BBVA Sells Majority Stake in its Real Estate Portfolio to Cerberus for More Than €5bn

28 November 2018 – Voz Pópuli

BBVA has closed a real estate mega operation. The entity chaired by Francisco González has agreed to sell the majority of its problem assets to Cerberus, in a deal worth between €5 billion and €6 billion, according to financial sources consulted by Vozpópuli. The Spanish group will receive a cheque for between €3.5 billion and €4 billion for the majority stake in a new company that will be controlled by the US fund. After months of intense negotiations, the bank and the fund decided to seal the deal at the beginning of this week. Whilst we wait for the official figures to be made public, financial sources indicate that the real estate package for sale amounts to between €13 billion and €14 billion (as this newspaper revealed) and comprise around 70,000 properties. The assets sold are valued with a discount of around 60%. The parties involved all declined to comment.

The discount is lower than that agreed for the sale of Popular’s property, which amounted to 67%. Santander sold €30 billion with a valuation of €10 billion. Blackstone paid €5.1 billion for 51% of that company.

After signing the agreement, the two parties will request time to review the small print of the contract and to obtain the necessary authorisations. In this case, approval must be given by the Deposit Guarantee Fund (FGD).

According to the latest figures, BBVA has real estate exposure amounting to €17.8 billion on its balance sheet. Of that amount, foreclosed assets (€11.9 billion) and doubtful loans (€3.4 billion) account for €15.3 billion. Those loans and properties have a coverage ratio of more than 61%.

A sale like the one that Cerberus has agreed will leave BBVA as one of the largest groups with the smallest real estate exposure in Spain, something that investors and regulators have been demanding for years.

This agreement arose as a result of a meeting between González and the President of Cerberus worldwide, John W. Snow, at the beginning of July. The US banker – and former US Treasury Secretary, under the presidency of George Bush junior – proposed this operation to the President of BBVA after his firm was left out of the sale of Popular’s property.

The operation has been managed by the operations team at PwC, led by Jaime Bergaz. The law firms Linklaters and Ashurst have worked alongside him, and on the buy side, the consultancy firm Deloitte. All of the parties involved have been working on this operation non-stop for several months. The deal only came close to dying during the worst moments of the Catalan crisis, given that a lot of BBVA’s real estate assets are located in that region.

Following this acquisition, Cerberus consolidates its position as one of the largest real estate investors in Spain, alongside Blackstone. The fund controls Haya Real Estate, which manages assets on behalf of Sareb, Bankia, Cajamar and Liberbank. With BBVA’s assets, it takes on one of the most sought-after portfolios in the sector.

Original story: Voz Pópuli (by Jorge Zuloaga and Miguel Alba)

Translation: Carmel Drake

BBVA Awaits FGD’s Approval To Sell €14,000M RE Portfolio To Cerberus

13 November 2017 – Voz Pópuli

The largest operation of the home stretch of 2017 is pushing ahead. BBVA and Cerberus are close to reaching an agreement regarding the sale of a large proportion of the bank’s real estate assets to the US fund. Financial sources consulted by Vozpópuli indicate that a deal may be signed within the next few weeks, between late November and early December.

One of the points still being discussed is the perimeter (of the transaction). The sources consulted indicate that what is on the table is the option of selling a stake in a new company with assets and loans worth €14,000 million.

The same sources add that an agreement could have already been reached if it hadn’t been for the crisis in Cataluña and the need for the Deposit Guarantee Fund (‘Fondo de Garantía de Depósitos’ or FGD) to give its approval. BBVA received an asset protection scheme (‘Esquema de protección de activos’ or EPA) for which the FGD committed to cover “80% of the losses resulting from a portfolio of assets worth €7,359.7 million”.

BBVA has real estate exposure on its balance sheet amounting to €17,774 million in total, according to the most recent figures. Of that figure, foreclosed assets (€11,937 million) and doubtful loans (€3,357 million) account for €15,300 million. Those loans and properties have a coverage ratio of more than 61%. For this reason, BBVA could sell them for 39% of their appraisal value without having to recognise any losses. Even so, the FGD would still need to approve any deal.

The need for consent from the FGD could delay any asset sale for several months. That is what has happened, on more than one occasion, to Banco Sabadell, such as with Project Normandy. It is worth remembering that the FGD’s Management Committee comprises not only regulators and Government members but also bankers, who do not want to spend even one more euro of their resources (…).

Although BBVA’s sale (known as Project Marina and Sena) is on track, the sources consulted indicate that it could all be thrown up in the air at any moment. “It would not be the first time that an operation that has almost been finalised dies off because of one of BBVA’s management committees or Board of Director meetings”, they say. The same thing is happening with Cerberus, one of the most inflexible funds when it comes to price: “Once the price has been fixed, it is very difficult to move it or play with counter-offers”, they add.

This operation has generated a lot of commotion amongst other opportunistic funds, many of whom were not invited to participate, and who have even indicated their displeasure to BBVA’s leaders. The negotiations between Cerberus and the bank arose after the fund’s President, John W. Snow (former US Treasury Secretary) cracked the whip over his own management team in Spain. He did so after Cerberus missed out on the sale of Popular’s real estate, which was awarded to Blackstone.

Snow himself decided to come to Madrid in person to meet with the President of BBVA, Francisco González (pictured above) and propose an operation similar in size to Project Quasar (Popular). Indeed, Cerberus purchased a €600 million portfolio from the bank in June, Project Jaipur, which gave rise to the current negotiations.

Although the operation still hangs in the balance, BBVA has never been as close to sealing an agreement like this one. There is a lot of optimism amongst the advisors to the operation, PwC and Linklaters. But, for the time being, anything can happen.

Original story: Voz Pópuli (by Jorge Zuloaga)

Translation: Carmel Drake

Cerberus Wants To Buy Anida & A €4,000M Portfolio From BBVA

29 September 2017 – Expansión

BBVA is taking new steps to deconsolidate its real estate risk. The entity is holding exclusive negotiations with the US fund Cerberus to sell it a majority stake in its real estate manager, Anida.

Financial sources explain that the fund may also be interested in acquiring around €4,000 million in foreclosed assets and doubtful real estate loans from the bank.

BBVA’s real estate activity, which centres around Anida, comprises two branches. On the one hand, the manager is in charge of administration. On the other hand, it is responsible for the real estate assets, be they foreclosed properties or loans to property developers. BBVA’s gross exposure to property amounts to €20,190 million, according to the latest available data. The entity has a coverage level of 57%, which reduces its net risk in terms of the real estate sector to €8,760 million.

In a relevant fact sent to Spain’s National Securities Market Commission (CNMV), BBVA reported that it is holding conversations with Cerberus (…). “At this time, it is not possible to determine whether the conversations will end in an agreement or not, or what the terms and conditions of such an agreement, were it to be reached, might be”, said the bank.

Similar to Santander

According to sources, the intention of Cerberus is to acquire a majority stake in the real estate company, similar to the agreement that Santander reached with Blackstone to deconsolidate the real estate risk of Popular. Hours after Brussels authorised the purchase of until then the sixth largest Spanish bank by assets, Santander sold Blackstone a 51% stake in the company to offload its problem assets with a gross value of €30,000 million. That was the largest ever real estate operation in Spain.

If the negotiations with Cerberus prove fruitful, BBVA would follow the template established by Santander. Some sources indicate that Cerberus has decided to try its hardest to buy Anida after not making it past the first round in the bid for Popular’s toxic real estate. In fact, the same sources say that the CEO of Cerberus, John Snow, travelled to Madrid a few weeks ago to meet with BBVA’s President, Francisco González.

Negotiations

The negotiations, with Cerberus as the only interlocutor, are very advanced, say sources in the sector. It is expected that the sale of the majority stake in Anida and of property by BBVA could be completed within the next few weeks.

BBVA is being advised by the law firm Clifford Chance and by a team from the consultancy firm PwC. Meanwhile, Linklaters is advising the US fund, which has also hired JLL for the negotiations.

BBVA is one of a handful of banks that have retained full control over their real estate businesses. During the crisis, several entities sold their management companies to specialist funds to generate profits with which to strengthen their businesses and accelerate the divestment of problem assets. Only Kutxabank (to Lone Star) and Santander (with the transfer of Popular’s business to Blackstone) have managed to close block sales of their management arms and asset portfolios.

Original story: Expansión (by R. Ruiz & R. Sampedro)

Translation: Carmel Drake

MDSR Buys A Portfolio Of Hypermarkets For €150M

21 September 2017 – Expansión

The fund MDSR Investments has completed another purchase in Spain. The firm has acquired a portfolio of hypermarkets leased to Carrefour and Eroski, which were owned until now by Tristan Capital. The operation, which has been closed for a value of approximately €150 million, represents the largest transaction in Spain involving hypermarkets and shopping arcades so far this year.

The portfolio has a gross leasable area of 86,836 m2. Located in Segovia, Jaca, Fuengirola, San Javier, Tomelloso, San Sebastián and Ribadeo, the first four operate buildings under the Carrefour brand. Moreover, the operation also includes shopping arcades in Segovia, Jaca and Tomelloso.

This is the seventh operation to be undertaken by the firm, which is managed by an Israeli group and financed by US investors, since it arrived in Spain a year and a half ago. Moreover, it is the firm’s second transaction in recent months, given that, in March, it acquired a portfolio of five Eroski hypermarkets, owned until then by Joparny, for around €30 million.

In October 2016, MDSR Investments acquired the Travesía de Vigo shopping centre for €49 million.

In this operation, MDSR has been advised by Savills on the real estate side and Dentons for legal aspects; whilst Linklaters has advised the seller on the legal side.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

Vía Célere Engages Lazard To Prepare Its IPO

29 June 2017 – Expansión

Vía Célere is accelerating its process of debuting on the stock market. The real estate developer, controlled by the US private equity fund Värde, has engaged the bank Lazard as an advisor for its debut on the Madrid stock exchange.

Moreover, the firm chaired by the businessman Juan Antonio Gómez-Pintado (pictured above) is making contact with some of the placement entities of the operation, which is forecast to take place in the spring of next year, although a firm date has not yet been set.

The real estate developer, which owns a portfolio of more than 10,000 homes, plans to debut on the market with a capitalisation of more than €1,000 million, in an operation that will allow the US fund to undo positions at the same time, which will serve to raise financing to allow it to continue to grow.

Värde acquired a controlling stake in Vía Célere from Juan Antonio Gómez-Pintado – who has continued as the President of the company – in February for €90 million. The US fund carried out that operation a year after launching the real estate firm Dospuntos, which it constituted using assets from Parquesol – a subsidiary that the SanJosé group ceded to its creditors under its own refinancing framework at the end of 2014. The merger between the two groups was approved by the General Shareholders’ Meeting of Dospuntos in April.

Shareholders

Besides Värde, the following players also hold stakes in Vía Célere’s share capital: the funds Attestor and Marathon, which are the second- and third-largest shareholders, respectively, as well as Barclays and Bank of America.

The integration of Vía Célere and Dospuntos resulted in the creation of one of the major property developers in the sector, with a land portfolio spanning more than 1 million m2.

The company owns assets worth more than €700 million and has own funds worth €400 million. Its plans for the next three years include starting to build 4,491 homes and completing 2,494 units, according to data provided by the company in April.

Värde – one of the most active players in the Spanish real estate market in recent years – is also the majority shareholder of another property developer – Aelca, which purchased the Avintia group for €50 million in June 2016, and which controls 40% of La Finca Global Assets, which, in turn, owns the business park of the same name, together with the García Cereceda family.

With this operation, Vía Célere will follow in Neinor’s footsteps, after it debuted on the stock market in March, to become the first property developer to debut on the stock exchange in ten years, following Realia’s IPO in 2007. The property developer backed by Lone Star debuted on the stock market at a price of €16.46 per share and currently has a market capitalisation of €1,440 million.

Vía Célere’s debut on the stock market is likely to be followed by that of Aedas. That real estate firm, which is controlled by the fund Castlelake and led by David Martínez, engaged Goldman Sachs and the law firm Linklaters in April, to prepare its debut on the stock market, which is scheduled for October.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Aedas Homes Prepares Its Stock Market Debut For October

28 April 2017 – Expansión

Aedas Homes wants to follow in the footsteps of its rival Neinor and debut on the stock market. The residential property developer controlled by the US fund Castlelake has engaged Goldman Sachs and the law firm Linklaters to prepare its debut on the stock market and whereby benefit from the good times that the residential market is currently enjoying in Spain, as well as from the confidence that international investors are placing in the real estate sector, according to market sources.

The same sources indicate that, although the operation is still in a preliminary, evaluation, phase, the objective of the new property developer, which only commenced activity a few months ago, is to be ready to start trading its shares in October of this year.

In this way, the real estate company would join Neinor, which debuted in March and would overtake Vía Célere, which is controlled by the fund Värde, which has also expressed its desire to debut on the stock market, within two years.

Aedas Homes is exclusively dedicated to the development of housing projects, both primary and secondary residences. The property developer undertakes projects on land that it owns and has a portfolio of land, primarily buildable (building permission has already been granted), for the construction of more than 12,000 homes. Specifically, it has fourteen developments currently underway in Alicante, Barcelona, Madrid, Málaga, Sevilla and Valencia.

Castlelake’s commitment

Castlelake, which backed the housing market in Spain in 2013 by purchasing various plots of land, launched Aedas Homes less than a year ago, advised by the Socimi Merlin Properties. After accumulating a portfolio of land in Spain spanning 1.3 million m2, worth more than €1,000 million, it is now building more than 1,500 homes.

The company, which includes professionals from Testa, is led by David Martínez (pictured above). (…).

Control of the funds

Aedas is one of several new property developers, controlled by investment funds, that wants to lead the residential market in Spain, which is highly fragmented and still reeling from the crisis.

Besides Aedas, one of the new star property developers in the Spanish real estate market is Neinor, which was launched by Lone Star. (…) . Other new players include Vía Célere – which has merged with Dos Puntos – and Aelca (both controlled by Värde).

Another new player (…) is Kronos Homes, in whose share capital, investors from the United Kingdom, France, Finland, the USA and Switzerland hold stakes.

In addition, other players include Metrovacesa Promoción Suelos – the division that was left out of the merger between Metrovacesa and Merlin –and other property developers that survived the crisis such as Realia, controlled by the Mexican businessman Carlos Slim, and Quabit, heir of the former Astroc.

Original story: Expansión (by R. Arroyo and S. Saiz)

Translation: Carmel Drake

Altamira Buys Oitante’s Servicer In Portugal

5 April 2017 – La Vanguardia

Altamira Asset Management and Oitante, the company created to manage Banif’s assets, have agreed to purchase the business unit responsible for managing the latter’s real estate assets and loans (the servicer) in Portugal.

The new servicer will initially manage real estate and financial assets worth more than €1,500 million, according to a statement issued by the manager, which currently has assets under management worth more than €50,000 million.

The manager indicated that the operation has been structured in such a way that ensures “significant” financial support, but it did not reveal any more details.

Alantra acted as the financial advisor to the operation, whilst Linklaters advised Oitante on the legal side and Uría Menéndez-Proença de Carvalho advised Altamira

Original story: La Vanguardia

Translation: Carmel Drake