Bankia Puts 3,000 Foreclosed Flats Worth €500M Up for Sale

4 June 2019 – El Confidencial

Bankia has put another problem asset portfolio up for sale as it continues to take the Spanish real estate market by storm in 2019. Project Jarama contains 3,000 flats worth €500 million and is one of the bank’s largest operations involving foreclosed assets to date.

The bank chaired by José Ignacio Goirigolzarri has engaged KPMG to coordinate Project Jarama, which is complicated by the fact that more than half of the assets have not yet been fully repossessed by the bank.

In those cases, rulings have been made in the courts to award the property to the bank in exchange for the defaulted debt, but the entity does not yet hold the deeds or the keys, and the final stage of the foreclosure process could take several months in each case.

This sale forms part of Bankia’s strategy to accelerate its strategic plan. At the beginning of 2018, it set itself the target of divesting non-performing assets worth €9 billion from its balance sheet. By March 2019, it had already sold €6.5 billion.

In recent weeks, it has sold a €300 million portfolio to Blackstone and a €150 million portfolio to Cerberus and Kruk.

Original story: El Confidencial (by Jorge Zuloaga)

Translation/Summary: Carmel Drake

Bankia Finalises Sale of its Largest Toxic Asset Portfolio to Lone Star

14 December 2018 – El Confidencial

Bankia is finalising the sale of the largest portfolio of problem assets in its history. The nationalised entity is holding exclusive negotiations with the US fund Lone Star for the sale of projects Earth and October, according to financial sources consulted by El Confidencial. Sources at Bankia have confirmed those conversations through a relevant event submitted to Spain’s National Securities and Market Commission (CNMV) and have said that “once the negotiations have been concluded, the market will be informed about them in detail”.

This macro-sale includes unpaid mortgage loans and properties worth around €3 billion. The negotiations are in a very advanced stage and the operation could be signed before the end of the year. The price could reach €1 billion, according to the average prices being paid in the market at the moment.

The group chaired by José Ignacio Goirigolzarri has sold these macro-portfolios taking advantage of the surplus liquidity in the market and the appetite from large funds for buying Spanish property. With this sale, the nationalised group will end 2018 with problem assets sold worth more than €5.5 billion – by September, it had sold €2.4 billion – almost doubling the annual divestment objective of €2.9 billion.

Lone Star has competed in this process head to head against Blackstone, which in recent weeks has lost the battle for the two portfolios to its US rival. The fund has redoubled its commitment to Spain after the changes that it underwent at the beginning of the year, with the departure of Juan Pepa and Felipe Morenés. These two executives led Lone Star during its purchase of Neinor and of the portfolio of large loans from Eurohypo in Spain.

Following those divestments and the raising of new funds, the fund is now betting on Spanish property again through its team in London. Bankia’s portfolio will be the second major operation after its purchase of a large proportion of CaixaBank’s assets and that entity’s platform Servihabitat.

Original story: El Confidencial (by Jorge Zuloaga)

Translation: Carmel Drake

Project Newton: Bankia Puts €450M Toxic Asset Portfolio Up for Sale

21 September 2018 – Voz Pópuli

The insatiable appetite of the opportunistic funds for Spanish property is never ending and the banks are taking advantage to reduce their exposure to real estate assets and whereby clean up their balance sheets. The latest to come to the market is Bankia, which has put a €450 million portfolio up for sale comprising primarily property developer loans, although Project Newton, as the operation has been baptised, also includes a small proportion of foreclosed assets, according to financial sources consulted by Vozpópuli.

Newton’s sale is expected to be completed this year and will be followed by two other asset portfolios that the bank plans to sell soon, according to reports from Bloomberg. The operations disclosed by the US agency include a €1,500M portfolio comprising unpaid mortgages and a €2,000M portfolio comprising foreclosed assets.

At the end of the first half of the year, the entity chaired by José Ignacio Goirigolzarri held €15.2 billion in toxic assets, after reducing its balance by €1.7 billion between the months of January and June.

Strategic plan

With the sale of the three aforementioned portfolios before the end of the year, the bank would more than exceed its annual objective in terms of asset sales, which amounts to €2.9 billion per year for the next three years. In fact, if Bankia divests all three portfolios, its real estate exposure would decrease to €11.25 billion, and so it would follow in the footsteps of the other entities that have accelerated the sale of these types of assets in the last year.

The most recent example is Santander, which on Wednesday closed the sale to Cerberus of a portfolio of properties worth around €2.79 billion with a 45% discount. The initial perimeter of the operation was €5.1 billion, but in the end, the commercial premises and land that had been included in Project Apple were left out of the final portfolio.

The entity already transferred Popular’s property last year to a joint venture with Blackstone, and so its real estate exposure will decrease to around €7.3 billion once the Apple sale is completed.

Meanwhile, BBVA, which also sold €13 billion in foreclosed assets to Cerberus, has entrusted the sale of €2.5 billion in problem loans to Alantra. That operation will reduce the real estate exposure of the bank chaired by Francisco González to almost zero.

Moreover, Sabadell and CaixaBank have also completed significant operations in recent months. The former sold €9.1 billion in foreclosed assets to Cerberus, whilst the latter divested almost all of its real estate business: €12.8 billion in real estate assets, which were acquired by Lone Star.

In this way, the banks are complying with the guidelines set out by the European Central Bank (ECB) and are generating returns from their businesses in Spain, which have been weighing them down since the economic crisis.

Original story: Voz Pópuli (by Pepe Bravo)

Translation: Carmel Drake

Bankia Puts €450M Rental Property Portfolio Up For Sale

27 June 2018 – Expansión

Bankia is going to start a sales process for a portfolio of rental properties with a market value of €450 million, reports Reuters, citing two sources familiar with the operation.

The entity chaired by José Ignacio Goirigolzarri expects the interested groups to present their non-binding offers over the summer, so as to finalise the process with definitive offers from September onwards, indicates one of the sources.

This portfolio of rental properties forms part of the €4.9 billion in assets and loans foreclosed during the crisis that Bankia is trying to eliminate from its balance sheet.

At the end of March, Bankia had a gross exposure of around €16.6 billion on its balance sheet comprising non-performing loans and assets. The bank’s objective is to reduce its non-performing assets by around €9 billion.

Original story: Expansión

Translation: Carmel Drake

Bankia To Start Financing Property Developers Again as EC Restrictions End

2 January 2018 – Inmodiario

From 1 January 2018, Bankia will be able to launch new lines of activity after the restrictions, established by the Restructuring Plan that the entity signed with the European Commission five years ago, were lifted. These activities will represent the levers for commercial development in the new growth phase that the entity is now embarking on.

José Ignacio Goirigolzarri, President of Bankia, has confirmed that “we are starting a new phase of growth after leaving behind a successful restructuring phase that we have now completed”. And he added that “the lifting of the restrictions imposed by the Restructuring Plan opens up new business opportunities for us and places us alongside our competitors once again”.

Over the last five years, and as a result of the commitments taken on to enable it to sign the Restructuring Plan (which allowed it to receive aid), Bankia was not allowed to operate in certain activities, such as financing real estate developments or companies with access to capital markets.

With the new objectives in mind, the entity has incorporated a Property Development Division into its new organisation, which was approved recently. It has appointed Alberto Manrique to lead that business and he will report directly to the Business Banking Division, led by Gonzalo Alcubilla.

Manrique joined the group in 1988. Since then, the industrial engineer, who holds a degree in ‘ETS de Ingenieros’ from ICAI, has taken on several positions of responsibility. Most recently, he has carried out different tasks within the Business Banking sphere, such as the corporate management of the business branch network in the centre of Spain, the management of the Structured Finance and Syndicated Loan product teams and taking responsibility for the online business channels.

The new management team will be responsible for developing financing for property developers at a point when the cycle is recovering, “with growth expected for at least three or four years, during which time we expect that around 150,000 new homes per year will be built”, says Manrique.

One of the other new lines of activity that Bankia will develop from 1 January 2018 onwards will be to grant long-term financing to large corporations with access to capital markets, inside and outside of Spain, as well as to finance projects and acquisitions, activities that have been limited in recent years.

In addition to these new lines of activity for the coming year, the growth phase that Bankia is now starting will be marked by its ability to take advantage of the enormous growth opportunities that result from the increase in the client base that the entity has experienced in recent years and as a result of the process to integrate BMN, which consolidates the resulting entity’s position as the fourth-largest bank by assets in Spain.

Original story: Inmodiario 

Translation: Carmel Drake

Bankia Considers Rapid Sale Of BMN’s Property Portfolio

13 October 2017 – Cinco Días

Bankia is currently considering how it will deal with the exposure to real estate through BMN that it will end up with following the planned integration of the two entities at the beginning of 2018. The bank chaired by José Ignacio Goirigolzarri is considering the rapid sale of BMN’s problem assets to one of the opportunistic funds that typically participate in these types of operations.

Goirigolzarri’s entity has already made contact with several of the intermediaries that typically advise on these types of transaction, according to sources familiar with Bankia’s intentions, to sound out the options available. These intermediaries include large consultancy firms and several investment banks. The bank has reportedly asked all of these companies to share their ideas about how to best handle a potential sale.

Bankia’s initial idea involves carrying out a rapid operation, similar to the deal undertaken by Santander in August, with the sale of the portfolio that it inherited from Popular that it transferred to the fund Blackstone in just six weeks. That agile move was very well received by the market.

Unlike in the case of Popular, BMN’s exposure to property is considerably less. The entity owns around €1,100 million in net foreclosed assets, according to data about the merger of both entities reported by Bankia in June. The entity has a coverage ratio of 28% over its foreclosed assets and 40% in the case of its doubtful debts (somewhat lower than the average for the sector, which stands at around 50%).

Moreover, of the total net foreclosed assets, 64.4% correspond to finished homes and 19.1% relate to land. In terms of the entity’s total loan book, which amounts to €21,900 million, only 2.7% relates to property developer loans.

The merger of Bankia and BMN was approved by the General Shareholders’ Meetings of both entities in September. The authorities are expected to declare their approval of the union in December and the definitive integration is forecast to take place at the beginning of 2018. The operation will be articulated through the handover of 205.6 million newly issued shares in Bankia to the shareholders of BMN, which effectively means assigning a value of €825 million to the latter (0.41 times its book value).

As such, BMN’s shareholders will hold 6.7% of Bankia’s share capital. Following the merger, Bankia will be the fourth largest entity in the country, behind Santander, BBVA and Caixabank (…).

Another of the differences compared to the operation involving Popular is that BMN does not have its own servicer. In the case of the bank acquired by Santander, it repurchased the 51% stake in Aliseda that was held by the funds Värde Partners and Kennedy Wilson, to subsequently include it in the operation that was then sealed with Blackstone.

In 2014, BMN sold its real estate asset management company Inmare to the servicer Aktua (controlled by the Norwegian fund Lindorff), to become strategic partners in the management of those assets.

The most likely scenario is that Bankia will execute the sale of the assets proceeding from BMN as the single transfer of a portfolio, given that it no longer owns a servicer. The entity chaired by Goirigolzarri declined to comment on any possible operation given that the merger has not yet been approved by the authorities (…).

The potential buyers will presumably include the usual suspects, such as Apollo, Oaktree, Bain, Cerberus, Blackstone, Lone Star, Castlelake, Värde Partners, Lindorff, TPG and Goldman Sachs.

Original story: Cinco Días (by Alfonso Simón Ruiz)

Translation: Carmel Drake

Bankia Buys 10,000m2 Office Building In Madrid From Activum

3 March 2017 – El Confidencial

Bankia outgrew its Torre Kio offices in Madrid several years ago. In fact, it was more than a decade ago when the entity (still operating under the guise of Caja Madrid) began to consider moving offices. To that end, it acquired the imposing skyscraper from Repsol that Norman Foster had designed on the site of Real Madrid’s former Ciudad Deportiva.

But that operation ended up being disastrous for the bank, which paid €800 million to acquire the property and ended up selling it for half that sum. Nevertheless, Bankia’s expanding space requirements are a reality once again, and under the mandate of José Ignacio Goirigolzarri, the entity is embarking on a cautious but gradual policy of acquiring assets for corporate use.

In this vein, the entity acquired an office building from Activum in December. The property is located in the Julián Camarillo district of Madrid, a secondary area that is currently enjoying a revival, thanks to the boost being given by property companies such as Torre Rioja.

The building in question is located at number 32 on Calle Santa Leonor, it has a surface area of 10,134 m2, spread over two basement floors, with more than a hundred parking spaces, one ground floor, four upper floors and one top floor. Bankia has acquired this building to house all of the workers from its Multi-channel Department, which until last year occupied a rental property, specifically, the Torre Foster, which Amancio Ortega has just purchased. The entity has confirmed the acquisition of this building, but declined to reveal the amount paid, which according to market sources must have amounted to between €2,000/m2 and €2,500/m2, taking the final figure for the transaction to around €20 million.

This is the second major purchase of an office building that Bankia has signed in recent months, after it closed the acquisition of the property that houses its IT services in Las Rozas, for €130 million, from the Swedish group SEKin December 2015. Five years earlier, SEK had bought the building from Caja Madrid for €108 million, with the commitment from the entity to remain as the tenant (‘sale & leaseback’).

With these two operations, the entity has managed to balance out some of its past mistakes, given that, on the one hand, it has exchanged an expensive rent in one of the most iconic buildings in Madrid for a purchase that it has managed to make at a reasonable price and, on the other hand, it is readjusting the numbers for a sale that it completed during one of the toughest periods of the financial crisis.

Through this sale, Activum has completed its second divestment in Spain, following the sale of an office building on Calle Manuel de Falla to the Socimi Axiare. (…).

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

Bankia Considers Cerberus’ Offer For 75% Of ‘Big Bang’

13 October 2015 -Expansión

Bankia’s Project Big Bang is moving towards the finishing line and a clear frontrunner has emerged: Cerberus. In recent weeks, the US fund has submitted a bid for 75% of the assets forming part of the macro-project through which the nationalised entity wants to get rid of all of its foreclosed assets. Cerberus must have put around €2,100 million on the table, according to financial sources.

The same sources say that only one counter-offer has been submitted, by the fund Oaktree, one of the most active players in Spain in recent months. However, its offer must have been lower and for a smaller package of assets.

Other large funds such as TPG, Apollo, Lone Star and Blackstone all exited the process before the binding offer phase, due to the complexity and costs associated with the transaction. They were also deterred by the fact that Cerberus has first-hand knowledge of the assets, since it manages them through its real estate platform Haya Real Estate, formerly Bankia Habitat, which it acquired in 2013. For this reason, Cerberus has been able to offer a price that is closest to the reality of the assets, without having to incur significant expenses in terms of appraisal and consultancy fees.

Bankia’s department for Corporate Investments has been analysing the offers since they were submitted two weeks ago. This stage of the process is very complex, since each one of the proposals is limited to different groupings of the 46,000 assets up for sale, which include homes, commercial premises and plots of land. Moreover, the offers have been received just as Manuel Lagares, the Head of the Corporate Investment team, is leaving the firm, to move to Credit Suisse.

The key behind the success of this operation will  be whether the prices are more or less aligned with those of the provisions. The portfolio, initially valued at €4,800 million has provisions amounting to €1,900 million, and therefore Bankia is not going to be willing to sell for less than €2,900 million.

The complexity of the process forced Bankia to announce over the summer that it would consider dividing up the portfolio. As such, it is possible that the entity led by José Ignacio Goirigolzarri will award the portfolio to both Cerberus and Oaktree. It may also opt to open a new round of offers with a more segmented portfolio, as a means of maximising its value.

Negotiations

In fact, according to sources close to the operation, the key obstacle is that the funds are leaving the lowest quality assets outside of their offers, and Bankia is not willing to be left with only the least attractive homes, commercial premises and land in the real estate market.

The investment bank Credit Suisse and the consultancy firm KPMG are advising the nationalised entity on this transaction.

The Big Bang portfolio comprises 38,500 homes, with a nominal value of €3,300 million; almost 5,000 commercial premises, worth €1,100 million; and 2,600 plots of land, with a gross price of €400 million.

For Cerberus, winning Project Big Bang would enable it to obtain economies of scale in its commitment to the recovery of the Spanish real estate sector. The US fund has acquired the real estate managers of Bankia and Cajamar – Cimenta2 – in recent years, as well as AyT, the securitisation fund manager, previously owned by Ahorro Corporación and Cecabank. But it still has not bought any large asset portfolios like its competitors Lone Star and Blackstone.

Meanwhile, Oaktree has revealed itself to be one of the most active funds in Spain in recent months, due to its purchase of a portfolio of mortgages from Bankia.

Original story: Expansión (by Jorge Zuloaga)

Translation: Carmel Drake

Project Big Bang: Bankia Open To Offers For Its €4,200M Portfolio

29 July 2015 – Expansión

Big Bang. That is the name of the large operation that Bankia has launched to sell a huge portfolio of real estate assets, including foreclosed residential and commercial properties, whose gross value currently amounts to €4,200 million.

These are assets that were not transferred to Sareb back in their day because they did not fit in its perimeter.

After the summer, the entity led by José Ignacio Goirigolzarri will evaluate offers submitted by potential buyers to decide whether to go ahead with this project, which represents the largest single divestment project launched to date by the nationalised entity. Its successful completion would represent a definitive boost to the clean up of Bankia’s balance sheet. Blackstone, Lone Star and Apollo have all expressed interest in the portfolio.

“By September, we will have received clear expressions of interest”, revealed the CEO of Bankia, José Sevilla (pictured above), at a presentation to analysts of the results for the first half of the year, which showed an attributable profit of €556 million, up 11.5% on the same period last year. “Then we will decide whether the operation makes sense or not”, he added. (…)

Sources close to the operation state that the portfolio is flexible, in the sense that, it may be sold in one block or divided into several sub-portfolios based on asset type, to suit investors’ preferences.

After accounting for provisions, the net book value of the foreclosed portfolio amounts to €2,875 million. The majority of the assets, worth €2,122 million, were originally loans for house purchases, whilst those relating to real estate construction and development amount to €315 million – most related to finished buildings, but some also corresponds to land.

During the first half of 2015, the entity sold 4,135 properties, more than twice the volume sold in the same period last year (1,919), at discounts of between 30% to 35%. This may serve as a benchmark for the sales price that Bankia expects to obtain for the Big Bang portfolio. (…).

The act of managing the foreclosed assets represents a cost for the entity, whose objective is to use some of the funds it obtains from the sale to finance investments that boost its business, which is now focusing on granting credit to consumers and SMEs. (…).

In parallel, Bankia wants to accelerate the sale of its doubtful debt portfolios; and it expects to achieve the objective it has set of reducing the balance by €2,000 million in 2015. (…).

During H1 2015, the entity reduced its doubtful balances by €1,239 million, bringing the total down to €15,310 million and thus established a default rate of 12.2%, which represents a decrease of 0.7 p.p. since the end of 2014. Moreover, recoveries (€2,490 million) exceeded gross defaults (€1,720 million) during the six months to June.

Original story: Expansión (by Alicia Crespo)

Translation: Carmel Drake