Tag: Mihabitans

Cerberus Gets its Cheque Book out again to Buy NPLs from CaixaBank

4 December 2017 – Voz Pópuli

Cerberus is stepping on the accelerator in Spain. The US fund has starred in another major operation just days after acquiring a real estate portfolio from BBVA. One of Cerberus’s subsidiaries, Gescobro, has won an auction for €0.8 billion in non-performing loans and real estate from CaixaBank.

The fund has purchased part of that portfolio, known as Project Egeo, whilst the Norwegian group Lindorff has bought the rest, according to financial sources consulted by this newspaper.

Part (€0.5 billion – €0.6 billion) of this €0.8 billion portfolio comprises unsecured loans (credit cards, personal loans and others without any guarantee) and just over €0.2 billion relates to loans to SMEs secured by real estate.

This is Cerberus’s fourth operation in the Spanish financial and real estate sector in 2017 following the acquisition of Project Jaipur from BBVA (€0.6 billion in non-performing property developer loans; the purchase of the real estate arm of Liberbank, Mihabitans, for €85 million; and the acquisition of €13 billion in property from BBVA for €4 billion.

Strategic fit

The sale of Project Egeo, which is still pending the completion of the necessary paperwork, forms part of the routine divestment plans of the Catalan group. In this way, it is managing and controlling its default rate and complying with the regulatory requirements of the European Central Bank (ECB).

Currently, the group’s default rate stands at 6.4%, after falling by seven tenths in the last year. In total, its doubtful loans amount to €15.3 billion, of which €13.9 billion are in Spain. It has another €7.2 billion in foreclosed assets.

The firm that has won the auction, Gescobro, has been led by Iheb Nafaa until now, but he was recently poached by Servihabitat, the real estate company owned by TPG (51%) and CaixaBank (49%).

Meanwhile, Lindorff has been one of the main competitors in the bank debt market since 2012. More than a year ago, it expanded its real estate business with the purchase of Aktua, the former real estate arm of Banesto; and it strengthened its business through a merger with Intrum Justicia.

Original story: Voz Pópuli (by Jorge Zuloaga)

Translation: Carmel Drake

Bain Submits Highest Bid For Liberbank’s Real Estate

10 October 2017 – Expansión

One of the main elements of the strategic plan launched by Liberbank to rebuild its financial health is entering the home stretch. The bank has now received offers from all three of the suitors who have reached the final phase of the sale of the portfolio of real estate assets worth €800 million. And, according to financial sources, the bid from the US fund Bain is the highest. But, Bain is not alone. KKR and Blackstone have also submitted binding offers, however, the cheque that the former is willing to sign is larger than those of the others, add the same sources.

Nevertheless, that does not mean that Bain is going to win Liberbank’s open bid. In the final evaluation of the offers, the perimeter that each bid defines (the portfolio primarily comprises homes, but also includes some land) will weigh as heavily as the financing that is going to be used and the tax implications. All of this could mean that the quality of the bids varies significantly, as well as the impact that one or another may have for the results of Liberbank.

In addition, market sources point out that from the date that the offers were submitted until the date exclusive negotiations begin with one of the candidates, last minute movements may arise that tip the balance one way or another.

All of this despite the fact that the calendar proposed by Liberbank does not allow for much time for the bids to be revised or for the processes to be delayed. The objective of the bank is to announce the principle of an agreement with one of the three funds that have submitted offers “imminently”, according to financial sources. And they consider that this is possible because all three of the proposals are sufficiently adequate to reach an agreement.

Capital increase

Liberbank’s intention is to announce the sale of the real estate portfolio before or during its upcoming capital increase, through which it hopes to raise €500 million from its shareholders. It plans to use the funds raised to improve the coverage levels for its non-performing assets, increasing them to almost 50% (still slightly below the average in the sector, which stands at 52%), as well as to strengthen its capital.

Liberbank’s wish is that its shareholders will participate in the capital increase safe in the knowledge that the bank has released €800 million in toxic assets, which will no longer weigh down on its balance sheet. The General Shareholders’ Meeting was due to approve the capital increase on Monday (yesterday) and the objective is that the operation will last 15 days, starting as soon as the legal processes allow.

Liberbank’s main shareholders have committed to participating in the capital increase, which means that Oceanwood, Aivilo Spain and Corporación Masaveu (owners of 12.6%, 7.4% and 5% of the share capital, respectively) will maintain their respective stakes.

The capital increase is the most important element of Liberbank’s plan to convince the markets of its financial solvency, but it is not the only one. The transfer of the real estate portfolio plays an important role, as did the sale of its real estate subsidiary, Mihabitans, to Haya Real Estate for €85 million. That company, which is owned by the fund Cerberus, has taken over the exclusive management of the foreclosed assets of Liberbank and its subsidiaries for a period of seven years.

Original story: Expansión (by Inés Abril)

Translation: Carmel Drake

Liberbank Finalises Property Sale To Ensure Success Of Capital Increase

4 October 2017 – Cinco Días

Liberbank does not want to follow in the footsteps of Popular and is taking firm strides to avoid that fate. Its focus now is on shaking off the property that it still holds following the crisis, in order to project the image in the market that it has cleaned up its books and to ensure the success of its upcoming capital increase. In this way, the entity is finalising the sale of a large part of its portfolio of foreclosed assets this week, in parallel to the capital increase, which its General Shareholders’ Meeting is expected to approve on 9 October.

The entity led by Manuel Menéndez is working against the clock to ensure its independence. The CNMV has given it until 30 November to extend, for the third time, a veto on short positions that it imposed in June, a few days after Popular’s future was resolved. Sources close to the operation expect the first stage (the sale of a portfolio worth €800 million) to be closed this week. Or within 15 days, at the latest, since in that case, it would be performed in parallel to the start of the capital increase.

Liberbank received the first binding offers at the beginning of last week. And from those, it has selected three funds: KKR, Bain and Cerberus. The latter is the firm that acquired the bank’s real estate subsidiary, Mihabitans, in the summer, through Haya Real Estate. It spent €85 million on that purchase. The market described the operation as a “success” and uses it as an example for the upcoming sale of the toxic property.

Haya is exclusively managing the current foreclosed real estate assets on Liberbank’s balance sheet, as well as any future foreclosed real estate assets that end up being incorporated onto the bank’s overall balance sheet or onto those of any of its real estate subsidiaries. According to the accounts for the first half of the year, Liberbank held €3,115 million in foreclosed assets on its balance sheet, with a provision coverage ratio of 40%. Of those, €1,741 million are finished homes, €1,162 million are plots of land, €480 million are homes under construction and €402 million are offices and warehouses.

This new sale of foreclosed assets, dubbed ‘Operación Invictus’, will be closed for a price of around €400 million. Although the book value of the real estate assets in the portfolio is €800 million, the sale will be closed at a discount of at least 50%. Santander closed the sale of 51% of Popular’s property to Blackstone at a discount of 66%.

With the aim of wiping out the losses that this sale will generate and of getting rid of a large part of its real estate portfolio, once and for all, the Board of Directors of Liberbank proposed a capital increase on 6 September, which they are now trying to safeguard. The bank hopes to raise €500 million through the operation. The objective is for the bank’s default ratio to amount to 3.5% by 2019 and for the coverage ratio on its non-performing assets (doubtful loans and foreclosed assets) to rise to around 50%. At the end of June, Liberbank recorded figures of 11.3% and 40% for these ratios, respectively.

With a balance sheet of €40,000 million, Liberbank is the smallest entity of those supervised by the ECB, together with Banco Crédito Social Cooperativo, the parent company of Cajamar. One of Liberbank’s other missions is to increase its return on equity (ROE) to 8% by 2020, compared with the figure of 2.7% recorded during the first half of this year. It is the second time that the bank has increased its share capital since it started trading on the stock market in 2013. The previous capital increase, in May 2014, saw it raise almost €500 million.

Then, the bank responsible for coordinating the operation was Deutsche Bank; now it is being managed by Citi. Last time, the injection of fresh funds allowed the entity to early repay €124 million that the FROB (Fund for Orderly Bank Restructuring or ‘Fondo de Reestructuración Ordenada Bancaria’) had injected it with; to strength its top-tier capital ratio to more than 10%, as if the Basel III requirements were completely applicable; and to bring forward the payment of dividends to its shareholders.

Original story: Cinco Días (by Álvaro Bayón and Pablo M. Simón)

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

Cerberus Finalises Purchase Of Liberbank’s RE Arm For €85M

31 July 2017 – Voz Pópuli

The sale of Liberbank’s real estate arm will be closed in a matter of days. And the candidate that is most likely to acquire Mihabitans (the name of its property arm) is Haya Real Estate, the platform owned by Cerberus in Spain, according to financial sources consulted by Vozpópuli.

Haya Real Estate and Liberbank are now holding advanced conversations to close an agreement for €85 million after the servicer’s final offer proved to be more convincing than Aktua’s, the former real estate arm of Banesto, which is now owned by the Norwegian group Lindorff. Both the Asturian bank and Haya Real Estate declined to comment.

The agreement includes the sale of Mihabitans to Haya Real Estate as well as an agreement to manage Liberbank’s foreclosed assets for a period of seven years.

Manuel Menéndez, CEO at the bank, explained on Thursday, that the aim of the sale of Mihabitans is to accelerate the divestment of foreclosed assets with a more professional style of management and the generation of business through an agreement for Liberbank to grant new mortgages.

This pact is key for the entity given that it sends a clear message to the market that its objective is to remain independent, despite the pressure from the regulators for a new wave of mergers between the medium-sized savings banks.

Road to independence

Liberbank is doing its utmost this year to convince the market that it is in no way similar to Popular, after the stock market pain it suffered following the rescue of the entity purchased by Santander. After controlling the decline in its share price through a veto on short positions, the group led by Menéndez presented its results on Thursday, which showed that its default rate had registered a decrease of more than 1.5 p.p. to 11.3%, representing an improvement on the objectives announced.

One of the trends to reduce the default rate has been to execute many of the delinquent loans, and so the bank has taken ownership of the corresponding properties. For that reasons, despite registering a record quarter in terms of house sales (€75 million), the volume of foreclosed properties remained stable: €3,115 million.

Liberbank wants to set some ambitious sales targets as part of the agreement that it is now close to signing with Haya Real Estate: the sale of €410 million this year; €625 million next year; and €850 million in 2019. Sales of wholesale portfolios will also be included in this strategy.

Haya Real Estate groups together the management of entities such as Bankia (formerly Bankia Habitat), Cajamar and Sareb. It earned €31 million last year and has almost 700 employees. Two years ago, it negotiated a possible merger with Solvia, owned by Sabadell, and at the end of last year, it evaluated the purchase of Unicaja Banco’s real estate arm.

Original story: Voz Pópuli (by Jorge Zuloaga)

Translation: Carmel Drake

Liberbank Accelerates Sale Of Its RE Arm For €80M

20 July 2017 – Voz Pópuli

A defensive operation by Liberbank. The Asturian entity is accelerating the sale of its real estate company Mihabitans to strengthen its capital, according to financial sources consulted by Vozpópuli. The group led by Manuel Menéndez (pictured above), which declined to make comments, had been considering this possibility for months but has decided to fire the starting gun now, when the market’s focus has been placed on the entity. The prices being considered for this sale come in at just over €80 million.

The operation has been underway for several months under the watch of Alantra (formerly N+1). The subsidiary up for sale is Mihabitans Cartera, which Liberbank created in June last year. This company is responsible for managing the financial group’s homes and real estate debt. Liberbank has transferred some of its staff to the new entity. Its CEO is Víctor Sánchez, the Director that Menéndez entrusted to sort out the property portfolio at CCM following its purchase.

This sale, known in the market as Project Pipe, includes only the management of the real estate assets, a priori, and not their ownership. The idea is that it will take a similar form to the operation carried out by Santander with Altamira when Apollo purchased an 85% stake of that entity; as well as CaixaBank with Servihabitat, which is now controlled by TPG; and Popular with Aliseda.

According to the same sources, the process is in an advanced phase and several candidates have been selected to submit binding offers. The candidates include Lindorff, owner of Aktua; and Haya Real Estate, owned by Cerberus.

Crucial moment

These types of operations are undertaken to generate capital gains and strengthen capital. Given that they only manage properties, companies such as Mihabitans do not have any assets of their own other than their employees and the contract with the bank(s) that own(s) the properties. Depending on the contract agreed, the price may be higher or lower. In this way, Popular obtained around €700 million for Aliseda and Santander received €664 million for Altamira.

This sale comes at a key moment for Liberbank. Following the termination of CCM’s asset protection scheme (EPA), the group’s default rate soared in the last quarter and its capital decreased to 12%, above the levels required. Nevertheless, it is considering several options, such as the deal involving Mihabitans to strengthen itself and calm the market (…).

Liberbank has been compared to the entity that is now in the hands of Santander (Popular) in terms of its default rate, which in the case of the former amounted to 13% at the end of March. The objective is to bring it down below 7% within a year and a half. The entity had accumulated €2,951 million in doubtful debt and €2,414 million in foreclosed assets as at March, with a coverage (over the latter) of 40%. The sale of homes, which Mihabitans is responsible for, reached historical highs in the first quarter of €56 million (…).

Original story: Voz Pópuli (by Jorge Zuloaga)

Translation: Carmel Drake