SGR Seeks Buyer for Real Estate Assets that Had Been Destined for Generalitat

27 August 2018

Though it has not yet concluded its first real estate transaction since its rescue, the Sociedad de Garantías Recíprocas (Society of Reciprocal Guarantees – SGR) is already preparing a second sale, looking to unload additional real estate assets. The financial institution, saved from bankruptcy by the current municipal council with 200 million euros from the FLA (liquidity fund), is concluding the sale of an important portfolio made up of loans and real estate that will allow it to end the year with debts of 15 million euros, well below its previous €400 million that had nearly pushed it into bankruptcy.

Within the portfolio are real estate assets valued at 26 million euros that SGR had intended to place with the Generalitat as part of the restructuring process. According to the original plan to save the institution, prepared and executed by the Valencian Institute of Finance (IVF), the Valencian administration had to stay in the operation to comply with its requirement to perform due diligence in the recovery of public resources. That requirement was a part of the €200 million guarantee that the Generalitat concluded in 2013 – or the EU could consider the guarantee as illegal state aid.

Now, however, those assets will no longer go to the Generalitat. The entirety of that portfolio, consisting mainly of urban land or lots, industrial buildings (23%), buildings (11.5%), rural lands (11%) and building plots (8.5%) plus a part of the assets that remain in the balance of the SGR will be subject to a second sale, once the sale of the first real estate portfolio is formalised.

According to Manuel Illueca, general-director of the IVF and president of the SGR, the composition of this second package is “attractive” for investors, since the high percentage of land included in this portfolio “may be better placed on the market now that the real estate market has once again taken off.”

The director of the IVF highlighted the market’s favourable response to the placement, which is why it is already preparing the second phase of asset disposals before signing the first, something that will happen in September. The potential investors include international investment funds and, although exact nature of the portfolio is still to be defined, he estimated that it would be concluded “within the range of typical discounts of this type of operation.”

“We needed to sell because we had to achieve a net positive asset ratio over a period of three years. The market has been receptive, and we have been able to reduce our debt. We are now going to carry out a second operation to further advance the restructuring process. The expectation for financial institutions that operate with the SGR today, is a full recovery of the amounts owed,” says Mr Illueca.

When the first sale of assets ends, the solvency ratio of the SGR will rise to 14.5%, with net senior debt at approximately €15 million, compared to the €400 million it had before. Apart from that, there are the €40 million in subordinated loans it has with the entities, the director of the IVF explained.

The first operation, in which SGR is being advised by Alantra, includes 793 properties that range from industrial warehouses, homes, parking spaces and land, stemming from a time that saw “endless guarantees.” The expectation, when the operation was announced, was to unload the equivalent of 75% of the properties on its balance sheet, raising 30 million euros. The net book value of the portfolio amounts to €44 million, while the assessed value reaches €83 million.

In 2016, SGR already tried to raise 180 million euros with its ill-fated Citrus Project, a portfolio of executed guarantees of more than 800 million euros, with foreclosed assets and loan losses initially valued at €82 million for which it expected to obtain €170 million.

After the project failed to move ahead, as the best offer received was only €65 million and not even for the entire portfolio, the new head of the IVF opted to move ahead with the execution of the €200-million guarantee, which expired in 2018, to try to sell the assets. The operation aimed to get more time to find a better solution on the market, as has occurred.

After the early repayment of the 200-million-euro guarantee in favour of the Generalitat, negotiated with the group of banks that already participated in its rescue in 2013, SGR’s outstanding debt with the financial institutions fell to 94 million euros: €54 million of senior debt and another €40 million in an unsecured participative loan from the municipal council.

Original Story: Valencia Plaza – Xavi Moret

Translation: Richard Turner

 

A Swap from ING & CaixaBank: the Last Stumbling Block in the Sale of Santander’s HQ to AGC

27 July 2018 – Voz Pópuli

The sale of the company that owns Santander’s Ciudad Financiera is closer than ever to becoming a reality. The approval of the liquidation plan by a Madrilenian court set September as the deadline for offers. Nevertheless, there are still disputes to be resolved.

The main stumbling block now is a lawsuit in London against a swap (financial derivative) granted by five entities: Royal Bank of Scotland (RBS), CaixaBank, ING, HSH Nordbank and AG Bayerische Landesbank. The lawsuit, filed years ago, is based on a claim that RBS manipulated the interbank – LIBOR and Euribor – market. The lawsuit amounts to €800 million, given that the swap has cost around €90 million per year since 2008, according to financial sources consulted by this newspaper.

The discussion in Spain focuses on the fact that some of the creditors of Santander’s headquarters fear that the new owner of the company (Marme Inversiones 2007) will decide to shelve that lawsuit. It would require an agreement between the new Marme and the five banks party to the swap in exchange for renegotiating the derivative, which expires in 2023.

AGC’s offer

Those €800 million, if the process in London proves successful, could mean that all of the creditors recover their money. In particular, the original shareholder, the Brit Glen Maud, and the company Edgeworth Capital, owned by the Iranian investor Robert Tchenguiz, who took positions during the bankruptcy.

Other sources consulted indicate that there is a commitment from the main interested party in the Ciudad Financiera, the Arab fund AGC Equity Partners, to keep the Marme litigation case open.

Currently, the only offer on the table is the one presented by AGC in 2016 for between €2.5 billion and €2.8 billion, depending on the variables that are included. A year earlier, Aabar Investments, the owner of Cepsa, and Edgeworth, also submitted bids. But they were not accepted.

As we wait to see what will happen over the next two months, AGC leads the rest of the candidates to acquire Santander’s headquarters.

One of the possible counter-offers could come from Edgeworth, which negotiated a €2 billion loan with JPMorgan to participate in the liquidation plan. It also proposed that the company exit from bankruptcy without the need to be liquidated.

This operation would generate a sale with significant gains for the funds that entered the process by buying Marme’s debt from financial institutions. They include Blackstone, Canyon and Monarch.

Original story: Voz Pópuli (by Jorge Zuloaga)

Translation: Carmel Drake

Reyal Urbis’ Liquidation Process Begins

6 September 2017 – Expansión

Three months after receiving the “No” decision from its creditors to its payment proposal, the real estate company Reyal Urbis is starting its liquidation process, with Sareb, the Tax Authority and several banks, such as Santander, as the main beneficiaries.

On Monday, the property developer controlled by Rafael Santamaría received the ruling from Mercantile Court number six in Madrid, ordering the launch of the liquidation phase. In this way, Reyal Urbis will star in the second largest bankruptcy in Spain’s history, with debt amounting to more than €3,500 million, exceeded only by that of Martinsa Fadesa.

This new phase will be led by the bankruptcy administrator, given that the judge is continuing to suspend the managers of the company and has ordered the termination of its corporate governance bodies.

Since its appointment as the bankruptcy administrator in February 2013, the audit firm DBO has taken care of the company’s legal proceedings. It was responsible for submitting the payment proposal prepared by the company for its creditors, which included discounts of more than 90% on its liabilities. Only 32.7% of its shareholders supported that payment plan in June, which effectively condemned the company to extinction.

Now, the administrations will have to determine the best solution for the creditors, which are owed around €3,600 million, according to the most recent figures presented, whilst the company owns assets worth €1,170 million as at 31 December 2016.

Portfolio

The company’s assets include €188 million corresponding to properties that generate rental income and €863 million relating to around 200 finished homes and land. Specifically, Reyal Urbis owns one of the largest land portfolios in Spain, with 6.7 million m2, exceeding the large property developers such as Metrovacesa (6 million) and Neinor Homes (1.3 million).

Distributed over more than 30 cities in Spain and Portugal (the company owns assets in Lisbon and Porto), the portfolio of land and rental assets, such as the best-located hotels in the Rafael Hoteles chain, as well as its stake in the Castellana 200 retail and office complex, will be the jewels in the crown to be shared out amongst the creditors or sold to allow them to recover at least some of their investment, according to sources close to the process.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

Sareb Will Take Ownership Of The ‘In Tempo’ Skyscraper In Benidorm

25 August 2016 – El Economista

The In Tempo skyscraper in Benidorm is the tallest residential tower in Spain and the second tallest in Europe, however, it is proving difficult to find an investor willing to pay the asking price. The property is weighed down by debt amounting to €100 million, which is in the hands of Sareb, but is reportedly worth around €90 million.

According to the newspaper El Confidencial, none of the offers for the skyscraper, which has been on the market since the end of last year, have exceeded €60 million. For this reason, Sareb has not waived its right to submit a higher offer to take over the asset, in an operation that would form part of the liquidation process of its current owner and developer, the company Olga Urbana.

According to online media, the bad bank has confirmed this information, however, “they assure that they have not yet received the asset foreclosure notice from the judge”.

The 52-floor building, which is 189m tall and contains 300 apartments is a symbol of the real estate bubble. Once the judge has authorised the award of the asset to Sareb, the bad bank could begin a new sales process involving negotiations with the two funds that have already expressed interest in the property.

Although construction work is still underway and the degree of completion ranges between 83% and 97%, apartments in the skyscraper are being sold for between €190,990.80 and €1.6 million, according to the online portal Idealista.

Original story: El Economista

Translation: Carmel Drake

Asset Sale After The Liquidation

6 September 2015 – Expansión

Martinsa Fadesa bankruptcy administration has initiated the liquidation process of the real estate, putting for sale a total of 33 lots of assets of the company, presided and controlled by Fernando Martin. It went into liquidation in March.

Original story: Expansión

Translation: Lee La