Tag: Lone Star

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

CaixaBank Completes the Sale of 80% of its RE Business to Lone Star

20 December 2018 – La Vanguardia

Today, CaixaBank has completed the sale of 80% of its real estate business to two subsidiaries of the US fund Lone Star for around €4 billion.

The operation was formalised on Thursday, after the necessary approvals were obtained, according to reports from CaixaBank, which has specified that this real estate package primarily comprises assets available for sale as at 31 October 2017 and 100% of the company Servihabitat.

All of these assets have been transferred to a newly created company called Coral Homes.

The initial sales price for 80% of the share capital of this company is €3.974 billion, which corresponds to a valuation for 100% of the shares of €4.967.5 billion.

Nevertheless, the initial price will be adjusted up or down over the coming months depending on a series of variables that are typical in these types of operations, said the bank chaired by Jordi Gual and whose CEO is Gonzalo Gortázar.

In parallel to the sale of the real estate portfolio, CaixaBank and other companies in the group have signed a servicing contract with Servihabitat for their real estate assets, present and future, for a period of five years.

The global impact of the operation is estimated to be a loss of €40 million net of taxes.

Meanwhile, the impact of the deal on the fully loaded CET 1 capital ratio is estimated to be an improvement of 15 basis points.

Aura advised Lone Star on this purchase.

Original story: La Vanguardia 

Translation: Carmel Drake

BBVA Sells its Last Large Problem Portfolio to CPPIB

17 December 2018 – El Confidencial

The Canadian fund CPPIB has been awarded BBVA’s last major portfolio of problem assets. The investor, which manages the money of the public pensions in the North American country, is negotiating the final details of its purchase of €2.5 billion in unpaid real estate loans from the Spanish entity, according to financial sources consulted by El Confidencial. BBVA declined to comment.

The sale, framed as Project Ánfora, is going to close within the next few days.

CPPIB has won the bid, fighting off competition from two major US investors: Cerberus and Lone Star. The auction has been coordinated by Alantra and, according to average market prices, must have been closed for a price of around €1 billion.

For BBVA, this same represents almost the conclusion of the clean up of its real estate inheritance. Together with Project Ánfora, the entity, which is still chaired by Francisco González, agreed to sell €12-13 billion in property to Cerberus (Project Marina) a year ago. The final details of that operation are still being closed with the Deposit Guarantee Fund (FGD).

Before the sale of Ánfora and Marina, BBVA had a net real estate exposure of €5.5 billion, based on data as at September 2018. The aim is for the real estate inheritance to be reduced to almost zero by the end of the year.

The Ánfora portfolio also contains refinanced loans amounting to €900 million, a new type of asset in this type of process.

For CPPIB, this is the second batch of problem assets that it has purchased from BBVA this year. It already acquired Project Sintra, containing €1 billion in unpaid loans to property developers.

The Canadian fund broke into Spain a few years ago with the acquisition of Altamira, together with Apollo and the ADIA sovereign fund, the main investor vehicle of Abu Dhabi. CPPIB’s interest in Spanish real estate means that it cannot be ruled out that it will end up being the buyer of Altamira following the current sales process. Large vehicles such as the Canadian one use alternative assets such as properties to diversify their portfolios and reduce their dependence on stock market and bonds.

Original story: El Confidencial (by Jorge Zuloaga)

Translation: Carmel Drake

Bankia Finalises Sale of its Largest Toxic Asset Portfolio to Lone Star

14 December 2018 – El Confidencial

Bankia is finalising the sale of the largest portfolio of problem assets in its history. The nationalised entity is holding exclusive negotiations with the US fund Lone Star for the sale of projects Earth and October, according to financial sources consulted by El Confidencial. Sources at Bankia have confirmed those conversations through a relevant event submitted to Spain’s National Securities and Market Commission (CNMV) and have said that “once the negotiations have been concluded, the market will be informed about them in detail”.

This macro-sale includes unpaid mortgage loans and properties worth around €3 billion. The negotiations are in a very advanced stage and the operation could be signed before the end of the year. The price could reach €1 billion, according to the average prices being paid in the market at the moment.

The group chaired by José Ignacio Goirigolzarri has sold these macro-portfolios taking advantage of the surplus liquidity in the market and the appetite from large funds for buying Spanish property. With this sale, the nationalised group will end 2018 with problem assets sold worth more than €5.5 billion – by September, it had sold €2.4 billion – almost doubling the annual divestment objective of €2.9 billion.

Lone Star has competed in this process head to head against Blackstone, which in recent weeks has lost the battle for the two portfolios to its US rival. The fund has redoubled its commitment to Spain after the changes that it underwent at the beginning of the year, with the departure of Juan Pepa and Felipe Morenés. These two executives led Lone Star during its purchase of Neinor and of the portfolio of large loans from Eurohypo in Spain.

Following those divestments and the raising of new funds, the fund is now betting on Spanish property again through its team in London. Bankia’s portfolio will be the second major operation after its purchase of a large proportion of CaixaBank’s assets and that entity’s platform Servihabitat.

Original story: El Confidencial (by Jorge Zuloaga)

Translation: Carmel Drake

Savills Values Solvia’s Property Developer Land at €1.3bn

12 December 2018 – El Confidencial

The banks are starting to benefit from the recovery in the real estate sector. Such is the case of Banco Sabadell, which has seen its portfolio of prime land appreciate by €300 million, or 30%, in recent months, ahead of its firing of the starting gun for the sale of its property developer, Solvia Desarrollos Inmobiliarios.

That is the result of an appraisal of the land that the consultancy firm Savills Aguirre Newman has performed for Sabadell. Initially, the plots were valued at €1 billion. They are the best quality plots of land that Sabadell has left since the outbreak of the crisis, and many of them are in areas with high demand in Madrid and Barcelona. For Savills, the chosen plots are now worth almost €1.3 billion, according to financial sources consulted by this newspaper.

Now that the appraisal has been performed, Sabadell and its chosen advisor for this operation, Rothschild, will launch the sale of the property developer SDI and the plots worth €1.3 billion, imminently.

This operation will result in the creation of one of the largest real estate companies in Spain. It will be even larger than Neinor when it was purchased by Lone Star.

The bank does not expect to close the sale of Solvia Desarrollos Inmobiliarios before the end of the first quarter of 2019. By contrast, Sabadell has also launched the sale of Solvia Servicios Inmobiliarios (the management platform), which is on the market for €300 million and whose sale it hopes to close in 2018. According to Expansión, Haya Real Estate (Cerberus), Intrum and Centricus are participating in that process.

Candidates

There are several funds amongst the candidates to acquire the property developer SDI including: Cerberus, Oaktree, Blackstone, Apollo and Lone Star. The first features in everyone’s list of likely contenders because of its good relationship with Sabadell in recent major operations. Moreover, it owns a property developer, Inmoglacier, with which there could be synergies following the operation.

Meanwhile, Oaktree is one of the candidates that would start with an advantage, given that it is Sabadell’s partner in similar businesses, and so it knows the team at SDI: they have a platform for the joint development of land and they have purchased land from Iberdrola. Nevertheless, according to sources close to the operation, that fund still needs to confirm its presence in the process.

Other candidates that still need to define their strategies include Blackstone, which is studying all of the operations with Aliseda, but which has opted more for rental assets until now; Apollo, which has wanted to enter the development segment for years; and Lone Star, which since its exit from Neinor has purchased Servihabitat and has as much appetite for Spanish property as it did before the crisis. ‘A priori’, the operation seems large for Bain Capital, owner of Habitat.

Original story: El Confidencial (by Jorge Zuloaga)

Translation: Carmel Drake

Cerberus, Intrum & DoBank Bid to Acquire Altamira

15 November 2018 – El Confidencial

There is still an appetite for the servicers’ business. The sale of the 85% stake that Apollo owns in Altamira is making its first cut of candidates, with some of the most high profile investors in the segment amongst the finalists. According to financial sources, the fund Cerberus (Haya Real Estate), the Swedish firm Intrum (Nordic Capital) and the Italian firm DoBank (Fortress) are the candidates that have progressed in the process, which is being coordinated by Goldman Sachs, and which was relaunched after the summer following months on the table.

Other players in the sector interested in Spain are also in the process, both at the domestic and European level. One of those new candidates is the US firm Davidson Kempner, which has a portfolio of USD 30 billion under management and with interests in the transformation of toxic assets in the United Kingdom and Ireland, according to sources involved in the operation.

Apollo is willing to take advantage of the hunger for this type of vehicle to make gains, although it does so after four years at the helm of the servicer and having not been awarded any of the large real estate portfolios that the banks have sold (Santander to Blackstone, BBVA to Cerberus, CaixaBank to Lone Star and the Sabadell-Solvia process, in whose final stretch it is not participating). In fact, this divestment comes after Apollo’s manager for the last few years – Andrés Rubio – left the fund.

The price of the management platform could reach €1.5 billion (debt included), a business for which Apollo paid €664 million in January 2014 in exchange for an 85% stake (the remaining 15% is still owned by Banco Santander). The agreement comprised the management of toxic assets (recovery of loans and sale of properties) until 2028, although the transformation of that perimeter has led to a change in the management conditions (commissions) and to the repayment of a €200 million dividend.

Altamira has assets under management amounting to more than €50 billion, compared with €26 billion in 2014, and a portfolio comprising more than 82,000 properties at the end of 2017, making it the largest servicer in operation in Spain. In addition to its contract with Santander, it also manages assets for Sareb (which account for 30% of its portfolio) and for third parties – international investors, financial institutions, family offices and institutional clients – as a result of the international expansion plan launched in 2017.

Original story: El Confidencial (by Carlos Hernanz)

Translation: Carmel Drake