Tag: loss

Meridia III Buys a Logistics Platform in Madrid for €15M+

5 December 2018 – Eje Prime

Meridia III has added another asset to its logistics portfolio. Meridia Capital’s Socimi has acquired an industrial platform in Alcalá de Henares (Madrid) for €15.25 million, according to a statement filed by the company with the Alternative Investment Market (MAB).

The warehouse has a surface area of 26,400 m2 and is located on the Corredor de Henares axis, the place that accounts for the largest volume of logistics stock in the whole of Spain.

The Socimi, which debuted on the stock market at the end of 2017, has financed the operation using a €10.3 million loan with a term of seven years, according to a statement filed by the company with the stock market regulator. Moreover, with this acquisition, the logistics portfolio of Meridia III now spans almost 100,000 m2.

In recent months, the company has also been undertaking some significant investments in the Spanish office market, such as its purchase in March of a building in the financial district of Madrid for €26.5 million. That property, which has a surface area of 7,500 m2, is located at number 4 Calle Juan Hurtado de Mendoza, close to Paseo de la Castellana. Moreover, in Barcelona, the Catalan manager leased its new building in the 22@ district to the international consultancy firm Everis.

On the other hand, according to the company’s latest accounts, Meridia III recorded a loss of €522,124 to June, which means that said indicator had decreased by 76% with respect to the first half of 2017. In addition, the company recorded revenues of €8 million during the first six months of the year, whereby doubling its turnover in comparison with the same period a year earlier.

Moreover, the company completed a €14.2 million capital increase at the end of November. The company’s new shares are going to be issued for a nominal value of €13 million plus an issue premium of €1.2 million.

Original story: Eje Prime 

Translation: Carmel Drake

Solvia Acknowledges That it Will Have to Generate Value from Solvia “Sooner or Later”

27 July 2018 – La Vanguardia

The CEO of Banco Sabadell, Jaime Guardiola, has acknowledged that “sooner or later”, he will have to generate value from Solvia, highlighting the “great job” that the entity has done and how “proud” he feels of the servicer.

That was according to the bank’s most senior executive at the presentation of Sabadell’s half-year results, where he reported that the entity has recorded a net profit of €120.6 million, down by 67.2% compared to the same period a year earlier, due to the provisions recognised as a result of the reduction in problem assets and the migration costs of the platform of TSB, its British subsidiary.

“Solvia not only serves assets on the bank’s books but also those of other clients such as Sareb. Beyond its financial value, it has a great industrial value, with some great professionals with a very different profile from those in the banking sector”, he specified.

In Guardiola’s opinion, Solvia is one of the bank’s entities that has done “a great job”, and so if at any time this value were to be realised and recognised, then selling the asset could become an option, although currently, it contributes in a positive way to Sabadell’s accounts.

Recently, the entity chaired by Josep Oliu disposed of four portfolios comprising problem assets with a gross value of €12.2 billion, which were awarded to the funds Axactor, Cerberus and Deutsche Bank, together with Carval.

The day on which it announced the sale of the largest batch of assets, worth €9.1 billion, Sabadell reassured the market that Solvia would continue to form a critical part of the bank and would continue to provide integral management services of the real estate assets subject to the operation on an exclusive basis.

Original story: La Vanguardia 

Translation: Carmel Drake

CaixaBank Repurchases 51% of Servihabitat from TPG for €176M

8 June 2018 – Expansión

The financial institution, which until now owned 49% of the real estate firm, is going to restore control of 100% of the firm four years after it sold the majority stake to TPG.

CaixaBank has announced an agreement with the fund TPG to repurchase 51% of the real estate manager Servihabitat for €176.5 million. With this operation, which will return full control over the real estate subsidiary to the financial institution, CaixaBank wants to enjoy “greater flexibility and efficiency in the management and marketing” of its real estate assets “as well as a reduction in its costs”.

The operation, which still needs to be approved by the competition authorities, will have a negative impact of around 15 basis points on CaixaBank’s first level capital ratio (CET1 fully loaded) and of around €200 million on the bank’s income statement this year.

Nevertheless, the entity chaired by Jordi Gual expects the impact to be positive over the next few years, amounting to around €45 million per year.

The financial institution sold 51% of Servihabitat to TPG in 2013, in an operation that valued the real estate subsidiary at €370 million and which generated a gross gain of €255 million for CaixaBank, which retained control of the remaining 49%.

The agreement between CaixaBank and TPG included a clause whereby Servihabitat would manage La Caixa’s real estate assets for a decade. Less than five years after that agreement was announced, CaixaBank has decided to recover 100% of the share capital of its real estate servicer.

In January, Iheb Nafaa was appointed as the CEO of Servihabitat to replace Julián Cabanillas, who had been linked to the firm for two decades, and who had served as the most senior executive for the last twelve years.

Nafaa is an Engineer in Statistics, Econometrics and Finance from the École Nationale de la Statistique et de l’Administration Économique in París (France) and has extensive experience as a director of companies such as BNP Paribas, GE Capital and Gescobro.

Original story: Expansión (by J. Díaz)

Translation: Carmel Drake

Spain’s Banks Sold Toxic Assets Worth €50.8bn to Funds in 2017

23 April 2018 – La Vanguardia

Last year, Spain led the sale of defaulted mortgage portfolios in Europe, with the sale of loans with a nominal value of €50.758 billion (of the €104.0 billion that were sold in Europe in total), according to a study on problematic real estate debt compiled by the consultancy firm Evercore. In 2017, Santander, with the sale of Popular’s property to Blackstone for €30 billion, and BBVA, with the sale of a portfolio worth €13 billion to Cerberus, were ranked amongst the top five vendors in Europe. “It is likely that we will be leaders in the sale of foreclosed properties and defaulted mortgages again this year and next”, says Íñigo Laspiur, Director of Corporate Finance at the consultancy firm CBRE. “At the moment, portfolios worth more than €8 billion are up for sale in the market”.

During the first few years of the financial crisis, it was entities in Ireland and the United Kingdom that led the sale of foreclosed real estate assets in Europe, but now the Spanish and Italian banks have taken over the baton (the latter led the ranking for the first quarter of this year). “Regulation by the ECB, which has caused provisions to soar, and above all, accounting guidelines, which have forced banks to increase their capital requirements, are accelerating the sales of toxic assets”, said Laspiur. Moreover, these sales are being boosted by the recovery of the real estate market and by the high level of provisions that the banks have now recognised. “Most sales by the banking entities these days make money, or at least, don’t generate losses”.

Laspiur explains how this means that the funds are accepting higher prices for toxic Spanish property: whilst in 2013, when Sareb began its first block sales, they were demanding returns of 15% per annum to buy assets, now the yields have decreased to just 8% when they are purchasing mortgage loans backed by high-quality properties.

Given their large size, the sales of asset portfolios are in the hands of just a few entities. “Only Blackstone, Cerberus, Apollo and Lone Star are bidding for portfolios worth more than €5 billion, whilst firms such as Bain Capital, Oaktree and Deutsche Bank are also very active in smaller operations”, said Laspiur. This lack of competition allows the funds to buy properties at prices well below market rates. “It is not only a question of size” – he adds. “The funds assume the risk of managing the debt (by negotiating with the debtor or in court) to take ownership of the property. It is a sophisticated process that appeals to few companies”. Nevertheless, for the financial institutions, “the sale of foreclosed assets and defaulted loans in large batches allows them to accelerate their cleanups and free up resources because selling them one by one would take years”.

Laspiur says that 2017 marked a turning point in the strategy of the banks to divest property. “Before, they were undertaking small operations. For example, Sareb, the most active entity, has completed more than 30 sales, followed by Sabadell, CaixaBank and Bankia. Nevertheless, last year, Santander and BBVA both created vehicles (companies) to which they transferred their bad assets, and then they sold them, but they retained a minority stake in each case, which allowed them to deconsolidate the assets but hold onto some of the ownership rights in order to benefit from the price rises being seen in the real estate sector”, said Laspiur. “It is a very good formula, and I think we are going to see more operations of a similar ilk this year”. In his opinion, Sareb, CaixaBank and Sabadell are going to be the entities that will lead property sales this year.

Together, the financial institutions in the south of Europe now account for the bulk of the foreclosed properties and defaulted loans in Europe, according to data from the consultancy firm Evercore, which forecasts that operations worth around €80 billion will be closed this year, with Spain leading the ranking once again (at the moment, it accounts for 78% of the portfolios up for sale in Europe, according to the consultancy firm) (…).

Sareb, the European bad asset leader

The Spanish bad bank or Sareb is the largest owner of toxic assets in Europe, according to Evercore, with foreclosed assets amounting to €75 billion, ahead of the bad bank of Ireland (which has €27 billion) and the UK (€20 billion). The hardest hit banks are Italian (Intesa San Paolo, Unicredito, Atlante Fund and Monte dei Paschi) and Greek (Pireus and Alpha) (…).

Original story: La Vanguardia (by Rosa Salvador)

Translation: Carmel Drake

Liberbank Agrees To Sell €750M RE Portfolio To Bain

11 October 2017 – El Confidencial

Liberbank has agreed to sell a portfolio of foreclosed properties worth €750 million to the fund Bain Capital, after ruling out a rival offer from KKR. According to sources familiar with the situation, the transaction will be closed at a price of between 45% and 48% of the initial value (the final figure is the only matter that still needs to be agreed), in other words, with a discount of between 52% and 55% of the book value. That haircut is lower than the 66% that Santander had to apply to divest Popular’s property portfolio in the summer.

The aforementioned sources explain that, in the end, this portfolio does not include any non-performing loans, but rather contains foreclosed assets only. The sales price implies a higher discount than the net value (after provisions) at which Liberbank recognises these assets on its balance sheet (around 40%, albeit based on their appraisal value as at 2017), which means that the entity will have to recognise an additional loss as a result of this sale. But it will cover some of that loss with funds resulting from the €500 million capital increase that it approved on Monday and to which its main shareholders have already signed up.

The fact that Liberbank has had to offer a lower discount than Santander did for the sale of Popular’s assets is explained by three factors. Firstly, the size and urgency of the operation: the bank chaired by Ana Botín sold a much larger portfolio, amounting to €30,000 million, which it wanted to divest from its balance sheet as soon as possible, and whereby shield itself from the possible legal annulment of its purchase of Popular.

The second is that Santander sold only 51% of its portfolio, in other words, in that case, the bank will continue to receive income from the rental or sale of the assets in its remaining 49% stake. A better price can always be negotiated when the buyer acquires the rights to all of the revenues associated with a given portfolio. The third reason is that “not all of the assets are the same, and Popular’s portfolio contained a lot of poor quality properties”, according to one of the sources consulted. In other words, Liberbank’s portfolio contains better quality assets.

Ensuring survival on its own

(…). As El Confidencial has reported, both this real estate operation, as well as the capital increase, are consequences of demands made by the (Spanish) Government and the Bank of Spain to strengthen Liberbank’s solvency for fear of a repeat of a collapse like Popular’s (a fear that also led to the supervisor imposing a ban on the short selling of the entity’s shares, which still continues). In the face of interest from Abanca, Unicaja and CaixaBank to acquire Liberbank, the entity led by Manuel Menéndez decided to undertake these operations to ensure its survival as an independent player.

Moreover, the entity sold another €215 million in real estate assets unrelated to this portfolio during the third quarter. In that case, it sold the assets at their net book value, in other words, without the need to record any additional losses. In this way, Liberbank will easily exceed its objective of decreasing its property portfolio by €800 million this year, with most of the fourth quarter still remaining. In addition, during the same period, it decreased its non-performing loans by a further €230 million thanks to recoveries and foreclosures.

Original story: El Confidencial (by Eduardo Segovia)

Translation: Carmel Drake

Bain & KKR In Final Round To Acquire Liberbank’s RE Portfolio

22 September 2017 – Expansión

Liberbank is on the verge of closing the sale of a portfolio of real estate assets worth €800 million. The funds Bain and KKR are the finalists in the process, according to financial sources in the know. There may also be a third finalist in the running, which could be any one of Apollo, Blackstone and Lone Star.

These last three funds approached Liberbank during the initial phase to express their interest in the portfolio of real estate assets for sale, according to sources close to the operation. The funds will have already had access to the virtual data room to find out more details about the assets for sale.

As is usual for this type of real estate operation, they would have also performed the corresponding due diligence. The interest parties signed confidentiality agreements during the first few weeks of August.

The sources specify that Liberbank will close the binding offer phase in the last week of September, most likely on Friday 29.

Development of land

Liberbank is willing to offer favourable conditions to those funds interested in developing the land included in the portfolio, according to sources familiar with the operation, which has been baptised as Project Invictus by Alantra. An incentive for the sale in light of the good times that the Spanish real estate sector is enjoying, which is in the middle of a growth spurt.

The objective of the bank is to divest this batch of property, mostly homes, during the month of October, at the same time as it undertakes a capital increase, amounting to €500 million, which it plans to launch on 9 October. The capital increase, which has preferential subscription rights, is expected to be approved by the Extraordinary General Shareholders’ Meeting on that date.

At the end of July, Liberbank engaged Alantra to coordinate the sale of a package of 9,000 real estate assets, worth €1,200 million. But that firm has reduced the sale perimeter to a batch worth just over €800 million.

The entity is being forced to clear up the uncertainty over the health of its balance sheet. The bank’s high real estate exposure led to doubts in the market following the resolution of Popular’s future on the morning of 7 June. Its stock of non-performing assets accounts for 22% of its balance sheet, one of the highest levels in the sector.

New strategy

Until then, Liberbank had been selling its real estate assets to individuals above all, and it was even generating profits in some cases. The sale of the real estate portfolio worth more than €800 million to one of the major funds will represent a change of strategy to accelerate the reduction of the entity’s real estate exposure.

But the speed of getting rid of this real estate could come at the expense of its financial results. Operations with opportunistic funds are typically signed at a loss, and so sources at the bank have not ruled out the possibility that this strategy will see Liberbank record losses this year. During the first quarter of the year, the most recent accounts published in the market, Liberbank earned 8% less than during the same period in 2016. The entity thinks that the pure banking business, the interest margin, bottomed out in June, when it dipped by 11%.

Real estate subsidiary

In August, the bank led by Manuel Menéndez started its cleanup plans. It sold its real estate subsidiary, Mihabitans, to Haya Real Estate for €85 million. The company specialising in the provision of management services for financial and real estate assets for entities and funds then become a partner of the bank for the next seven years.

Liberbank, the fruit of the integration between Cajastur, Caja Extremadura, Caja Cantabria and Caja Castilla-La Mancha (CCM), has been facing the rumour of a takeover for several months. The entity’s share price is trading at 0.29% of its book value (..).

Original story: Expansión (by R. Sampedro)

Translation: Carmel Drake

Santander Negotiates With Blackstone Re Sale Of Popular’s RE

2 August 2017 – Expansión

A month after announcing that it was putting Popular’s toxic real estate up for sale, Santander has chosen the fund with which it wants to negotiate. The bank is looking to sell a portfolio of Popular’s foreclosed assets and doubtful real estate debts with a gross value of €30,000 million. It will be the largest sale of a toxic real estate portfolio in Spain in recent years. And the process is already taking shape, in the hope that Brussels will give the definitive green light to the Cantabrian bank’s acquisition of Popular, due at the end of this month.

Yesterday, Santander announced that it will negotiate exclusively with Blackstone from now on to sell a majority stake in the vehicle in which it placed the toxic property inherited following the purchase of the entity wound up by the European authorities. Santander’s initial idea is to sell 51% of this vehicle, which will allow the group to deconsolidate those real estate assets from its balance sheet. The assets and doubtful loans that Blackstone plans to acquire will be managed by Aliseda. That company already administers Popular’s real estate assets and is 100% owned by Santander after the bank repurchased the 51% stake held by Kennedy Wilson and Värde Partners a month ago.

After buying Popular, whose merger will be completed over the course of the next two years, Santander has increased its exposure to real estate risk to €41,048 million, according to the latest available data. Popular’s real estate risk amounts to almost €37,000 million, including its stakes in real estate companies, which amount to around €7,000 million.

Several offers

According to a statement made to the CNMV yesterday, Santander has received binding offers from “several investors” over the last few days for one of the largest portfolios ever to go onto the market in Spain, and also in Europe. The operation sparked immediate interest amongst the large international funds when Santander announced that it was putting Popular’s real estate up for sale on 30 June. In addition to Blackstone, Apollo, TPG, GreenOak and Goldman Sachs, amongst others, approached the bank to find out more.

Financial sources indicate that Apollo and Lone Star fought hard until the end to acquire the majority of Popular’s toxic real estate. In the last few days, some of the interested funds have asked Santander, which is being advised by Morgan Stanley, for more time to conduct due diligences (…).

The rapid sale of Popular’s real estate portfolio, which is being piloted by the Deputy Director General of Santander, Javier García-Carranza, could result in revenues of €5,000 million, according to estimates in the sector. Santander has recognised provisions of €7,900 million to increase the coverage ratio of Popular’s real estate to 69%, well above the sector average (52%). This means the bank can afford to get rid of the real estate portfolio at significant discounts and thereby recognise gains (…).

Original story: Expansión (by R. Sampedro)

Translation: Carmel Drake

Spain’s First Gas Station Socimi Will Debut On The MAB Tomorrow

10 July 2017 – Cinco Días

Kingbook Inversiones, a Socimi that owns 57 petrol stations operated by Petrocorner, will debut on the Alternative Investment Market (MAB) tomorrow, 11 July, at a price of €4.78 per share, which represents a company valuation of €23.9 million.

This makes it the 36th Socimi to debut on the market, and the first to be constituted from real estate assets dedicated to fuel distribution in the retail sector and other commercial activities.

Kingbook owns a portfolio of 57 service stations throughout the country. The operation of all but one of them is leased to Petrocorner; the exception is a gas station located in Almería, which is operated by BP. The firm also owns a hotel in Mirando de Ebro and an industrial warehouse in Jaén.

The company, chaired by Antonio Eraso Campuzano, said that although it has begun life focusing on gas stations, it has a “general profile” and for that reason, “it does not rule out investing in other sectors in the future”.

It is one of the Socimis that is expected to debut before 1 August, when according to the experts, between five and eight new Socimis may debut, due to a change in legislation with respect to minority shareholders. From next month, the one-year deadline that these companies have to comply with in terms of diffusion requirements disappears (2% of minority shareholders or €25 million must be in free float).

At the end of the first quarter of this year, Kingbook reported rental income from its gas stations of €1.59 million, however, it registered a loss of €175,983. In financing terms, the Socimi holds debt amounting to €42 million, equivalent to 84% of its asset value.

Finalising a €100 million loan

Nevertheless, the brochure submitted for the firm’s debut on the MAB explains that it is currently in the process of negotiating new bank financing, for which it has already agreed the general terms.

It is a €100 million loan with a five-year term granted by a group of banks that, although it has not been signed yet, already includes ING Bank and Banco Santander. The financing will be structured into three tranches, one for €30 million, a second for €45 million and a third, for €25 million.

With this loan, Kingbook is seeking to refinance its current debt with shareholders and bank financing and obtain funds to pay for its new asset purchases with the aim of growing.

Original story: Cinco Días

Translation: Carmel Drake

Quabit’s Revenues Down By 85% To €7.7M In 9m To Sept

19 October 2015 – Expansión

The real estate company Quabit recorded revenues of €7.7 million during the first nine months of the year, 85% less than in 2014, when it sold its assets to its creditor banks. During the nine months to September, Quabit recorded a loss of €10 million compared with a profit of €56.7 million in 2014.

Original story: Expansión

Translation: Carmel Drake

Sareb Will Have To Capitalize More Debt To Avoid Bankruptcy

5 October 2015 – Expansión

On Friday, the Bank of Spain published an accounting circular that Sareb will be obliged to comply with this year. The company responsible for managing the real estate assets inherited from the banks that received public aid, acknowledged immediately that it will have to recognise new provisions. This means that the company will record losses once again. Furthermore, it is very likely that, as a result, Sareb will have to covert some of its subordinated debt into capital to prevent it from being wound up.

Sareb is coming to the end of its third year and is not scheduled to be wound up until it is 15 years old. However, during its first two years, it recorded total losses of more than €800 million, which reduced its initial capital from €1,200 million to just less than €400 million.

Now, the accounting circular, drafted by the Bank of Spain, is requiring that Sareb value all of its asset this year and next. This will involve a considerable effort by the company, which clearly separates out all of its assets. Sareb’s balance sheet comprises 100,000 own properties, 400,000 collaterals as guarantees and 70,000 loans.

The cost of (re)valuing the whole portfolio is estimated at €25 million until 2017, which would clearly have an impact on total costs.

The properties owned by Sareb should not represent a significant problem because the company is familiar with them, and has pretty good idea of their approximate market values. They even think that overall, their owned properties could generate some gains, although any such gains would not appear on the balance sheet.

The problem exists when it comes to valuing the loans and collateral guarantees that support them, because Sareb does not control or know those assets in as much detail. The general view is that valuing those assets at current prices will result in significant losses, which would be reflected directly in the income statement given that provisions would be required.

For this reason, and based on information from the experts at the company, a statement was made to the Board of Directors, formed by representatives of the Frob, which owns 45% of Sareb, and by representatives of the private (owner) banks, which own the remaining 55% majority stake, that it is certain that Sareb will register losses once again this year and may therefore need to convert some of its subordinated debt (subscribed by the shareholders in the same proportion to their capital stakes) into capital to rebuild the financial position of the company.

Sareb has subordinated debt amounting to €3,600 million, a much higher figure than it would have to convert (into capital) to solve the problem posed by the circular, without having to resort to a possible capital increase.

Although officially, the heads of Sareb have not communicated a specific figure to the Board in terms of the size of the losses for the year, sources at the bad bank are talking about provisions of no less than €500 million.

This year, Sareb is selling fewer properties to individuals than it did last year, for various reasons, including because the management of certain assets has been transferred from the ceding banks to specialist companies, which won the tender held earlier in the year.

Original story: Expansión (by Salvador Arancibia)

Translation: Carmel Drake