Tag: macro-operation

Blackstone Puts 2 million m2 of Popular’s Residential Land up for Sale

1 October 2018 – Cinco Días

Now that the banks have offloaded their real estate portfolios onto the opportunistic funds that acquired them, it is time for the next move. Those buyers are going to see at first hand whether property developers are interested in buying plots on which to homes can be built all over Spain. The first player to test the market is Blackstone, which has placed a macro-portfolio of land spanning 2 million m2 from Popular on the market; according to market sources, it has the capacity for the construction of more than 18,000 homes.

The operation is being carried out through Aliseda, a company controlled by Blackstone (51%) and Santander (49%). The value of the plots is almost €500 million, according to sources at Aliseda. That real estate firm already revealed, at the start of September, that a sales process was in the pipeline relating to so-called Project Origin (…).

This land proceeds from the toxic assets of Popular, after Santander sold 51% of the property-linked portfolio to Blackstone last year for €5.1 billion. In that portfolio, there were doubtful loans and foreclosed assets, including both homes and land linked to property developers. Of those assets, 42% corresponded to land and work in progress projects. In that operation, the servicer Aliseda was also transferred. That entity is now responsible for managing those assets, recovering doubtful loans and, when recovery is not possible, foreclosing the properties and putting them on the market, like in  the case of this macro-operation.

The details of the operation

The details of the operation reveal a gigantic portfolio. The land portfolio spans 2.05 million m2 for residential use, specifically for the construction of 18,299 homes, on plots located in 43 provinces, but excluding Madrid and Barcelona. In total, 270 assets have been put up for sale.

Blackstone and Santander, through their servicer Aliseda, are giving companies the option of bidding only for the plots that are of interest to them. The real estate firm has opened an online store in which it says around 1,000 interested investors are participating.

Local property developers are expected to be the players most interested in these plots. In fact, Blackstone has decided to put plots on the market in locations where demand has reactivated a bit later, whereby backing the recovery of the property sector across Spain. The fund has entrusted this transaction to the real estate consultancy CBRE.

The portfolio is divided into four categories, based on the type of land. Specifically, 158 assets (58% of the total) corresponding to 888,364 m2 of land, are finalist plots (which can be built on right away) with capacity for 8,691 homes. It has also put some work in progress projects up for sale, in other words, developments that were left unfinished. In that case, there are 39 assets, spanning 174,034 m2 and corresponding to 1,549 homes.

Aliseda is also marketing 33 assets for which the urbanisation process has been started, with capacity for 4,603 homes and another 42 assets without any licences for 4,772 homes.

In terms of the locations, Andalucía, Levante and Galicia account for the majority of the assets. The 10 provinces with the most homes in the portfolio are Murcia (14%), Málaga (12%), Castellón (7%), Valencia (5%), La Coruña (5%), Alicante (4%), Asturias (4%), Navarra (4%) and Zaragoza (3%).

Property developers interested in bidding for one or more of the plots will have until the end of October to do so and Aliseda expects to close the operations during December.

To put the gigantic size of the portfolio being marketed by Aliseda into context, it is worth comparing it with the land banks owned by some of the large listed property developers. Only Metrovacesa (in which Santander and BBVA hold stakes) owns more land. It currently owns plots for 38,000 homes, with a gross value of €2.686 billion, according to its most recent accounts. In the case of Aedas, it has a landbank for 14,521 homes and Neinor has land for another 13,500 units (…).

It remains to be seen whether the appetite of property developers for these locations outside of Madrid and Barcelona, the most active markets, is sufficient and whether they will be capable of swallowing up this supply. It is the first time that interest in the market for land proceeding from bank assets has been tested on such a large scale (…).

Original story: Cinco Días (by Alfonso Simón Ruiz)

Translation: Carmel Drake

Santander Puts €6bn in Real Estate Assets Up For Sale

30 June 2018 – Cinco Días

Spain’s banks have put their foot down on the accelerator to end the property hangover once and for all. And there is no letup. On Thursday, CaixaBank announced that it had reached an agreement with Lone Star to sell it 80% of its problem assets, including its real estate platform Servihabitat, worth €7 billion altogether, which means that the fund will disburse around €5.6 billion for the property of the Catalan entity (based on the valuation as at October 2017).

This operation caused CaixaBank’s share price to soar on Friday, rising by almost 7%, and closing trading with an increase of 3.32%, to reach a value of €3.706 per share.

Sabadell also saw its share price soar on the stock market after closing the sale of a portfolio of non-performing loans worth €900 million to the Norwegian fund Axactor. That was Project Galerna, the smallest portfolio of the four containing foreclosed assets and non-performing loans that the bank has put up for sale, and whose deadline for the presentation of binding offers ended last Wednesday.

The bank’s objective is to close the sale of the four portfolios in a competitive process with a value of €10.8 billion over the next two weeks, before it presents its results for the first half of the year. Despite that, the Catalan bank will not be able to deconsolidate from its balance sheet more than €5 billion, equivalent to the largest portfolio comprising problem assets proceeding from the bank itself.

The other portfolios, whose contents came from CAM, cannot be removed from its balance sheet until the Deposit Guarantee Fund (FGD) reaches an agreement with the banks and Brussels so that the losses that these sales generate are not included in the public deficit. The stumbling block with these portfolios is that they are backed by an Asset Protection Scheme (EPA), in which the FGD initially assumes 80% of the losses generated by the operation, and Sabadell the remaining 20%, although the channel being considered to resolve this problem leaves those percentages to one side.

The market, on the news of the sale of the Galerna portfolio and the existence of seven offers in total for the purchase of almost all of the entity’s property, reacted with a rise of 4.7%. Although by close of trading the increase had dropped to just 1.74%, the third largest of the selective, to finish with a share price of €1.4355.

Santander has joined these operations, by placing up for sale foreclosed assets worth €6 billion, almost all of the property still held by Santander España. A spokesperson for the bank declined to comment on the operation.

The advisor on the sell-side is Crédit Suisse.

This macro-sale is the second largest operation that the group chaired by Ana Botín (pictured above) has ever undertaken and could be its last, given that this final disposal will allow the group to get rid of almost all of its real estate.

Indeed, Santander starred in the first macro-operation involving the sale of real estate assets one year ago. Last summer, it surprised the market with the sale in a single operation of all of the property proceeding from Banco Popular, around €30 billion, to Blackstone, with whom it created a company in which the US fund holds a 51% stake and the bank chaired by Ana Botín owns the remaining 49%.

That operation put pressure on the rest of the sector, which started to replicate the formula. The second to repeat the formula, in fact, was BBVA, with the sale of €13 billion to Cerberus.

Sareb is also now sounding out the market regarding the sale of gross assets worth around €30 billion (around €13 billion net). Nevertheless, the bad bank must wait for the green light from the Government to be able to carry out that operation, given that Sareb is an institution that depends on the Executive. It was created to unblock the former savings banks that received aid for their property, which is why it will try to maximise the value of any operation that is undertaken in order to return the public aid.

Original story: Cinco Días (by Ángeles Gonzalo Alconada)

Translation: Carmel Drake

BBVA Reduces the Property Portfolio that it will Transfer to Cerberus by 12%

17 May 2018 – Expansión

BBVA is not holding back in its strategy to reduce its exposure to the real estate sector ahead of putting the finishing touches to its agreement with Cerberus. The entity has already cleaned up some of the portfolio that it will transfer to the US fund in September.

Between the reference date for the operation – the end of June 2017, and March this year, the date of the most recent audited accounts -, the bank has decreased its foreclosed assets by 12% – those assets proceed from unpaid residential and property developer mortgages.

The bank is going to create a joint venture with the US fund to reduce its real estate exposure in Spain to almost zero. BBVA will sell 80% of that joint venture to Cerberus for an estimated price of €4 billion. But that amount may vary, depending on the volume of foreclosed assets that end up being transferred.

Initially, a portfolio with a gross asset value of around €13 billion was defined. By March, the entity’s foreclosed assets balance had decreased to a gross value of €11.541 billion. Most of the portfolio comprises finished buildings and land, which are easier to sell now thanks to the recovery of the real estate sector.

To cover its gross risk, BBVA has recognised provisions amounting to €7.073 billion, which reduces its net exposure to €4.468 billion. The coverage ratio of the foreclosed assets amounts to 61%.

Sources at BBVA explain that the portfolio that is going to be transferred to Cerberus also includes the ‘other real estate assets’ caption. The bank’s gross real estate exposure, including both concepts, amounted to €12.472 billion in March compared with €14.318 billion in June 2017.

Until the close of the operation, which is scheduled for September, the assets to be transferred to the joint venture will not be finalised. “Under no circumstances will transferring fewer assets result in a loss to the income statement. In fact, this operation is not expected to have a significant impact on the income statement”, explain official sources at the entity.

Solvency

The agreement with Cerberus will improve BBVA’s solvency. In March, the bank saw its core capital fully loaded ratio worsen to 10.9%. But the transfer of the real estate portfolio to the fund and the sale of its business in Chile will improve that metric to 11.5%.

BBVA has loaned Cerberus €800 million to finance part of its purchase of the real estate portfolio from the bank. The loan has a term of two years and will not accrue any interest. The fund will repay the debt in a single payment on the maturity date.

Spain’s financial institutions have stepped on the accelerator to clean up property from their balance sheets following Santander’s macro-operation to deconsolidate real estate risk amounting to around €30 billion proceeding from Popular (…).

Original story: Expansión (by R. Sampedro)

Translation: Carmel Drake