Tag: Lone Star

Lone Star & JPMorgan Acquire Octopus of Eurohypo For €3.5 Bn

20/05/2014 – Expansion

The sale of the large loan portfolio of Eurohypo raised the real estate fever of investors to the limits. Yesterday, the German giant Commerzbank  announced coming to a pre-agreement with Lone Star and JPMorgan on transfer of the credits for €3.5 billion.

At the auction, the winners outbid the offer submitted by the Blackstone and Deutsche Bank consortium. Lone Star and JPMorgan bought the “Octopus” portfolio with a 25% discount on its nominal value (€4.5 billion).

It is worth to remind that the loan package contains such precious collateral property as the Ritz or the Gran Meliá Fénix hotels, the Zielo de Pozuelo or the La Vaguada shopping centers in Madrid and the MN4 in Valencia, as well as debt of large real estate managers like Bami, Inmobiliaria Chamartín, Testa or Realia.

 

Original article: Expansión (by Jorge Zuloaga)

Translation: AURA REE

Lone Star & Blackstone Battle For the Largest Real Estate Portfolio in Spain

14/05/2014 – Expansion

The Europe´s biggest loan portfolio sale reaches its final stage. German banking entity Commerzbank has chosen two alliances of Lone Star and JPMorgan on one side and Blackstone and Deustche Bank on the other that will bid for the €4.5 million in Spanish real estate debt originating from its branch Eurohypo.

The “Octopus Project“, as the portfolio was named, might raise between €2.5 – €3 billion. It includes real-estate-backed loans granted to large real estate companies, hotel groups and international investment funds. Thereby, inside it one may find property like the Zielo de Pozuelo shopping mall in Madrid or the MN4 in Valencia, also hotel debt of e.g. the Ritz, the Gran Meliá Fénix and the ME hotel in Madrid, as well as buildings situated in main Spanish, Portugese and Swiss cities, such as offices housing lawyers of Garrigues, Uria, Cuatrecasas, or the construction company Sacyr.

Around €700 million worth of loans embraced by the “Octopus” are non-performing, €1.5 billion consists of sub-performing credits, while loans for €2.3 billion are still progressively paid-off.

Several fund-bank allies strived for only a part of the loan scope, unsuccessfully.

Everything points to Lone Star and JP Morgan team as the winner as the first fund has not closed any acquisition in Spain yet. Moreover, the other bidder team is formed by one of Commerzbank´s main competitors, another German entity, Deutsche Bank.

On the other part, Blackstone will be difficult to stop after having acquired Catalunya Banc´s property servicer, 1.860 subsidized homes from Madrid´s City Council and another lot of 1.000 houses of this kind from Sareb and FCC.

 

 

Original aticle: Expansión (by Jorge Zuloaga)

Translation: AURA REE

Lone Star, Blackstone & Apollo Compete for Eurohypo

14/03/2014 – Expansion

Sale of Eurohypo in Spain is taking shape. Lazard, an investment bank, coordinates the sale of the largest credit portfolio in Europe, valued at €4.500 million and widely known as the Octopus Project. In the upcoming days, the company will announce who will take part in the final bidding.

Among the sure finalists there are allies of Lone Star and JPMorgan, Apollo and Santander, and Blackstone and Deutsche Bank. According to sources with knowledge of the process, by now the largest amount has been proposed by the first pair.

Once the finalists chosen, an exhaustive revision of all assets will be run and it is said that their price might exceed €2.000 million.

Quality portfolio

Among the items put up for auction there are debt of Bami, Martinsa-Fadesa, Testa, Inmobiliaria Chamartín, big shopping malls like Zielo de Pozuelo, H2O and a Ritz hotel in Madrid. (…).

Right now, the most determined investor seems to be Lone Star.  The U.S. fund was among the first to arrive to Spain but has not closed any significant transaction yet. (…) At the bidding, the company will go hand in hand with JPMorgan.

In turn, Blackstone has been only buying subsidized houses in Madrid by now. (…) The fund formed alliance with Deutsche Bank.

The third serious player is Apollo. The U.S. fund has already acquired Evo Banco and Altamira (apart from other Spanish assets) and now is seeking good quality assets at bargain prices, supported by Santander.

 

 

Original article: Expansión (Jorge Zuloaga)

Translation: AURA REE

Funds & Banks Join Forces to Bid For Eurohypo

10/02/2014 – Expansion

The sale of Eurohypo in Spain is reserved for high-flying vulture funds only. As the nominal value of the transaction reaches €4.500 million, some of the competitors, not used to the several-million investments, will have to seek partners. Them they find in banks.

Blackstone, the biggest private equity firm, alliated with Deutsche Bank. The U.S. Lone Star will pull together with Wells Fargo and its rival Bank of America is looking for a fund for itself. Also, Apollo (already having its own bank, Evo), Fortress, Cerberus and HIG are calling for attention.

The reason for the temporary alliances is not only the transaction´s scope (that is said to reach even €2.000 million), but also the content of the porfolio: up-to-date credits, that will have to be managed by a financial institution.

The Content

The portfolio is compound of €3.000 million in up-to-date loans and €1.500 in unpaid credits, inherited by Commerzbank´s real estate after the bubble burst.

The opportunistic investors lurk the assets at the edge of bankruptcy as they will end up as real estate property in collateral.

The Operation Octopus includes debts of Bami, Martinsa-Fadesa, Inmobiliaria Chamartín and huge shopping malls, like Zielo de Pozuelo or H2O de Rivas Vaciamadrid, both found in Madrid. The transaction will be advised by Lazard.

Other assets put on sale by Eurohypo are the ABC Serrano shopping center and the offices of the Unidad Editorial on the Avenida de San Luis Avenue, acquired by IBA Capital for €96 million at the end of 2013.

 

Original article: Expansión (Jorge Zuloaga)

Translation: AURA REE

 

Sareb auctions its first great lot of toxic assets between Lone Star, Centerbridge and TPG.

On the next 18th July, Sareb will award the sale of the first great lot of toxic assets to an international investment fund. Two weeks ago, those interested in participating in the Operation Bull, code name for this process, presented their binding offers, as confirmed by financial sources. In total, the bad bank has received  proposals from the giants Lone Star, Centerbridge and Texas Pacific Group (TPG), although there are other firms such as Cerberus and Colony Capital.

Everyone in the market considers that Lone Star is the favorite candidate to win the bid for several reasons. The main one is its capacity to present the tightest price, as it knows better than anyone the profile of the assets on sale, as it studied its acquisition from Bankia before they were transferred to Sareb.  Since then, it has monitored their evolution within the bad bank, being even ready to propose their acquisition without a competitive process, as finally decided by the team lead by Belén Romana.

Precisely this decision has complicated the execution of the Operation Bull. The election of KPMG to carry out a competitive process generated a lot of noise among the six international investors that hope to split up the main lots of assets that Sareb will sell. In the end, the same funds that studied the possibility of participating in the capital of the bad bank-Fortress, GE Capital- are the ones that will now buy the properties directly, without entering the strict shareholding structure imposed by the Banking Restructuring Fund.

Any result other than the victory of Lone Star would be a surprise. As explained by one of its rivals, the Texan firm – with headquarters in Dallas, has hired the main real estate consulting firms in the market – Knight Frank, Aguirre Newman and Jones Lang LaSalle, except CB Richard Ellis, in conflict after advising Sareb – to study its offer and, at the same time, to stay out of the reach of its rivals. Also, it is the investor that has spent more resources in audit and viability processes in order to classify the assets on sale.

Something similar happened with the sale of assets carried out by the Municipal Company of Housing and Land (MCHL) of the Council of Madrid, although in the end the buyer has been a different one. Before opening the bidding process, the municipal company negotiated individually with Lone Star in order to model a portfolio that fits its preferences. Once this phase was completed, however, the MCHL carried out a bidding process attended by most of the funds installed in Spain that hope to have a piece of the confiscation process that is taking place there.

While the date for the decision approaches, all investment funds specialized in the acquisition of toxic assets, those who are participating and those who are not, work hoping to be able to bid for the portfolios of properties (Bull 2, Bull 2…) that Sareb is carrying out. This calendar, however, depends on the working rhythm needed by the bad bank to complete the audit of the 180.000 real estate assets, from land to unfinished developments, which are part of its stock. This should theoretically be ready in August.

After this date Sareb will start the sale of its great portfolios of properties, with the intention of reaching the 1500 million Euros included in their business plan for this year. The team of the bad bank, which works at a frantic pace to comply with the requirements established by Brussels, is not too happy with the complaints on their work. (…)

Source: El Confidencial

Investors in search of bargains.

KKR, Centerbridge, Cerberus, Lone Star, Apollo, Blackstone, Colony Capital or Green Oak. Their names sound more and more often in Spain, as the list of international funds interested in finding a real estate bargain continues growing. The traditional Spanish venture capital is out of the equation, not only due to lack of cash, but also because of the legal limitations to invest in this kind of assets. Only certain firms, such as Atitlan, from the Roig family, or Altamar have the possibilities of participating in the real estate sector.

These great funds have nearly 13.000 million Euros to invest in Spain and a great part of this capital is for the real estate sector that is now considered a priority. Nevertheless, the search for assets is very specific.”The foreign investors focus on a liquid and good quality product, preferably in rent; the search for high profits implies important discounts, which reduces the volume of operations”, Jesús Conde, partner in the real estate department at Baker & McKenzie.

The operations in the sector depend on the market of each asset. In the residential one, “the foreign funds are waiting for Sareb to organize and package the portfolio of the nationalized banks, so as to offer then a very reduced price for a set of assets with a similar level of liquidity and risk, with discounts of up to 90% of the original valuation”, Eduard Saura, managing partner of the financial assessment company Accuracy, explains.  In his opinion, the Anglo Saxon opportunistic funds are the ones keeping an eye on these assets.

This expert considers there is less interest on the segment of shopping malls. However there are still operations. For example, the bid organized by Morgan Stanley for the three malls that its fund Msref has in Spain was attended by many funds that are not present in the country. Only foreign funds have reached the final stage: Bau Post, Drago Capital and the one that is best positioned, Incus Capital.

At the end of the year, another foreign investor made its debut in Spain: the North American Autonomy, which acquired two buildings in the business park Omega, in Alcobendas (Madrid). In Barcelona, other funds, this time European ones, Värde and Anchorage, took part in the Operation Copernico, with the acquisition of five buildings in the centre of the Catalan capital and in Madrid for around 100 million Euros.

If the first ones to arrive to Spain were the Anglo Saxon funds, in the last few months other funds with a Latin American origin, have arrived to the market with a lot of liquidity. “Up to now, the Latin American capital fled the volatility of its countries and bet on the United States to invest. Now they are searching in Spain”, Francisco Machón, in charge of Investments of BNP Paribas Real Estate, assures. One example is the tycoon Carlos Slim, who acquired six months ago properties from CaixaBank for more than 400 million Euros, or the acquisition of a building in Recoletos street, closed last week, by a Latin American family.

“The investors are much more active, although they search for an adjustment in prices in view of the uncertainty of the awaited flow of cash for the next three years”, Javier García-Mateo, in charge of Real Estate at Deloitte, declares.

Source: Expansión

The vulture funds that fly over the Spanish construction sector.

There is a business in the bruised Spanish real estate sector. In the last few months, the real estate subsidiaries of the nationalized savings banks, some of the assets that have been transferred to Sareb and “packages” of properties of those banks that have not been rescued will change hands. The buyers will be ten foreign companies, known as vulture funds, specialized in acquiring real estate bargains, as they have done in other countries.

Their names, Apollo, Cerberus, Lone Star, Lindorff…..where do they come from? Who are they? What will they do with the properties they sell? Most of them have a U.S. and British capital and are related to businessmen who are more or less known in Spain, such as the tycoon Donald Trump, the former vice president of U.S.A. Dan Quayle, the former Secretary of the Treasury of U.S.A., John W. Snow or the Mexican Carlos Slim.

The game is on. In November one of them, Centerbridge took the first step and acquired the awarded properties from Banesto (mostly second hand ones). Now it´s the turn of La Caixa, who appointed an investment bank for the sale of Servihabitat; Bankia has just received offers for its subsidiary Bankia Habitat. Catalunya Banc also studies who will get its real estate subsidiary Catalunya Caixa Inmobiliaria, and Novagalicia Banco has also ten offers on the table.

These are the vulture funds who aspire to dominate the Spanish real estate market in the next few years:

Apollo Global Management

The U.S. company is one of the main investment businesses on a global scale specialized in operations related to the acquisition of credits, real estate investments and the “private equity”. It was founded in 1990 by the Jewish businessman Leon Black, who acquired in 2012 one of the four versions of “The cry”, by Munch, for nearly 120 million Dollars (92 million Euros), the firm also has a subsidiary focused on the real estate operations.

In Spain, the Apollo group acquired the platform Finanmadrid from Bankia for 1,6 million Euros. The real estate subsidiary of this company, Apollo Real Estate is one of the main candidates to acquire CX Inmobiliaria from Catalunya Bank.

Cerberus Capital Management L.P.

With its headquarters in New York, Cerberus is one of the main investment companies in the world. It is presided over by two heavy weights U.S. Republicans: The former vice president in the USA during the presidency of George Bush Sr., Dan Quayle, and the Secretary of the Treasury between 2003 and 2006 during the presidency of George W. Bush, John W. Snow.

The acquisition of default credits from Banco Santander for 350 million Euros in April 2012 is the most important operation in Spain until now. The company has been positioning itself as one of the funds with more relevance in the acquisition of default assets, having acquired several packages of credits and properties from Bankia. Cerberus hired the son of former president José María Aznar at the beginning of the year with the intention of receiving counseling on the possible acquisition of assets from the “bad bank”.

Lone Star Funds

The Texan investment funds Lone Star are another of the potential buyers of assets of the Spanish “bad banks”. In 2012, the company acquired default credits of the Banco Santander for 150 million Euros and at the end of that year opened its own platform for credit recovery with the former manager of Apollo in Spain, Luis Cebrián.

These investment funds manage a total business volume focused on making capital added obligations more profitable with a volume of 33 bilion American dollars (25352 million Euros). One of its more important operations was the acquisition of 90,8% of the shares of the semipublic bank IBK which was affected by the subprime crisis.

D.E. Shaw & Co

Founded in 1998 by the scientist specialized in computer studies David E. Shaw, this investment and technological development company has its headquarters in New York. According to the figures of the company in April 2013, the company has an investment capital of 30 billion dollars (25.345 million Euros) and branches in the United States, Europe and Asia.

In the United States, this company is one of the main economic agents specialized in investment funds of security of mortgages that do not have the backing of the government. D.E. Shaw is also one of the main investors in pension funds in the city of New York.

Lindorff

The Norwegian company Lindorff is present in 11 European countries and has a business core specialized in the collection of debts. This company owns the companies Aitor and Investor AB at 50% each.

Lindorff has already carried out several businesses with Spanish financial institutions. We can highlight the acquisition of the platform of recovery management Reintegra from Banco Santander and the bid they are currently carrying out for the acquisition of default credits of NCG.

Aktiv Kapital

This Norwegian company  specialized in the acquisition of toxic assets at bargain prices was founded in 1991 in Oslo and currently operates in eight European countries and in Canada.

Aktiv Kapital has worked with the group BFA-Bankia in two occasions in 2012. It acquired around 100.000 default credits for consumers and another portfolio related to default credits in the car industry made of 16000 agreements and valued at 126 million Euros.

Oaktree Capital Group LLC

Founded in 1995, the company Oaktree has a staff of 600 employees mainly made of financial executives. It is among the 25 main investment management companies specialized in alternative assets such as the venture capital. It also has a real estate subsidiary called Oak Tree Reality that operates in the U.S. Its president, Howard S. Marks is considered one of the main authorities in Wall Street and according to the Forbes magazine is one of the richest financiers in the world.

In Spain, Oaktree is the main individual creditor of the company Panrico thanks to the acquisition of 20% of its debt and is the main shareholder from the company Campofrío.

TPG

TPG, previously Texas Pacific Group is one of the main financial investment groups in the world with its headquarters in California and Texas. Its business activity ranges from telecommunications to travel, the technological and industrial sectors, health services and banks.

One of their main operations was the rescue of Bradford and Bingley, the greatest mortgage bank in the United Kingdom, after the acquisition of 20% of its capital. This group also negotiated with the owners of Iberia in order to take on the control of the company.

WL Ross & Co. LLC

Lead by the millionaire Wilbur Ross, WL Ross & Co. LLC is an investment company specialized in taking over companies with financial problems with the aim of restructuring them. Energy, financial services, health services, heavy materials and transport are the main areas where this tycoon develops his business, with a fortune around 2,6 billion Dollars (1996 million Euros) according to the Forbes magazine.

This American millionaire who declares “his love for mortgages” which bring him a lucrative business in the States has winked at the “bad bank” and declares that Spain “is, in many ways, a very interesting country”.

Fortress Investment Group LLC

Founded in 1998, this company specialized in investments develops its activity in different sectors that range from the real estate sector, with a subsidiary specialized in castles, to the financial sector, energy or infrastructures.

In 2012, Fortress acquired a package of aprox. 1000 million Euros in default credits from Santander, most of which were consumer credits.

Centerbridge Partners

Centerbridge is a multistrategic investment company with more than 15 billion dollars (11523 million Euros in assets. Its headquarters are in New York and it has branches in London.

Centerbridge Partners acquired at the end of 2012 Aktúa, the subsidiary from Banesto specialized in management and recovery of credit portfolios, for around 100 million Euros.

Donald Trump

The eccentric millionaire Donald Trump is another candidate to acquire a great number of Spanish properties. Its name sounds among the potential investors that could arrive to our country after he declared in 2012 that in Spain “they were giving land for nothing” and that as “country was ill, it was the time to take advantage of that”.

Carlos Slim

The richest man on earth for the fourth year in a row according to Forbes magazine, bought through its Mexican real estate subsidiary, Carso, properties from Caixabank for 428,2 million Euros.

The 439 properties acquired by Slim are intended for bank branches and the operation was a “sale and lease back” as after the sale, a long term lease with a purchase option was signed, which allows Caixabank to continue using the sold branches.

Otto Group/EOS Group

The German group Otto with more than 50000 employees and presence in Europe, America and Asia is one of the firm candidates to take a big piece of the Spanish real estate market.

Through its subsidiary EOS Group, Otto acquired at the beginning of 2013 the recovery business from Banco Popular for ten years and 135 million Euros.

Source: El Mundo