collateral for a portfolio of loans. In turn, the bad bank sold those loans to the US investment fund Castlelake. Meanwhile, Aedas Homes, a listed property developer created by that fund, attended the Valencian real estate fair Urbe on Friday. There, it presented its plans for the city for the next two years, revealing that its star development is going to be located on the same iconic plot that used to be owned by Armiñana.

Aedas is one of the property developers of the day. It has arrived in Valencia as demand for new build properties is heating up, in parallel to the economic recovery. Since April, the firm has put almost 300 new homes on the market in Campanar, Quatre Carreres and Dénia, with the intention of putting the cranes to work early next year and handing over the homes in a couple of years. In turn, Aedas holds a portfolio of land and it is continuing to explore acquisitions, whenever the prices fall within acceptable ranges. (…).

Two of Aedas’s rivals, Neinor and Aelca, have also started to make a controlled landing in the Valencian market. The listed company led by Juan Velayos plans to build 500 homes per year in the Community of Valencia, which it considers its third largest market after Madrid and Barcelona. (…). The real estate company in which Lone Star holds stake has just purchased a plot of land for 200 homes in the neighbourhood of Benicalp and it already owns plots for another 450 homes in the neighbourhood of Malilla.

But, the player that has launched itself into the market without any qualms is Aelca. Although traditionally it has been very focused on Madrid, Barcelona and Málaga, the property developer founded by Javier Gómez and José Juan Martín has now launched developments to build up to 1,200 homes in Valencia. Its immediate projects, which are already being marketed, are located in the neighbourhoods of Patraix and Nou Campanar, and they will be joined by another residential building in the Cabecera Park area and another in Dénia. In Alicante, on the Playa de San Juan, Aelca is also working on its first project on the Levante Coast, Residencial Arenas, a residential complex executed in collaboration with Sabadell (…).

Aedas, Neinor and Aelca are the new kids on the block. But there are other players who have been in the market for a long time. Sareb is one of them. Until a few months ago, it was focusing on divesting its land and second-hand homes. The Community of Valencia is the second most active region in terms of sales for the bad bank behind Madrid, with 488 properties and €150 million of land sold since 2013, according to the entity’s CEO, Jaime Echegoyen. Now, Sareb has rolled up its sleeves and is trying to generate some value from the projects that are underway and unfinished from the banking portfolio that it received – more than €6.4 billion in properties and loans secured by real estate assets.

The bad bank has signed agreements with local property developers and construction companies to develop some of the assets that have not ended up in the hands of investment funds (…).

Another very active agent is CBRE Richard Ellis. It has sold more than 3,000 homes in recent years and has another 400 new build homes on the market in Valencia. These properties have been launched by funds and property developers such as Iberdrola Inmobiliaria, which has built a 58 home luxury residential building in Ruzafa and Q21 Real Estate, owned by the US fund Baupost, which has a presence in the so-called PAI of Quatre Carreres (…).

The volumes of off-plan sales are unprecedented in recent years. Developments that have been on the market for just six months are already reaching pre-sales ratios of 40% or 50% in Valencia and along the coast. These percentages mean that property developers are able to secure financing and improve the trust deposited in them by financial institutions (…).

Foreign property developers are also joining the activity being undertaken by the local players that survived the economic crisis. For example, Ficsa, the real estate brand of the Noguera family, has four developments underway in Valencia and its metropolitan area, with reservation rates of 50%. In addition, Parvasal, which has projects in Patriax and on Avenida Giorgeta (Patraix Plaça and Sosa Edificio) is in a similar position.

Metrovacesa, Grupo Lar, White Real Estate and IHomes also all have developments underway (…), which will be ready in 2019 (…).

Original story: El Confidencial (by Víctor Romero)

Translation: Carmel Drake