Tag: loans

Project Olympia: CaixaBank Puts €800M Portfolio of Doubtful SME Loans Up for Sale

23 October 2018 – Voz Pópuli

CaixaBank is pushing ahead with its objective to clean up its toxic property. The Catalan entity is holding negotiations with large international funds to sell the largest portfolio of doubtful SME loans to go on the market to date, amounting to €800 million, according to financial sources consulted by Voz Pópuli.

The deal in question is Project Olympia, which CaixaBank wants to close before the end of the year. It includes loans with real estate guarantees granted to small and medium-sized entities.

This operation joins another that the group led by Gonzalo Gortázar has underway and which is in a more advanced phase, Project Orion, comprising €600 million also in doubtful loans to SMEs with real estate guarantees.

In total, CaixaBank wants to clean up almost €1.5 billion before the end of the year and whereby complete the macro-operation signed with Lone Star to sell almost all of its foreclosed assets for €7 billion. After transferring the homes and land, the only assets left to sell are the problem loans, which is exactly what the entity is doing with Olympia and Orion.

Candidates

Unlike with the sale of the foreclosed assets, the favourites to buy the Olympia portfolio are not large fortunes such as Blackstone, Cerberus, Lone Star and Apollo. In this case, intermediate funds are looking at the operation, such as Axactor, Bain Capital, Intrum and D. E. Shaw. The large funds are saving themselves for other operations underway and to close those already signed during the year.

In the case of Olympia, experts in the market calculate that CaixaBank could obtain around €250 million for this package of loans, whilst the price of Orion could amount to €200 million.

With all of these operations, the Catalan entity is expected to end up with a net exposure (after provisions) to real estate of around €10 billion, down from €20.2 billion at the end of last year.

Beyond the pressure from the ECB to follow this path, the strategy is key for the bank this year due to the closure of its current strategic plan. The lower its exposure to property, the greater the profitability of the entities, which is critical in the current environment.

Original story: Voz Pópuli (Jorge Zuloaga)

Translation: Carmel Drake

Quonia Sells an Asset on c/Balmes in Barcelona for €13.2M

12 October 2018 – Eje Prime

Quonia has divested one of its assets in Barcelona. The Catalan Socimi has sold a property comprising twenty-six residential units and two commercial premises located on Calle Balmes. The operation has been closed for €13.2 million, according to a statement filed by the company with the Alternative Investment Market (MAB).

The residential block comprises eight storeys, spans a surface area of 2,536 m2 and is located at number 166 Calle Balmes. In addition, the property has one commercial premise on the ground floor, which is linked to a second unit located at number 164 on the same street.

The company, which acquired the asset for almost €7.2 million, has obtained a gross accounting profit of more than €6 million. Following the operation, Quonia’s portfolio in the Catalan capital comprises one property in the Barceloneta neighbourhood, a hotel-use building on Rambla Catalunya and another mixed-use residential and commercial asset on Calle Balmes at number 45.

Quonia, whose average investments amount to between €10 million and €13 million, is looking for opportunities in Spain to continue growing its portfolio. With Barcelona and Madrid as the on-going targets, the company’s preferred destinations include other cities such as Málaga, Sevilla and Palma, as well as País Vasco.

The Socimi was created in 2014 by two Mexican investors Divo Milán and Ana Saucedo, but it did not debut on the MAB until July 2016. In the spring, Quonia completed a €3 million capital increase, although the company had approved the possibility of raising up to €26.5 million. Before the end of the year, the company expects to obtain an additional €1 million by capitalising loans from investors.

Original story: Eje Prime 

Translation: Carmel Drake

Santander Offers €3bn for its own Ciudad Financiera

19 September 2018 – Eje Prime

Banco Santander could end up buying back its Ciudad Financiera. The Spanish bank has submitted an offer for around €3 billion for the complex in the framework of the auction organised by Commercial Court number 9 in Madrid to liquidate the assets of Marme Inversiones, the owner of the asset, according to Expansión.

Besides Santander, two other entities have submitted bids. They are the Kuwaiti fund headquartered in the British capital, AGC Capital Markets, and the British-Irani investor Robert Tchenguiz.

According to the most recent information, Blackstone was going to participate in the bid. Specifically, the US fund was going to offer more than €3 billion for the Spanish bank’s central offices.

In the end, both Blackstone and Centerbridge have ruled out participating in the auction, the resolution of which will be revealed within the next few days: the bankruptcy administrator could award the asset, or open another phase for the receipt of better offers.

Banco Santander’s Ciudad Financiera has been owned by Marme Inversiones (controlled by the investors Glenn Maud and Derek Quinlan) since 2008. The company filed for bankruptcy after it was unable to keep up the repayments on the loans it took out to sign the operation.

Original story: Eje Prime

Translation: Carmel Drake

CaixaBank and Sabadell Lend €1.4 Billion to Hotels

10 August 2018

The tourism sector, where both banks operate through specialised units, is one of the principal motors of loan investment.

The growth of Spain’s tourism sector has become one of the main levers for loan-based investments. CaixaBank and Banco Sabadell have found a powerful platform for increasing their turnover in the renovation of the country’s hotels and the continuous buying and selling of establishments in an industry that has made Spain the second most visited country in the world after France.

During the first half of the year, CaixaBank and Sabadell extended a total of 1.446 billion euros in loans to the hotel sector. The bank headed by Gonzalo Gortázar lent €942.5 million to the hospitality industry between January and June, a growth of 36% over the same period of the previous year (€692 million). The figure easily exceeded the bank’s target growth of 20%.

CaixaBank’s financing included 1,618 operations that went primarily to the Balearic Islands (€400 million), Catalonia (€109 million) and Madrid (€164 million). Madrid, where the bank saw the greatest growth in its concession of loans, increasing by 250%, compared to growth of 16% and 43% in the Balearic Islands and Catalonia.

In total, Caixabank saw a business volume of €4.542 billion from the tourism sector, where it has a portfolio of 8,927 customers. In 2017, the bank created a specialised division of 30 professionals to manage its business in the sector, called CaixaBank Hoteles & Tourism, which has since signed 20 agreements with Spanish hotel associations and federations.

For its part, Sabadell was a pioneer in creating its Sabadell Tourism Business division in 2014, which allowed it to grow by double digits ever since. During the first quarter of this year, the bank managed by Jaume Guardiola provided 504 million euros in financing to hotels, an 8.5% increase. Similarly, it has increased spending by 16% to manage a volume of business for the sector of €3.55 billion. According to the bank, the division’s total number of clients has risen to 14,582.

CaixaBank has increased its concession of loans to hotels by 36%, to €942 million in the year to June

Sabadell saw growth of 8.5% in its loans, extending credit worth €504 million

Although it foresees “a moderate slowdown” in growth, CaixaBank Research forecasts an increase of 3.4% in tourism-based GDP growth in 2018, higher than that of the Spanish economy as a whole, which is estimated at 2.8%. According to the research centre, the average hotel occupancy in Spain stood at 53% between January and May, compared to 53.3% during the previous year, due to a moderation in the rate of arrival of foreign tourists. Even so, the bank expects international visitors to increase by 3% in 2018 and 1% in 2019, reaching 85 million, compared to 81.8 million in 2017. Investment by the sector to improve hotel quality has resulted in the fact that these days, four- and five-star hotels account for 51.7% of beds in Spain, compared to 48.6% in May 2014.

Original Story: Expansión

Translation: Richard Turner

On the Hunt for Capital: Socimi Quonia Considers Issuing Bonds to Finance its Growth

11 July 2018 – Eje Prime

Quonia does not want to put any limits on its capacity for indebtedness. The company is considering carrying out a corporate bond issue to increase its financing options and, whereby, continue with its development plan, according to explanations provided by the company’s CEO, Eduard Mercader, speaking to Eje Prime. Through this move, Quonia would also open itself up to institutional investors.

The fact that Socimis must dedicate at least 80% of their profits to dividends “limits their capacity to accumulate debt”, explains Mercader. In this way, the main option for these types of companies when they are looking to grow is primarily through capital increases. However, the company’s executive is looking for “alternative formulae”, to apply “in the short term”.

Mercader’s decision to resort to bonds is also a consequence of the difficulties faced when completing capital increases with investors outside of Europe, such as in this case. Quonia was created in 2014 by the Mexican investors Divo Milán and Ana Saucedo and investors from that country currently contribute the majority of its resources.

Quonia has just completed a €3 million capital increase, although the company had approved the possibility of raising up to €26.5 million. Before the end of the year, the company will obtain another €1 million through the capitalisation of investor loans.

Although the resources forecast by the Socimi were greater, Mercader says that the final amount does not limit the company’s development plan. “We adapt ourselves to the capital that we receive”, says the executive, and adds that Quonia “is continuously raising funds”.

After its launch with the purchase of an asset in Barcelona, Quonia has been attracting different investors from Mexico, Europe and the USA. In July 2014, the company adopted the Socimi regime and in July 2016, it made its debut on the Alternative Investment Market (MAB) where it is currently listed.

“We are very much a real estate Socimi, we do not have a financial profile at all”, explains Mercader – “we buy assets with a lot of potential”. The company’s portfolio currently comprises seven assets, located in Barcelona, Lagreo and Sevilla, of a residential, hotel and commercial nature. The valuation of the company’s portfolio in October 2017 amounted to €85 million, with a gross value of €57 million.

The company is currently finalising the sale of one of its properties. Specifically, the building located at number 166 Calle Balmes in Barcelona. It is an eight-storey residential property, with commercial premises on the ground floor, constructed in 1930 in the rationalist style. Both this property and the one at number 45 on the same street are being used as residences for students.

Quonia, whose average investments range between €10 million and €13 million, is on the lookout for opportunities in Spain to continue growing its portfolio. With Barcelona and Madrid always in its sights, the company is branching out to new destinations for its new investments in cities such as Málaga and Sevilla, as well as País Vasco, where it is analysing several operations. Palma is another city where it is considering investing (…).

Original story: Eje Prime (by P. Riaño and J. Izquierdo)

Translation: Carmel Drake

Hispania Will No Longer Be a Socimi & Blackstone Will Channel its Future Profits via the Cayman Islands

13 June 2018 – El Confidencial

Following the green light granted by the CNMV – Spain’s National Securities and Exchange Commission – for Blackstone’s takeover of Hispania, the countdown has begun for the US fund to take control of the company, a milestone that is dependent upon it obtaining 50% plus one share and which, if no rival offer prevents it, could start to take shape on 13 July, when the term for the acceptance of the offer comes to an end.

From that moment on, Blackstone plans to exclude the Socimi from the stock market, which means that it will lose the benefits of the special tax regime, whereby it has been exempt from paying corporation tax in exchange for distributing at least 80% of its profits in the form of dividends, which are taxed at between 19% and 23%.

Blackstone’s decision will, therefore, have a direct impact on the public coffers, given that the conversion of Hispania into a limited company (SA) means that it will now be taxed as a company. Nevertheless, as is typical amongst these large investment vehicles, the fund has created a company structure aimed at financially optimising its tax bill for the duration of the investment period.

According to confessions made by Blackstone itself to the CNMV, the offer is being made through the company Alzette Investment Sarl, which was constituted on 2 February in Luxembourg for the purposes of this operation. Its only shareholder is Alzette Holdco Sarl, also a Luxembourg-registered company and itself wholly owned by BRE/Europe 9NQ Sarl, which is in turn controlled by BREP Investment 9NQ LP, an exempted limited partnership registered in the Cayman Islands.

As such, the ultimate parent company operates under a tax haven that ensures that it will be free from paying taxes for 50 years (…). In fact, the shareholders of BREP Investment 9NQ LP are different offshore companies owned by Blackstone, which are also covered by the exempted limited partnership structure of the Cayman Islands, with the exception of two, which are headquartered in the US tax haven of Delaware, and which are the entities that really benefit from this structure.

Flagships of opportunistic investment

Blackstone’s BREP funds are the US giant’s “flagships of the opportunistic investment funds”, according to its own definition in the takeover prospectus “with USD 75 billion of investment capital, a net return of 16% since 1991 and 1% of losses over 27 years”.

In order to raise the €1,589.6 million that Alzette will have to hand over if all of Hispania’s shareholders accept the terms of its offer (the fund already controls 16.5% of the share capital after it acquired the stake previously owned by George Soros), the different Blackstone funds have committed to contributing the money, either through capital, shareholder loans or other intra-group financing instruments.

In these types of company structures, the different loans arrangements made between the parent companies and their subsidiaries allow them to decrease the overall tax bill in the different countries in which the corporate chain operates in the form of the interest payments that the funds make to themselves and which allow them to “repatriate” the money invested to the Cayman Islands, at the same time as reducing the profit, and with it, the tax charge.

In the case of the takeover bid for Hispania, in addition, Blackstone is also planning to resort to lenders to raise financing amounting to €850 million, referenced to 3-month Euribor, plus a margin of up to 2.25% per annum, and with a maturity date of 15 May 2021, and with the option of being renewed for one more year.

Business plan

Similarly, in order to acquire the stake from Soros, Blackstone signed a financing agreement with Morgan Stanley for a maximum amount of €250 million, although in the end it only drew down €128.6 million. In terms of the financial commitments that Hispania currently has (€894.8 million), Alzette says that it is analysing different refinancing options, including both raising new debt and increasing the level of leverage.

In terms of the business, Blackstone’s plans for Hispania include completing the sale of the office portfolio, which the Socimi had to put on hold at the last minute, even though it had already reached an agreement with Tristán to sell it for more than €500 million, due to the presentation of the takeover bid.

By contrast, in terms of the hotel assets, which are the jewel in the Hispania’s crown, its intention is to hold onto the majority of them for between three and seven years, and transfer their management to the team at HI Partners, the company that the US fund acquired last year for €630 million and which it will likely end up merging with the Socimi.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

Lugo’s Only 5-Star Hotel Goes up for Auction for c. €5M

16 May 2018 – El Confidencial

It has been closed for four years and weeds are spreading uncontrollably across the estate. The only luxury five-star hotel in Lugo has gone up for auction for just over €5 million – the auction price includes the hotel’s furniture and a chapel in two separate lots – as part of the liquidation plan that is being followed since Mercantile Court number 12 of Madrid ruled against its owner, Alvaher 98. That company purchased the property in 2007 and built on the ruins of what used to be the Palacio del Conde de Lemos. Alberto Vázquez wanted to turn around his business activity, which focused on meat products and recover this historical and artistic gem, which originally belonged to the López de Lemos family and which had been abandoned since the beginning of the 20th century.

The bidding has now concluded with a single bidder offering €2.4 million for the hotel, below the €4.7 million auction price. As such, we will have to wait and see whether the court authorises the sale or not, given that it would not cover the debt. Meanwhile, in the other lots, €60,000 has been offered for the furniture, compared with an auction value of €450,000, and €6,000 has been offered for the chapel, above the auction value of almost €1,800.

The Hotel Palacio de Sober, whose refurbishment cost several million euros – most of which came from public funds – is also the oldest civil architecture building in Galicia, the largest estate in the autonomous region, and its chapel dates back to the 7th century. A year ago, the same court opened a sales process for possible interested parties to bid, and although several companies expressed their interest, no firm offer was submitted. Now, as part of the liquidation process of the owner company, its fate is being put to the test through a public auction (…).

The property has several financial charges, including a mortgage in favour of the Galician Institute for Economic Development (‘Instituto Galego de Promoción Económica’ or Igape), the public entity that backed the project to open the hotel at the time through loans and subsidies, as well as embargoes for non-payments to the Social Security department.

Located in the south of the province of Lugo in a natural setting, 10km from Monforte de Lemos and 38 km from Ourense, it opened its newly renovated doors in 2010 (…). It had 43 super-luxury rooms, all of which measure more than 25 m2 (…).

The price per room used to cost no less than €300 per night for the cheapest rooms, whilst sleeping in one of the suites cost upwards of €750 (…).

At the beginning of 2012, just two years after its inauguration (…), the Palacio de Sober stopped receiving guests and it definitively closed its doors in March 2014 (…). In February 2015, the owner company was declared bankrupt (…).

Original story: El Confidencial (by E. Sanz)

Translation: Carmel Drake

Registrars: Mortgage Lending Increased by 10.9% in 2017

23 April 2018 – Eje Prime

The number of mortgages signed to buy homes in Spain during 2017 rose by 10.9% with respect to 2016. According to the Real Estate Yearbook 2017 from the College of Registrars, 310,640 mortgage loans were signed, a figure that represents an increase of 56% compared to the minimum level recorded in 2013. But, despite that significant gain, the figure is still well below the 1.3 million mortgages signed in 2006.

The study reveals that the number of residential mortgages increased in every autonomous region last year, with double-digit growth rates in eight of them. The largest increases were recorded in the Community of Madrid (17.8%), La Rioja (17.8%), Asturias (16.5%), Andalucía (11.7%), Cantabria (11.5%) and the Community of Valencia (11.3%). The regions where the greatest volume of mortgages were signed included Andalucía (60,026), the Community of Madrid (56,866), Cataluña (50,848) and the Community of Valencia (32,408).

In addition to domestic buyers, international purchasers also become more active. In fact, 6.9% of the residential mortgages signed last year were formalised by foreigners, exceeding 21,000 contracts in absolute terms, although three times as many overseas buyers purchased a home in Spain without any financing at all.

The nationalities with the highest percentage weight in terms of residential mortgages signed over the total number of mortgages formalised by foreigners were Romanian (11.6%), British (9.3%), Chinese (8.4%), Italian (5.8%), French (4.6%), Moroccan (4.2%) and German (4%).

Original story: Eje Prime 

Translation: Carmel Drake

BBVA Continues to Obtain Juicy Profits from the RE Market

17 April 2018 – Merca2

Bilbao. Gran Vía, 1. One of the most iconic buildings in the Vizcayan capital has been located at that address since 1969. Comprising 21 storeys and measuring 86 m tall, it was the giant of the city until the arrival of Torre Iberdrola. Headquarters, at the time, of Banco de Vizcaya, the entity known nowadays as BBVA has just put the property up for sale. The price? Around €100 million.

This is a new milestone in the process to divest iconic buildings that the entity chaired by Francisco González has been carrying out for several years and which has been generating some juicy profits. This money for the coffers is a godsend for the balance sheet.

Another example, the most recent on the long list, saw the sale of Torre Puig in 2017 to the Catalan perfume group of the same name. That building, which ended up in BBVA’s hands after its acquisition of Catalunya Caixa, was sold for €60 million, at a gain of €30 million.

Also prior to this latest operation on Bilbao’s Gran Vía, which is expected to be closed before the summer, in 2015, BBVA sold the office block known as Torre Ederra in Madrid, located at number 77 Paseo de la Castellana, to Gmp (owned by the Montoro Alemán family and the sovereign fund of Singapore GIC). Spanning 21,000 m2 and spread over 18 floors, BBVA acquired that property in 2003 for €87.5 million from the French group Saint Gobain. The sales price paid by Gmp exceeded €90 million.

BBVA and its €300 million gain

There are several reasons behind BBVA’s decision to divest a series of buildings; some of them have significant value, not only financial but also in terms of their history and architectural beauty.

One of the reasons is to finance the cost of the creation of BBVA City (Ciudad BBVA). The new headquarters, popularly known as La Vela due to its most iconic tower, also comprises another seven horizontal buildings. It cost around €700 million to build and was constructed to reduce by one third the operating cost of having around 6,500 employees spread across a dozen properties, amongst other reasons.

Another building that was sold, for example, was the work of the architect Francisco Javier Saénz de Oiza. Constructed at number 81 Paseo de la Castellana, measuring 100 m tall, and spanning more than 49,000 m2 over 30 storeys, that property was sold in 2007, also to the real estate group Gmp.

That same year, BBVA reduced its portfolio further by placing other buildings in Madrid on the market, such as those located on Calle Goya 14, Calle Alcalá 16 and on Gran Vía de Hortaleza. In total, more than 108,000 m2 of space was sold, which saw these last four buildings generate gains of €300 million for the entity chaired by González (…).

Another operation that was different was BBVA’s sale, at the end of 2017, of its real estate division to the fund Cerberus Capital for around €4 billion. That deal was carried out at a discount of 61%: the gross book value of the 78,000 real estate assets that form part of the deal is €13 billion.

In this case, the operation involved divesting the bank’s exposure to property, in part “imposed” or “recommended” by the Single Supervisory Mechanism (SSM) of the European Central Bank (…).

Which assets are being spared? So far, the former headquarters of Argentaria, located on Paseo de Recoletos in Madrid, which currently houses the headquarters of Fundación BBVA. For the time being, no “for sale” sign has been put up there. But it could only be a matter of time.

Original story: Merca2 (by Valentín Bustos)

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