Sareb Opens Bidding to Other Servicers After Low Bids from Haya, Solvia, Altamira and Servihabitat

30 July 2019

Sareb has notified the four servicers that manage its €34 billion in real estate loans and assets that it will open up bidding on its management contracts to other potential bidders, after having received a round of offers that it considered insufficient. Haya Real Estate (Cerberus), Servihabitat (Lone Star), Solvia (Intrum) and Altamira (doValue) have been servicing the bad bank’s assets until now. Sareb mandated DC Advisory to manage the process as the bank looks to reduce the size of the commissions it has been paying to the four firms.

DC Advisory and Sareb have reportedly been in contact with smaller, specialised firms such as Hipoges, Finsolutia and Copernicus. The decision is a message to the four current servicers, letting them know that they may lose out on future contracts unless they improve their bids. Sareb is considering dividing some sections of its portfolio by geographical location, reducing the number of managers in each and streamlining its operations.

The process – known as the Project Esparta – sent shudders through the servicing sector and was a factor in the postponement of Haya Real Estate’s IPO last year.  Haya currently has the largest mandate, servicing 37% of the bad bank’s assets (2014). Altamira, in turn, manages 29%, while Servihabitat has 19% and Solvia 15%.

Original Story: El Confidencial – Jorge Zuloaga

Adaptation/Translation: Richard D. Turner

Bankia Finalises Transfer of €2.7-Billion Real Estate Portfolio to Lone Star

28 July 2019 – Richard D. K. Turner

Bankia has finalised the transfer of a portfolio of foreclosed properties and non-performing loans to companies controlled by the Lone Star XI Fund.

The final value of the portfolio of foreclosed real estate assets has an approximate gross accounting value of 1.42 billion euros, while the portfolio of non-performing loans is worth approximately €1.283 billion. The total size is slightly lower than originally announced due to recoveries since the deal was signed.

The transaction with Lone Star involves the creation of a new company which will hold the assets and be 20 percent held by Bankia and 80 percent by Lone Star Fund XI.

Original Story: Expansión

Former CEO of Neinor Juan Velayos Joins Alantra

24 June 2019Cinco Dias

Alantra has hired Juan Velayos as a managing partner, tasked with building up a new real estate asset management business in Spain and abroad. Velayos will lead the creation of investment vehicles, while raising funds and directing investment, following the example of such major international firms as Blackstone, Brookfield and Cerberus.

Juan Velayos was Neinor Homes’ CEO until two months ago after Lone Star put him in charge of the firm when it acquired the developer from Kutxabank.

Original Story: Cinco Dias – Alfonso Simón Ruiz

Translation/Summary – Richard D. Turner

 

 

Sareb Offers the Contracts of Altamira, Servihabitat & Solvia to its Rivals

17 June 2019 – El Confidencial

Sareb is on a mission to change its course. According to market sources, the bad bank chaired by Jaime Echegoyen (pictured below) has decided to put its contracts with Altamira (owned by doBank), Servihabitat (Lone Star) and Solvia (Intrum) out to tender two years before their scheduled renewal.

Even though the contracts are not due to expire until the end of 2021, Sareb is putting them out to tender alongside that of Haya Real Estate, which is due to expire at the end of 2019. This represents a boost for Cerberus’s servicer, given that its competitors will now also have to focus on retaining their own contracts rather than just bidding for Haya’s.

In the event that Sareb awards the contracts of Altamira, Servihabitat and Solvia to other entities, it will have to compensate the servicers since their contracts clearly establish early termination clauses.

Altogether, Sareb is looking at putting out to tender the management of €34 billion in loans and properties that it still has left in its portfolio. The four will have to submit their bids in the next few months, specifying which assets they want to manage and what commissions they will charge.

The largest mandate is that of Haya, which manages assets proceeding from Bankia, which accounted for 37% of the bad bank’s original assets. It is followed by Altamira, which manages the assets proceeding from Catalunya Banc, BMN and Caja 3 (29% of the total); Servihabitat, which manages the assets from NCG Banco, Liberbank and Banco de Valencia (19%); and Solvia,  which manages assets from Bankia (foreclosed), Banco Gallego and Ceiss (15%). Clearly, there is a lot at stake for these servicers.

Original story: El Confidencial (by J. Zuloaga & R. Ugalde)

Translation/Summary: Carmel Drake

S&P Encourages Spain’s Banks to Divest More Property & NPLs

18 April 2019 – Ya Encontré

Spain’s banks got rid of €90 billion in foreclosed assets and doubtful loans last year, almost doubling the transaction volume recorded in 2017 (€52 billion) and setting a new annual record. But they still have a lot of homes left to sell and Standard&Poors is encouraging them to divest more of those properties, with a view to restoring their pre-crisis risk levels of 4% within two years.

According to the ratings agency, the banks still hold properties worth €80 billion, representing one of the highest stocks in Europe and accounting for 7% of the balance sheets of the domestic financial sector. In this context, S&P considers that the banks still need to get rid of another €30 billion in assets, at least, if they are to properly clean up their accounts.

The active buyside players in the market include many overseas investors and funds, such as Lone Star, TPG, Apollo, Blackstone, Bain Capital and Cerberus, which have played an important role in reducing the stock of major financial institutions, such as Santander, BBVA, CaixaBank and Banco Sabadell.

S&P is not alone in its stance. Both the European Central Bank (ECB) and the International Monetary Fund (IMF) are also urging Spain’s banks to divest the last of their property portfolios as quickly as possible to ensure financial stability ahead of the next recession.

Original story: Ya Encontré

Translation/Summary: Carmel Drake

Lone Star & Cerberus Increase their Commitment to Spanish Property

21 February 2019 – Expansión

The need for the banks to reduce their exposure to property and the funds’ appetite for the Spanish real estate sector have converged in recent years leading to the transfer of portfolios of debt and foreclosed assets worth millions of euros. Blackstone, Cerberus, Lone Star, the Canadian pension fund (CPPIB), Bain, Axactor and Lindorff are the funds that have been behind most of the major transactions involving portfolios of bank debt secured by real estate collateral during that period.

Emilio Portes, Director of Quantitative & Risk Management at JLL for Southern Europe, said that, following a frantic 2017 when more than €55 billion was transacted, last year saw portfolios sold with a gross value of more than €45 billion (…).

In 2018, the indisputable star was Lone Star, which took control of a portfolio worth around €12.8 billion from CaixaBank. Specifically, CaixaBank sold that portfolio along with Servihabitat to a company called Coral Homes in which Lone Star owns an 80% stake. Cerberus was also active last year with the purchase of several portfolios from Sabadell, Santander and CaixaBank with a total gross value of €12.5 billion. Behind it, came CPPIB, Axactor, D.E. Shaw and Lindorff, according to data provided by JLL.

“The sum of the transactions recorded over the last two years exceeds €100 billion, which places Spain as one of the countries with the largest transaction volume in Europe and the most liquid in terms of real transactions”, says Portes. In those portfolios, there are various types of assets, mainly residential, but also land, offices, premises and hotels.

The year ahead

During 2019, the banks will continue to divest assets, although with smaller portfolio sales. “In 2019, we expect a transaction volume of €20 billion, in addition to whatever Sareb ends up doing”, revealed Portes. He explains that most of the large Spanish banks have now reduced their NPA (non-performing asset) ratios to below 5%.

Following the activity undertaken by the large banks, all eyes are now focused on the medium and small-sized entities, particularly those with the greatest property exposure and therefore most pressure, as well as on Sareb, which has assets worth more than €35 billion still left to sell (…).

The heirs of the banks’ property, having purchased at significant discounts, have an average investment horizon of five years before they undo their positions (…)

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Marathon Acquires 2 Office Buildings in Madrid from CaixaBank

14 February 2019 – El Confidencial

The US fund Marathon Asset Management, one of the first to back the recovery of the residential property development sector in Spain, has set its sights on the peripheral office market. According to sources speaking to this newspaper, the firm has purchased a complex measuring 17,557 m2 in Madrid from CaixaBank.

The complex comprises two office buildings and 300 parking spaces, as well as several commercial premises and is located at number 43 on Avenida Institución Libre de Enseñanza in the Julián Camarillo area, which is home to the offices of companies such as Atos, Indra and Prisa.

It is the second operation of its kind that Marathon has carried out in the past three months, given that in November, it acquired a mixed-used complex, also in this area from Credit Suisse. That complex comprised an office building and a hotel managed by Barceló.

Specialising in value-added operations, as demonstrated in the past, with its anticipation of the recovery of the residential property development market with its investments in Habitat and San José Desarrollos (now Vía Célere), the fund is convinced about the potential of the secondary office market in Spain, which it has placed at the centre of its investment target.

In fact, Marathon is interested in closing more acquisitions of this kind both in Madrid, where it plans to continue growing in the Julián Camarillo area, and in Barcelona, where it is looking at opportunities in areas such as 22@.

Last sale by CaixaBank

The fund, which has been advised in its purchase from CaixaBank by Cuatrecasas, Arcadis and Doble Dígito Brokerage, is planning to carry out a comprehensive repositioning of the asset, given that its current occupancy rate amounts to just 30%, according to market sources. They also indicate that the acquisition price will have amounted to around €15 million.

This complex was originally promoted by Grupo Veintidós in 2010, a company that ended up transferring ownership of the complex to CaixaBank, which lodged it in its real estate subsidiary Building Center.

Meanwhile, the bank reached an agreement with Lone Star last year to sell 80% of its real estate business, which means that this could be one of the last operations that the real estate subsidiary carries out under the control of the entity.

Original story: El Confidencial (by R. Ugalde)

Translation: Carmel Drake

Unicaja Considers the Sale of a Large RE Portfolio in 2019

12 February 2019 – Expansión

Unicaja accelerated the clean up of its balance sheet during the course of 2018. The Málaga-based entity decreased its volume of non-performing assets by 22%, in such a way that it is now close to the reduction objective it established in its latest strategic plan for 2020. That is according to the figures provided by the bank itself during the presentation of its results for last year.

The entity chaired by Manuel Azuaga (pictured above) ended 2018 with a volume of non-performing assets (NPAs) amounting to €3.6 billion, of which €1.7 billion were foreclosed assets and €1.9 billion were non-performing loans.

In five years, the bank has reduced its toxic legacy by 51% or more than €3.8 billion. Unicaja’s commitment to investors was to bring its exposure to problem assets down below the €3.5 billion mark before the end of 2020. The rate of sales of small NPA portfolios has allowed it to get ahead in the calendar that it established in its strategic plan. But the entity will continue its clean up.

The heads of Unicaja have reported their intention to continue with small portfolio sales during 2019. Moreover, they do not rule out carrying out the sale of a large portfolio in order to segregate a majority of the non-performing exposure, in a similar way to what most of the Spanish banks have been doing over the last two years.

Unicaja’s decision to carry out a massive property sale will depend, like in other cases, on the discounts that the entity will have to apply to its portfolio. The NPAs of the Malagan bank have an average coverage level of 57%, which means that a discount of a similar percentage could be applied to the book value without resulting in accounting losses for the entity this year.

High asset quality

Unicaja is, together with Abanca, the only Spanish bank entity that still retains ownership of its servicer, the real estate subsidiary through which it sells its homes and commercial premises.

The recent decision by Sabadell to sell 80% of Solvia to Intrum followed other previous operations that have seen the Spanish banks undoing their positions in the property segment, including the sale of Servihabitat to Lone Star by CaixaBank, and of Aliseda to Blackstone by Santander.

Beyond Unicaja’s plans for its property, the entity has been recording a positive trend in terms of the quality of its assets for several years now. The net inflows of problem loans have registered eight consecutive quarters of decreases, and between September and December, they recorded the largest decrease in the bank’s historical series.

Since 2014, Unicaja’s default ratio has also decreased by almost half: from 12.6% recorded in December 2014, the Málaga-based entity has managed to clean up its balance sheet to bring the rate of toxic loans down to just 6.7%.

Original story: Expansión (by Nicolás M. Sarriés)

Translation: Carmel Drake

Following Blackstone, Cerberus, Lone Star and Bain Plan to Launch Socimis

7 February 2019

Major investment funds have taken over billions of euros of real estate from the banking sector in recent years and are now planning their exit strategies. Some funds, such as Cerberus, Bain Capital and Lone Star intend to follow in Blackstone’s footsteps, considering the creation of socimis with a portion of their assets, various sources in the sector told the Economista.

The sources stated that some funds’ plans are further advanced than others, already at the point where they are analysing the size of the portfolios which they may transfer to the market through this type of listed vehicle. They held out the possibility that one or more of the new socimis may premiere before the end of the year.

Under this formula, the funds would increase their investments’ liquidity, taking over from other more core investors, with a longer-term profile and more moderate levels of profitability.

The three funds’ future socimis would focus on the residential rental housing market with a model based on largely dispersed units since the apartments they acquired from the banks generally fit such a profile.

Major operations

Cerberus earned its place on the podium as one of the most significant real estate investors in Spain, just behind Blackstone. The fund, based in New York, was one of the first to arrive in Spain during the real estate crisis, between 2010 and 2012, and since then it has been taking positions in almost every sector of the property market through Haya Real Estate , the developer Inmoglaciar, the real estate agency Housell and Gescobro.

In November 2017, it bought 80% of BBVA’s real estate business, which had a gross value of some 13 billion euros. The transaction was the second largest portfolio operation ever concluded in the history of Spain, behind Blackstone’s acquisition of Banco Popular’s toxic assets from Banco Santander. Cerberus has also been increasing its portfolio of NPLs and REOs with other smaller operations such as CaixaBank’s Agora project, Sabadell’s Challenger and Coliseum portfolios and BBVA’s Jaipur Project, among others.

On the other hand, Cerberus is in the race to acquire Solvia Desarrollos Inmobiliarios, a developer that owns a portfolio of land valued at about €1 billion.

Lone Star is also analysing the possibility of launching a socimi with a portion of the properties it acquired during its flagship operation in Spain when it bought CaixaBank’s real estate business, which had a gross value of 12.8 billion euros. The fund also acquired the bank’s servicer, Servihabitat.

For its part, Bain Capital, which owns the developer Habitat, has also been one of the most active investors in debt portfolios. One of its more recent operations, known as the Shell Project, involved the acquisition of some €700 million in NPLs to developers from Kutxabank.

Original Story: Eleconomista.es – Alba Brualla

Photo: Getty

Translation: Richard Turner

Sabadell & CaixaBank in the Top 5 European Ranking of Toxic Asset Sales in 2018

29 January 2019 – Expansión

CaixaBank starred in the fourth largest toxic asset sale operation in Europe in 2018 whilst Sabadell starred in the seventh largest. And they were not the only transactions that the two entities undertook (…). In fact, both banks feature in the list of the Top 5 entities in Europe by volume of toxic asset portfolio sales last year, according to data collected by the analysis firm specialising in debt Debtwire.

All of that, despite the fact that Spain’s two largest banks, Santander and BBVA, had a much quieter 2018 than 2017, when the former undertook the largest sale of toxic assets in the country’s history, with the transfer of assets with a nominal value of €30 billion inherited from Popular to Blackstone. Meanwhile, BBVA placed part of its real estate business in the hands of Cerberus that same year.

Last year, Sabadell and CaixaBank took over the baton. The bank chaired by Josep Oliu is the Spanish entity that recorded the largest toxic asset sales in 2018, divesting assets with a nominal value of €12.6 billion. That figure placed it fourth in the ranking, behind only the Italian entities Monte Dei PAschi, Banca Popolare di Vicenza and Banco BPM.

Meanwhile, CaixaBank (…) was the fifth most active bank in the ranking, with toxic asset sales of €12.1 billion, just behind Sabadell.

Together with contributions from the other banks, with Bankia and Santander in high-ranking places, the Spanish sector divested toxic assets worth €43.2 billion in 2018, compared with €51.7 billion in 2017, which represented a decrease of 16%.

Nevertheless, neither CaixaBank nor Sabadell managed to keep Spain at the top of the podium of countries that divested the most toxic assets last year. Italy is the new leader with NPL sales of €103.6 billion (…).

In Spain, the loans and foreclosed assets divested by the banks are now in the hands of Cerberus and Lone Star, primarily, the two funds that purchased the most in Spain last year, with €15.8 billion and €13 billion, respectively.

Well behind them in the ranking is Axactor, which is typically more interested in smaller operations. And Blackstone, which was out of the ranking last year, after starring as the absolute leader in 2017, thanks to the operation that it closed with Santander, according to the report from Debtwire, which takes into account all transactions exceeding €100 million (…).

Original story: Expansión (by Inés Abril)

Translation: Carmel Drake