Tag: loan portfolio

CPPIB Awards Altamira the Mandate to Manage BBVA’s Former €1.5bn Portfolio

1 March 2019 – Voz Pópuli

The Canadian pension fund (CPPIB) has delegated the management of the Ánfora portfolio, purchased from BBVA, to the servicer Altamira, according to financial sources consulted by this newspaper. Altamira has declined to comment on the reports.

It is a striking decision given that the fund decided to sell its stake in the servicer to DoBank in January, along with Apollo.

Between them, the two funds used to own 85% of Altamira. Santander owns the remaining 15%, although that stake could also end up being sold to DoBank. This operation shows that the Canadian fund continues to trust in Altamira, despite its exit from the company.

Agreement with BBVA

BBVA signed an agreement to sell the aforementioned loan portfolio, which mainly comprises mortgage loans (primarily doubtful and non-performing loans) with a live balance of approximately €1.49 billion to CPPIB in December. That operation formed part of the bank’s strategy to reduce its exposure to real estate risk to a minimum.

In the last two years, BBVA has closed a series of operations that form part of that real estate strategy, including the transfer of its real estate business in Spain to Cerberus, which was announced in November 2017 and closed last October.

The acquisition of 100% of the share capital of the servicer has been valued at €412 million in business value terms, according to Oliver Wyman, strategic advisor to the operation.

Altamira offers NPL services, including the sale, development and administration of real estate assets, advisory services and portfolio administration activities. In 2017, it had a market share of 15% in Spain, with assets amounting to more than €140 billion and a workforce of 2,200 employees.

Original story: Voz Pópuli (by David Cabrera)

Translation: Carmel Drake

BBVA Sells its Stake in Avantespacia to Manuel Jove’s RE Company

8 January 2019 – El Economista

BBVA is continuing to divest property. This time with the sale of its stake in Avantespacia Inmobiliaria, the company that it constituted in 2016 to undertake real estate projects in Spain.

The entity has sold its remaining 30% stake in the firm to Inveravante, the holding company owned by the businessman Manuel Jove, the founding partner of the real estate company, who now owns the entire firm.

With this operation, Avantespacia “is strengthening its commitment to the residential real estate sector in Spain, with housing developments in the prime areas of the main provincial capitals of our country”, said the company in a note.

This operation forms part of a company restructuring process of the real estate division of Inveravante with the aim of “charting a global strategy, in accordance with the challenges that the sector poses for the future in both the domestic and international spheres”.

Jove’s company, founded in 2007 in A Coruña, divides its activity into different business areas, since in addition to real estate, it also works in the hotel segment, in selected agri-food products, and in the energy sector. Currently, the company has an international presence and operates in Morocco, Mexico, Brazil, Panama, the Dominican Republic, Canada, Germany and Romania.

BBVA has been one of the most active entities in the sale of loan portfolios, signing its most recent operation on 26 December with the sale of Project Ánfora to an entity managed by the Canadian pension fund CPPIB. Specifically, it sold a portfolio of loans comprising mainly doubtful and non-performing mortgage loans, with a live balance of approximately €1.49 billion (…).

Original story: El Economista (by Alba Brualla)

Translation: Carmel Drake

Popular’s €10bn Portfolio Sale Was The Largest RE Operation in the World in 2017

26 March 2018 – Cinco Días

Spain was the setting for the largest real estate operation in the world in 2017. The stars were Santander, as the vendor, and Blackstone, as the buyer. The object of desire was the property portfolio that took down Popular. The price: no less than a valuation of €10 billion.

The purchase of Popular’s property portfolio (containing real estate assets and loans with real estate collateral) led last year’s ranking of the largest operations in the sector involving a single asset or portfolio, compiled by Real Capital Analytics (RCA). Of the largest transactions, those undertaken in China stand out in particular, as well as a handful of deals completed in the United Kingdom. The classification excludes operations involving the purchase of companies.

The operation to sell Popular’s portfolio, announced in August, after Santander took control of the entity in June, was structured into a company worth €10 billion, in which Blackstone controls 51% and the rest remained in the hands of the bank chaired by Ana Botín.

Following that purchase, as well as others, such as Catalunya Caixa’s portfolio, Blackstone is now one of the largest owners of real estate assets in Spain. Another major operation of this nature was closed a few months later when Cerberus purchased 80% of BBVA’s real estate portfolio worth €5.5 billion (…).

In total, around the world, last year, deals worth USD 143.2 billion were closed, which represented an increase of 14% compared to the previous year.

China starred in the majority of the largest operations last year. China Vanke acquired an enormous land portfolio for real estate developments in Cantón for €7.1 billion, which constituted the second largest transaction of 2017. The next largest sale in the Asian country was the purchase of part of an office and retail development in Shenzhen by the company Kingboard, which is headquartered in Hong Kong (…).

In Europe and the USA, the focus was on alternative investments, such as student halls of residence, hospitals and logistics warehouses.

In fact, the third largest transaction in the world last year involved an alternative investment. Specifically, the sale of a stake in a portfolio of hospitals and 200 nursing homes in the USA and UK, which was purchased by the Chinese insurance company Taikang Insurance Group.

In Europe, in addition to Popular’s portfolio, the next largest deal saw the sale of the Bluewater shopping centre in the United Kingdom, worth €2.1 billion, in which Royal London Mutual Assurance acquired a stake.

In terms of office buildings, the sale of the Leadenhall Building in London, popularly known as the “cheese grater”, also stood out; it was acquired by the investment group CC Land, from Hong Kong, for more than €1.3 billion.

Typically, the large buyers include the largest investment managers, such as Blackstone, Brookfield, Deka, THI, Axa, Invesco and Morgan Stanley, whose clients tend to include sovereign funds from Norway and Abu Dhabi, as well as universities (for example, the Harvard investment fund) and workers’ unions or pension funds (German doctors, public sector workers from Korea and Ontario…).

In terms of 2018, for example in Europe, Borja Sierra, Executive Vice-President of Savills Aguirre Newman, believes that the clearest trend will be investment in the residential rental sector as a form of institutionalised real estate investment. “With the scenario of rising interest rates and measures from Trump that favour the renewal of infrastructure in the USA, I think that we will see a migration towards infrastructure funds, a move that will somewhat reduce investment pressure on the real estate sector. Nevertheless, the year has started with volumes that exceed those recorded in 2017, and so we expect a good year”.

Original story: Cinco Días (by Alfonso Simón Ruiz)

Translation: Carmel Drake

Deutsche Bank Lost €68M On Operation Tag

8 May 2017 – Voz Pópuli

Deutsche Bank España recorded losses of €68 million on so-called Operation Tag, which was agreed last October, and which involved the sale of a portfolio of non-performing loans and real estate assets to the fund Oaktree for €430 million. And, the negative result from that operation drastically reduced the entity’s profit last year, which fell from €91.4 million in 2015 to €5.7 million in 2016.

The operation involved the sale of a loan portfolio that contained “a series of loans that had already been recognised as non-performing”, as well as foreclosed assets. The bank acknowledges in its most recent annual financial report that the sale “had a negative impact of €68.1 million on the entity’s income statement”. Of that amount, €40.4 million corresponded to the sale of the loan portfolio and €4.7 million to the sale of the foreclosed properties.

Part of the agreed sale of the properties was signed during the first quarter of 2017. They included assets located in Cataluña, which had a gross value on the group’s books of €7 million and which ended up being sold for €4.4 million. The other real estate assets had a book value of €29 million but their sales price was much lower, €8.1 million.

Operation Tag also had an additional cost of €23 million for Deutsche Bank España. The costs arising from the sale amounted to €8.1 million and those relating to adapting the workforce to the new structure amounted to €14.9 million.

Early retirement

In 2016, Deutsche Bank España processed the early retirement of 108 employees, compared with 24 early retirees in 2015. The entity explains in its latest accounts that the amount of pensions caused, €155 million, corresponds to commitments for pensions caused with the retiring and early-retiring employees and that those commitments are “insured or provisioned by an internal fund”. Last year, the bank recognised a provision of €13.9 million for early retirees.

In March, Deutsche Bank announced its plans to sell its retail business in Spain. The entity currently serves more than 700,00 clients in the country and employs almost 2,600 people in its retail division.

Original story: Voz Pópuli (by Alberto Ortín)

Translation: Carmel Drake

Apollo Gets Ready To Buy Property Developers & Hotels In Spain

14 March 2017 – El Confidencial

A new player has emerged in the Spanish real estate market. Apollo, one of the largest fund managers in the word, has decided to join the fray between Värde, Castlelake and Lone Star, and analyse the purchase of its own property developer, according to sources familiar with the entity.

The firm led in Spain by Andrés Rubio is tackling this strategy through its new fund (its third), which already has €2,700 million and which plans to raise up to €4,000 million. This money will be used to acquire real estate assets, NPLs and hotel portfolios in Spain, Italy, UK, Ireland and Germany. Our country could receive around €1,000 million of investment, given that Apollo is expected to continue its commitment to the hotel sector, into which it took a giant leap last December, when it acquired two portfolios from CaixaBank and Popular, and looks set to enter the property development business with a bang.

According to the same sources, one of the companies that is on the fund’s radar is Levitt, which has some of the best plots of land and fame in the sector. Its possible sale has been mooted in the market for a while, given the generational change that the group faces and the appeal of the company, which operates in the high-end segment.

Asentia, Colonial‘s former bad bank is one of the other companies that has been making a name for itself in the market; Acciona Real Estate has also been considering its options, which range from an IPO to the entry of a large fund into its share capital; whilst Procisa, the former property developer behind La Finca, has sold 40% of its offices to Värde and continues to control important developments on plots of land in Madrid (Pozuelo de Alarcón and Brunete), Huelva (Cartaya) and Lleida (Baqueira).

In fact, Apollo was previously involved in negotiations regarding a similar operation to the one that Värde ended up signing with the Cereceda family. But the rapid consolidation that has taken place in the market, with the creation of Aedas by Castlelake, the purchase of Vía Célere by Värde and the imminent debut of Neinor on the stock market, has convinced the fund that a window of opportunity has now opened up in the property development sector.

Apollo plans to invest this new €1,000 million fund over the next three or four years, during which time it wants to become a top-tier player in the property development sector, in line with the moves made by its competitors, and to create its own hotel platform.

In the residential sector, it intends to focus on buildable land, located primarily in Madrid and Barcelona, the two provinces where the incipient recovery is being felt most strongly.

In the tourist segment, in parallel to the strategy to purchase loan portfolios secured by hotel collateral, the fund is actively looking for well-located establishments to create a vacation platform along the coast and on the islands, comprising around 20 assets.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

Popular’s RE Losses €992M Higher Than Expected In 2016

2 March 2017 – Expansión

Popular had to find almost €1,000 million more than it had planned in 2016, to cover over-valued loans and properties, and the impairment of its subsidiary, Targobank.

During its last capital increase, Banco Popular announced that it was going to carry out an upwards adjustment to its provisions of around €4,700 million. Nevertheless, the final figure for the definitive provisions amounted to €5,692 million, which led to a negative result (loss) of €3,485 million. The entity, which was chaired by Ángel Ron at the time, has justified the reasons for that €992 million deviation in its total provisions balance in its recently published annual report.

The largest item in terms of provisions not foreseen in the market by the former managers of Banco Popular was “non-recurring provisions for loans and properties”. In total, around €703 million had to be found, in addition to another €54 million in extra provisions to cover other portfolios of loans and properties on the bank’s balance sheet (in this case on a recurring basis).

The other major item in terms of provisions for impairment, which worsened Popular’s numbers by more than expected, related to its subsidiary, Targobank (the bank that it controls jointly with Crédit Mutuel). The significant losses incurred by the entity in 2016 (it recorded a negative result of €71 million) and its failure to comply with the business plan caused the impairment of 100% of the entity’s goodwill balance, which had amounted to €169 million.

Finally, the bank acknowledges that it also had to add another €66 million to its provision balance in 2016 (and post 100% of the corresponding entry in the income statement for the year) in relation to “pensions, restructuring costs and other items”.

In addition to the unforeseen provision-related items, Banco Popular says in its annual report that the high level of provisions recorded in 2016 is due “to a large extent” to the clean-up procedures that were carried out as a result of the new accounting circular 4/2016, issued by the Bank of Spain, known in the sector as Annex IX, which came into force last autumn.

The majority of the clean-up effort focused on the property portfolio, as well as on loans to sectors linked to real estate. According to information presented in the entity’s accounts, this adjustment translated into an impairment in the value of the real estate assets (in other words, provisions) of around €4,025 million last year. The remaining €1,666 million of the new provisions for bad debts were allocated to cover impairments in the bank’s main business. (…).

Original story: Expansión (by Nicolás M. Sarriés)

Translation: Carmel Drake

Project Gold: Bankia Puts €180M Loan Portfolio Up For Sale

20 February 2017 – Expansión

Bankia, the fifth largest bank in Spain, has just put a €180 million doubtful debt portfolio up for sale. The package contains loans to property developers and is being marketed under the name Project Gold, according to market sources.

Specifically, the portfolio comprises loans granted to small and medium-sized companies in Spain, many of which are property developers.

Last year, the entity managed to close several operations of this kind for €455 million in total, according to its income statement. However, none of those deals featured in the top fifteen largest transactions of 2016 by volume.

Portfolio sales, along with debt recovery processes, have decreased Bankia’s doubtful debt balance by 12.5%, according to annual data. Over the last year, the group has reduced the perimeter of its foreclosed assets by 16.4%. The coverage ratio of its doubtful balances amounts to 55%, which is above average for the sector.

Bankia has a significantly lower exposure to property developer risk than the other large banks because it offloaded the majority of its problematic assets to Sareb, the bad bank, as did the other savings banks that were rescued using public money. Only 1% of Bankia’s business comes from that sector.

Original story: Expansión

Translation: Carmel Drake

Bank of Spain: Default Rate Falls To 9.44% In June

19 August 2016 – Expansión

Yesterday, the Bank of Spain published provisional data for 30 June 2016, which shows that the default rate decreased for the fifth consecutive month, to 9.44%, its lowest level since June 2012. The figure includes the change in methodology for classifying Financial Credit Establishments (EFC), which are no longer included within the category of credit institutions. In this way, the default rate has now been below the 10% threshold for the fourth consecutive month.

The decrease in the default rate has come despite the fact that total credit in the sector rose by 1.2%, the first increase since November 2015. Specifically, total credit increased by €15,682 million to €1.298 billion. “The decrease in the default rate coincides with the strong growth in new loans to SMEs and households”, said José Luis Martínez, spokesperson for the Spanish Banking Association (AEB).

Doubtful debt

The doubtful debt balance sank to €122,508 million, down by €3,689 million compared with the previous month, its lowest level since June 2011. Financial entities have decreased their combined doubtful debt balance by more than €70,000 million since the peak in 2013, when it exceeded €200,000 million.

Therefore, the clean up of the financial sector is now a reality. Nevertheless, some entities have performed the process more quickly than others. In the last year, Sabadell and Bankia stand out as the entities that have got rid of the most doubtful assets, having reduced their doubtful balances by almost a quarter each. Specifically, the Catalan entity has reduced its doubtful debts by 23.9% and Bankia by 23.2%. Three other Spanish entities reduced their doubtful balances by at least a fifth between June 2015 and June 2016, namely: Liberbank (22.4%), Abanca (22%) and CaixaBank (20%).

Several factors have contributed to the reduction in the doubtful debt balance. As well as the macroeconomic improvement seen in recent years, the entities have accelerated their portfolio sales to large funds.

Another way in which the banks have shrunk their large doubtful balances has been through foreclosures, especially of unpaid loans to property developers overdue by more than one year.

Original story: Expansión (by D.B.)

Translation: Carmel Drake

Project Wind II: Bankia To Put €800M NPL Portfolio Up For Sale

21 March 2016 – El Confidencial

After withdrawing Project Big Bang from the market, through which it had hoped to divest the real estate assets that it did not transfer to Sareb amounting to €4,800 million, Bankia has decided to accelerate the pace of its other divestments, as it continues to analyse how to get rid of all of the property that it has on its balance sheet.

To this end, the entity chaired by José Ignacio Goirigolzarri is finalising the launch of Project Wind II, involving the sale of a portfolio of overdue mortgages. Although the details are still being finalised, the bank’s idea is to place a portfolio containing loans amounting to almost €800 million.

Last year, Bankia successfully closed Project Wind I, an operation that represented the entity’s first major sale of mortgages to investors in its history. On that occasion, the bank put loans with a value of €1,300 million on the market, divided into three sub-portfolio: more than 4,000 mortgages worth €918 million; loans to SMEs secured by RE collateral worth €180 million; and unpaid loans to SMEs worth €216 million.

Oaktree ended up acquiring the mortgages, whilst Chenavari bought the two smaller packages. For this second version, Bankia has already started to make contact with the funds, a temperature check that has awakened interest in the sector, given that it involves one of the most important portfolios forecast for this half of the year, together with Project Normadía, launched by Sabadell.

As El Confidencial revealed, the bank chaired by Josep Oliu has engaged PwC to sell its €800 million portfolio of consumer loans and credit cards, and is also analysing placing another package containing loans to property developers amounting to €1,700 million.

Appetite in the market

The funds that normally participate in these types of processes, such as TPG, Cerberus, Apollo, BofA, Goldman, Oaktree and Chenavari, are paying particular attention to the sale of these portfolios, above all, after Sareb shifted its strategy and decided to commit itself more to the retail channel.

Bankia is expected to resume Project Big Bang at some point during 2016 but, instead of forming a single portfolio, the market expects that it will divide it into several batches, given that the interested funds have already advised the bank that it is too large and diverse a portfolio to be ‘hunted down with a single shot’.

Last year, the entity carried out four major loan portfolio sales for a combined total of almost €2,800 million, which benefitted the bank’s balance sheet and allowed it to reduce its doubtful balance by more than €2,000 million.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

Sareb Sells A Secured Loan Portfolio Worth €73.7M

16 March 2016 – Reuters

On Tuesday, the so-called Spanish bad bank said that it has sold a package of loans with a nominal value of €73.7 million and secured by assets located in the provinces of Madrid, Barcelona, Cáceres and Tarragona.

68% of the assets are industrial-logistics properties, 26% are hotel and tourist assets and the remainder are offices, said Sareb in a press release.

This sale is the first institutional operation that the company has closed in 2016, in a segment of the market “that is beginning to show signs of recovery, following others, such as the residential and land segments”, said Sareb.

The Spanish bad bank was constituted at the end of 2012 by way of consideration for the aid package, amounting to €41,300 million, granted by the European partners to Spain for the clean up of its financial system.

Original story: Reuters

Translation: Carmel Drake