Sareb Sells €150M NPL Portfolio to Oaktree

30 December 2017 – Expansión

The bad bank has closed the sale of several non-performing loan portfolios during the last few days of the year. A week ago, it announced the sale of a package of loans secured by properties to Deutsche Bank, whose nominal value amounted to €375 million. That was its largest sale of the year.

And yesterday, Sareb reported that it has reached an agreement to sell the so-called Project Tambo to the US fund Oaktree for a nominal value of €150 million. The debt is secured by residential assets and land located in the Balearic Islands, the Canary Islands, Cataluña, the Community of Madrid, País Vasco and the Community of Valencia.

Sareb has been advised by CBRE and Ashurst in this process, whilst Oaktree has awarded its mandate to JLL and Herbert Smith Freehills.

The bad bank, where the toxic assets of the rescued savings banks were parked, closed 2017 with a lower volume of transactions of this kind compared to 2016. Nevertheless, it has launched a trial to test an online sales channel, which may allow it to intensify its activity over the next few months.

Having said that, 80% of the revenues that Sareb obtains do not proceed from the institutional market, but rather from the direct sale of properties in the retail market.

In five years, Sareb has divested 27% of the 200,000 assets that it received initially and has repaid debt amounting to almost €13 billion. It has ten years left to liquidate the rest of its balance sheet. The entity’s cumulative losses amount to €781 million.

Original story: Expansión (by R. L.)

Translation: Carmel Drake

Heron City Sale Fails to Spark Interest amongst Investors

12 December 2017 – El Confidencial

A concept too unique for a market that is used to something a lot more familiar. That is the moral that can be drawn from the decision by Heron International, the property developer behind the famous Heron City centres, to put into quarantine the sales process of the three leisure centres that it owns in Spain.

The offers received by the British company fall well below its expectations, which has caused it to reconsider its whole strategy and take the decision, last week, to suspend the current sales process, according to sources familiar with proceedings.

As El Confidencial revealed in September, the British company engaged CBRE to find a buyer for its whole portfolio, which comprises Heron City Las Rozas (Madrid), Heron City Paterna (Valencia) and Heron Diversia Alcobendas (Madrid), and which has a valuation of between €230 million and €250 million.

Nevertheless, the appetite in the market has been lower than anticipated because the usual suspects who typically participate in these types of operations (large international funds and Socimis) actually specialise in shopping centres, whose casuistry differs from those of leisure centres, and where lots of investment opportunities are still emerging.

In 2017 alone, with less than a month to go before the end of the year, 17 transactions involving shopping centres and retail parks have been closed across Spain, according to data from the trade association AECC, led by giants such as Xanadú. Moreover, during the next two years, around twenty new centres are expected to open and six centres are due to be expanded, which will see an additional gross leasable area come onto the market of more than 2 million m2.

The result has been that Heron International has decided to suspend the sales process and redefine its strategy. The three Heron City complexes, which span a combined gross leasable area of 84,000 m2, have 6,100 parking spaces, receive more than 12 million visitors per year, and represent a brand that arrived in Spain almost three decades ago with a very specific leisure concept, based on cinemas and a restaurant offer that tries to distance itself from classic fast food.

Since its arrival in Spain, Heron International has only starred in one operation, involving the sale of one of its leisure centred, namely Heron City in Barcelona, which it sold to Babcock & Brown and GPT at the end of 2006 for €138 million. Almost a decade later, as El Confidencial revealed, that complex was acquired by ASG, the Spanish subsidiary of Activum, a deal that represented that firm’s first operation in the Catalan capital.

The leisure centre in Barcelona, as well as those in Las Rozas and Paterna were all built by the British company. In the case of Diversia, it purchased that centre in 2003 in conjunction with Realia (50%) and a decade ago it took over all of the share capital when it also acquired the stake owned by FCC’s subsidiary.

Original story: El Confidencial (by R. Ugalde)

Translation: Carmel Drake

Colau Buys Residential Building From Renta Corporación For Social Housing

23 October 2017 – Expansión

Ada Colau is pushing ahead with her mission to recover residential buildings for the citizens of Barcelona. Her most recent battle has seen her conquer Renta Corporación, one of the traditional real estate companies dedicated to the purchase of old buildings in El Eixample and the subsequent rescission of contracts with tenants, with the aim of renovating and selling the properties. The Town Hall has exerted its right of first refusal for the building located at number 394 on Calle Còrsega in Barcelona, between Bruc and Girona, for which it has paid €5.85 million.

For its purchase of the building, Ada Colau’s Government has argued that the operation comes in response to “extraordinary and urgent measures to mobilise homes resulting from mortgage foreclosure processes”, together with “measures to protect the right to housing for people at risk of social exclusion”.

The Town Hall’s intention is to hand over the building, free of charges, to Patronat Municipal d’Habitatge so that it can be used as homes for social purposes.

The right of first refusal and withdrawal is a practice included in the Housing Law that the Parlament approved in 2007, although its use had been rare until now. It received a boost following the election of Ada Colau as mayor of the Catalan capital in June 2015.

The most recent balance reported by the municipal government includes the first year and a half of the mandate. In that regard, the Town Hall applied the right of first refusal and withdrawal in 87 of the 154 homes that it acquired.

Those figures have increased this year with several operations in that vein. The most significant deals have taken place at number 7, 9 and 11 on Calle Lancaster and number 37 on Calle Leiva.

In the first case, the Town Hall spent €5.65 million buying 41 homes spread over three blocks. In the second case, it paid €2.75 million to Anida – a subsidiary of BBVA – to avoid the sale of the block to a fund.

The municipal government also exercised its right of first refusal and withdrawal this summer to buy three plots of land on the former La Escocesa factory premises, in Poblenou, for €10.11 million. The hundreds of luxury homes that were planned for those plots are no longer going to be built, with social housing properties and facilities now planned for the site instead.

The housing plan that the plenary approved at the beginning of the year includes modalities that go beyond constructing new blocks for rent-protected and social housing homes. They include continuing with the acquisition of homes from financial institutions or their transfer for a period of time, buying blocks in neighbourhoods where the urban fabric is consolidated – such as in Calle Còrsega – and exploring co-housing: the transfer of homes at below-market prices for between 50 and 100 years.

Original story: Expansión (by M. Anglés and D. Casals)

Translation: Carmel Drake

Liberbank Engages Alantra To Sell 9,000 Assets Worth €1,200M

11 September 2017 – Eje Prime

Liberbank has created Project Invictus to offload its investment in one go. The company has engaged Alantra to sell a package containing more than 9,000 assets, above all residential properties. This portfolio is worth around €1,200 million and includes assets located in Madrid, the Community of Valencia, Castilla-La Mancha and Andalucía.

49% of the assets for sale are homes, but the portfolio also includes land and offices. This operation was launched at the end of July and has been baptised by Alantra as Project Invictus, according to Expansión.

Over the coming weeks, interested parties will hold meetings with the bank’s management team and binding offers are expected to be submitted to Alantra before the end of the first half of September. Liberbank had planned to close this sale before the month of October, but those time frames may have changed after the announcement of the capital increase.

Original story: Eje Prime

Translation: Carmel Drake

Heron International Engages CBRE To Sell All Its Assets In Spain

11 September 2017 – El Confidencial

The group that revolutionised the concept of shopping centres in Spain has completed its cycle in our country. The British firm Heron International, the developer of the Heron City retail and leisure spaces, has decided to divest all of its establishments in Spain. To this end, it has just engaged CBRE to organise a restricted sales process, in which only a limited number of investors, who have already been selected, are going to be invited to participate.

Sources at the real estate consultancy acknowledge that they have been awarded the exclusive mandate for this process, but they declined to comment further. Nevertheless, sources familiar with the process say that all of the potential buyers on the closed list (which includes major investors, Socimis and institutional funds)have now been contacted and that the portfolio is worth between €230 million and €250 million.

Specifically, the portfolio comprises the Heron City Las Rozas centre (Madrid), the Heron City Paterna centre (Valencia) and Heron Diversia Alcobendas (Madrid), which have a combined gross leasable area of 84,000 m2, along with 6,100 parking spaces and more than 12 million visitors per year. Those figures make this transaction one of the most important in the retail segment at the moment.

The operation includes the right to use the Heron City brand, which will allow the new owner to continue to fly the flag of a concept that arrived in our country almost three decades ago. It represents more than just a shopping centre, since it also encompasses leisure, restaurants and experiences, and is committed to outdoor spaces and partnerships with iconic brands.

For example, in terms of cinemas, Heron always works with Kinépolis and Cinesa to develop large, high-end cinema complexes; whilst Virgin is its typical travelling companion for gyms; moreover, the gastronomic offering always includes some premium concepts, steering clear of classic fast food.

History in Spain

Since it first arrived in Spain, Heron International has only starred in one sale operation involving a retail centre, that of Heron City Barcelona, which it sold at the end of 2006 to Babcock & Brown and GPT for €138 million. Almost a decade later, that complex was acquired by ASG, the Spanish subsidiary of Activum, in that firm’s first operation in the Catalan capital.

Both the Catalan centre as well as those in Las Rozas and Paterna were constructed by the British company, whereas Diversia was purchased in 2003 in a 50:50 alliance with Realia; a decade ago, Heron took over all of the share capital, after it acquired the 50% stake from FCC’s subsidiary.

Nevertheless, although the property developer is known for its retail centres, its history in Spain goes well behind that concept and is directly linked to the turbulent times of the 1980s and the purchase that it made then of the real estate division of Rumasa, as well as of Las Torres de Colón.

Following those acquisitions, it made a commitment to the Government to undertake investments in our country amounting to 30,000 million pesetas (equivalent to €180 million), an agreement it more than fulfilled with the development of its shopping centres. Moreover, its good work in our country also includes the construction of several hotels that, subsequently, have been sold.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

Santander Engages Morgan Stanley To Execute Express Sale Of Popular’s Property

29 June 2017 – Voz Pópuli

Banco Santander does not want to waste any time with its sale of Popular’s properties. The entity chaired by Ana Botín has engaged Morgan Stanley to execute an express plan to get rid of the problem assets that it has inherited from its subsidiary, according to financial sources consulted by Vozpópuli. Sources at Santander declined to comment.

According to the same sources, the mandate does not outline the sale of specific assets, but rather it defines which would be the best solution: the rapid transfer of assets in large batches; the reactivation of Ángel Ron’s old idea of creating a bad bank (Project Sunrise); the transfer of assets to Testa and Metrovacesa; or taking things more slowly to benefit from the economic recovery.

It is about putting the real estate balance sheet in order and defining the best path for each asset type. But Morgan Stanley’s work, which is being led by its CEO, Juan González Pedrol, will not focus only on resolving Popular’s existing property puzzle. It is also meeting investors to get them to analyse assets and prepare bids.

The fact that Santander has already committed to a mandate of this calibre shows that it is not afraid of reducing the volume of problem assets, which amount to almost €50,000 million after the merger. That is something that investors would penalise in the event that those assets stagnated on the bank’s balance sheet. In that context, a few weeks ago, Botín committed to cutting Popular’s real estate exposure in half by 2019.

The person responsible for this task at Santander is Javier García Carranza, Deputy General Manager of the group and Head of Restructuring, Real Estate, Investments and Venture Capital. García Carranza joined Santander from Morgan Stanley, where he used to be responsible for Real Estate in London.

The mandate given to his former entity is one of the most sought-after in the investment banking sector, alongside the capital increase, from which Morgan Stanley has been ruled out. Names still in the running for that €7,000 million-operation include Citigroup and UBS, as global coordinators, and Credit Suisse, Deutsche Bank, Barclays, BBVA, HSBC and CaixaBank, according to Bloomberg (…).

Saracho’s plan suspended

One of the first measures introduced by Santander after it took control of Popular was to suspend the operations that Saracho’s team had set in motion. The former management team had at least two portfolios on the market (…).

Sources in the market expect Santander and Morgan Stanley to bring a large portfolio onto the market before the end of the year, given that there is a lot of demand from large international funds. The clean-up conducted during the merger, of almost €8,000 million, means that the group is ready for these operations.

Following the merger, Santander has accumulated problem assets amounting to €48,417 million, according to the latest official figures. Of those, €36,800 million come from Popular, with a coverage after extraordinary provisions of 66%, and €11,600 million from Santander, which before the merger held a coverage of 57%. That means that the new Santander-Popular entity has more assets than Sareb.

In addition, the group holds other investments, such as its stakes in Metrovacesa, Sareb and Testa Residencial, which, in the case of Santander alone, amount to €5,300 million.

Original story: Voz Pópuli (by Jorge Zuloaga)

Translation: Carmel Drake

Lladó Buys Uría y Menéndez’s Future HQ From Hispania

16 May 2017 – El Confidencial

In the same way that Amancio Ortega is using the juicy dividend that he receives from Inditex to build his real estate empire, another successful home-grown businessman, José Lladó, President and majority shareholder of Técnicas Reunidas, is also investing the bulk of the money that he receives from his infrastructure group into iconic buildings.

Last year, Lladó reportedly received €29 million and he has used those funds to acquire the new headquarters of the law firm Uría y Menéndez. As circumstances would have it, that was the only building that Hispania had left out of the sales mandate that it awarded to CBRE and JLL, when it appointed them to find a buyer for its entire office portfolio. Sources at the Socimi have declined to comment.

According to three sources in the market, the reason is that the Lladó family has put a juicy offer on the table that limits the yield on its investment to 3.5%. It is a classic move by this kind of family office, which tend to prioritise the best assets and tenants possible, even if that means securing lower returns, given that their strategies are typically aimed at acquiring good properties, with stable and guaranteed returns.

Uría y Menéndez is the second largest law firm in Spain by turnover and last October, it signed a 17-year lease contract for the building located on Calle Suero de Quiñones 42 in Madrid, and it is obliged to fulfil at least half of that term.

Currently, Hispania is immersed in the comprehensive renovation of the property, in a project worth €5 million, which is expected to be completed at the end of this year. The law firm will rename the new headquarters, which will be complementary to the property it already owns at nearby Príncipe de Vergara, 187, as the “Aurelio Menéndez Building”: its new design is the handiwork of architect Rafael de la Hoz.

This acquisition follows the pattern applied by Lladó last year, involving investing areas on the rise, where the value of the asset itself promises to increase significantly over the coming years. On that occasion, the owner of Técnicas Reunidas purchased a building on Calle Marqués de la Ensenada 2, located just a few metres from Plaza de Colón, for €6 million.

In the summer of 2014, it made another significant acquisition on Paseo de Recoletos, 15 from Vía Célere, the property that houses Catalunya Caixa’s headquarters in Madrid, for almost €20 million, to join the neighbour at number 33 on the same thoroughfare, which is also owned by Lladó. (…).

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

BBVA Reorganises Its RE Team To Accelerate Divestments

27 December 2016 – Vozpópuli

BBVA is reorganising its real estate management team to accelerate the divestment of its property portfolio. The entity chaired by Francisco González has agreed to the early retirement of Agustín Vidal-Aragón (pictured above), the Director who has been responsible for Anida and BBVA Real Estate since 2014. His departure, at 55 years old, comes at a time when the bank wants to shake up its business and make the real estate hangover disappear from its balance sheet as soon as possible, according to financial sources consulted by Vozpópuli. Sources at the bank declined to comment.

Javier Rodrígeuz Soler, Director of Strategy and M&A will take over the reins. He is one of the directors who has gained the most influence in the bank’s organisational chart in recent times. He reports directly into González and comes from McKinsey, like the bank’s number two in charge, Carlos Torres.

Over the last few years, Vidal-Aragón had held several different roles in BBVA, incuding Director of Pensions and Insurance in Latin America and Regional Director in Andalucía, before he was appointed Head of Real Estate in May 2014. At the time he replaced Antonio Bejar, who moved to take over the reins at Operación Chamartín.

Sources in the market consider that BBVA has fallen behind its competitors in terms of divesting its real estate portfolio under Vidal-Aragón’s mandate. According to the most recent publicly available figures, the bank still has more than €22,000 million in real estate exposure in Spain, one of the largest balances in the sector.

Rodríguez Soler is expected to place much greater emphasis on the sale of large real estate packages through the wholesale markets, aimed at large international funds. One example of this is the operation that the bank put on the market two months ago: Project Buffalo, through which it is seeking to remove 4,000 homes from its balance sheet.

Another strategic turn is linked to a change in philosophy. Until now, the culture at BBVA was to preserve the maximum value of its properties on the balance sheet, rejecting offers even if they equated to book value. From now on, they will think about property as an inheritance that they need to get rid of as soon as possible and at the best possible price, in that order in terms of priorities.

New team

Rodríguz Soler has created a team of his own to handle this challenge. The following people will report directly into him: Juan de Ortueta (Foreclosed assets), Juan Pedro del Castillo (Financing) and Ana Fernández Manrique (Strategy and Finance). In addition, he has recruited Pedro Egea from the Secretary General’s team, who will take care of all of the administration and control aspects of the real estate business.

Another change is that Cesáreo Rey, Head of Investments, will report into Rodríguez Soler’s area. He will do so directly to one of his trusted executives, José Ferrís. On balance, the new strategy seeks to get rid of the old inheritance.

Original story: Vozpópuli (by Jorge Zuloaga)

Translation: Carmel Drake

Citi Seeks New Shareholders For Uro Property

20 May 2016 – Expansión

Uro Property, the Socimi that owns a quarter of Santander’s branch network in Spain, may see a change in its shareholders in the coming months. The company that holds 84% of its share capital, Ziloti Holdings, has given Citi a mandate to study possible shareholder changes.

This mandate comes in the face of interest from some of the current shareholders to exit the company, given that they were forced to acquire shares in the first place when their debt was converted into capital in 2014.

The main shareholders of Uro Property – both through Ziloti and otherwise – are Santander, with 22.7%; Atisha Holding, the former Sun Group, with 18.9%; Phoenix Life Assurance, with 14.6%; CaixaBank, with 14.5%; BNP Paribas, with 9.2%; and other private investors and international entities.

Citi will mainly look for investors amongst the large pension funds, insurance companies and investment funds.

The departure of the shareholders was vetoed until March under an institutional agreement reached following the recapitalisation of Uro.

The renewal of the shareholder base is one of the outstanding milestones for the company, which owns 755 Santander branches in Spain. It refinanced its debt last year and cancelled a swap, whereby reducing the financing costs of its €1,300 million debt from 6% to 3.35%. Last year, the Socimi sold 381 branches to Axa for €308 million, recording a capital gain of €27 million.

Original story: Expansión (by J. Zuloaga)

Translation: Carmel Drake

Lone Star Puts Adequa Business Park Up For Sale

6 May 2016 – Cinco Días

The US fund Lone Star is going to put the Adequa business park up for sale, which it acquired after taking on the debt of the inactive real estate company Bami Newco. Adequa will be put on the market within the next few weeks and will be marketed by the brokers Knight Frank and JLL.

These consultancy firms received the exclusive joint-mandate to handle the sales process, which will be presented to a small group of investors only.

Adequa is one of the largest business parks in Spain. It has a total surface area of 120,813 sqm and contains six office buildings, as well as a service centre with commercial space measuring 5,013 sqm, including a gym, restaurants, a pharmacy, a nursery and three padel courts. The park is located next to the A-1 highway, in the new neighbourhood of Las Tablas.

This business park is home to the headquarters of Renault in Spain, for xample. Moreover, construction is on-going at the site, to build a new space, measuring 44,885 sqm, which will be divided into two buildings, one of which will be a central tower with office space covering 29,095 sqm.

Bami Newco, the real estate company controlled by Joaquín Rivero following his departure from Metrovacesa, filed for liquidation last year, at the company’s own request under the Bankruptcy Law, with debts amounting to €652 million. At that time, the assets, basically the business park itself, were worth €726 million.

Original story: Cinco Días (by A.S.)

Translation: Carmel Drake