Axis: Spain’s Banks Will Divest At Least €40bn of Their Problem RE Assets This Year

30 March 2018 – El Mundo

Spain’s banks are still trying to lighten their balance sheets of the huge load left on them by the real estate crisis. Forecasts for this year indicate that they will manage to divest assets worth at least €40 billion including properties, foreclosed land and defaulted and non-performing loans.

Those are the estimates made by the consultancy firm Axis Corporate on the basis of operations that are currently being sounded out in the Spanish real estate sector. The figure includes transactions worth at least €9 billion by Sareb, sales of around €6 billion by Bankia and operations by CaixaBank and Banco Sabadell with a volume of close to €12 billion each. “To all of these operations, we have to add the retail operations that the servicers are currently undertaking”, explains José Masip, Real Estate Partner at Axis Corporate and coordinator of the Assets Under Management Observatory Report published recently by the company.

In 2017, sales of toxic assets linked to real estate exceeded €50 billion, “almost twice the €27.4 billion sold between 2012 and 2016”, says the report. Spanish entities are accelerating the clean up of this type of asset from their balance sheets to reduce their default rates and fulfil the European regulations that force entities to reduce the weight of non-performing assets to pre-crisis levels. Despite that and according to data from the consultancy firm JLL, the volume of non-performing assets with real estate collateral in the hands of the banks and Sareb amounts to around €200 billion: €80 billion in REOs (foreclosed assets) and €120 billion in NPLs (Non Performing Loans or doubtful credits).

Greater weight of funds

Both firms predict that the rate of sales seen last year will continue in 2018, above all due to the growing interest from international investment funds (…).

The main investment funds focused on the purchase of real estate assets in Spain are Bain Capital, Oaktree, EOS Spain, Apollo and Axactor, who are following in the footsteps of others such as Blackstone and Cerberus.

The latter two entities starred in the two most important operations of last year. In July, Santander sold a portfolio comprising 51% of the toxic property it had inherited following the purchase of Banco Popular to Blackstone in an operation worth €5.1 billion; meanwhile, in November, BBVA sold 80% of its real estate portfolio to Cerberus for around €4 billion. In a similar operation, also in 2017, Liberbank sold part of its toxic portfolio to the funds Bain and Oceanwood for €602 million.

The transactions were structured through the creation of joint ventures in all cases, in which the bank held a minority percentage of the company or servicer and the acquiring fund took over the bulk of the management. According to Emilio Portes, Director of the Portfolio Business at JLL for Southern Europe, “the structure offers entities a stake in the profits of the assets with upside potential at the same time as cleaning up their balance sheets and slightly improving their capital ratios. Similarly, it offers buyers more advantageous prices without limiting their strategy and management capacity”.

Indeed, in Axis’s opinion, those servicers are expected to be some of the main players in the market over the short and medium term. According to data from the consultancy firm, more than 80% of the assets under management are in the hands of five of them: Altamira (linked to Santander), Servihabitat (CaixaBank), Haya/Anida (controlled by Cerberus after the operation with BBVA), Aliseda/Anticipa (Blackstone) and Solvia (Sabadell). The outlook for this year points to greater concentration in the sector, “with the possible sale of some of the existing servicers”, in such a way that their specialisation and differentiation will be definitive.

Original story: El Mundo (by María Hernández)

Translation: Carmel Drake

Bankinter Prepares to Debut its Hotel Socimi in Q1 2018

26 December 2017 – El Confidencial

Bankinter has started to offer its private banking clients the option of acquiring a stake in a listed real estate investment company (Socimi) that owns a portfolio of 4- and 5-star hotels located across Spain, which it plans to debut on the stock market during the first quarter of 2018.

This Socimi will be created with a share capital of almost €200 million invested in a selection of hotels: 65% holiday establishments and the remainder urban, including several properties operated by high-profile chains such as Marriott and Meliá, according to reports made today by sources close to the project.

In recent weeks, Bankinter has been in charge of choosing the hotels, all of which are operating, in order to offer an annual dividend of approximately 5% to all of the shareholders of the Socimi, which will make its debut on the MAB, the stock market segment designed for SMEs.

The main shareholders will be Bankinter’s private banking clients, who have already pledged to contribute around €120 million to the project on 18 January. The minimum investment per client will be €200,000 and the maximum will be 15% of each individual’s financial wealth.

In addition, other investors, including Bankinter itself, the manager of the Socimi and institutional investors, will invest at least €60 million more.

The idea is that the bank led by María Dolores Dancausa will invest €18 million and the manager of the Socimi, GMA, €9 million, which would mean that both will hold a minority stake in the company, but one that is sufficient to entitle representation on the Board of Directors.

Unlike other Socimis, the investment vehicle designed by Bankinter has a divestment period of 7 years, although the bank reserves the right to extend its life.

This Socimi is not the first to be launched by the financial institution, given that in February, it placed Ores on the market, together with the company Sonae Sierra. Ores invests in commercial assets such as shops and large retail spaces in Spain and Portugal.

Original story: El Confidencial 

Translation: Carmel Drake

Investors Vie To Buy Residential Assets

22 June 2017 – Expansión

The residential market has come onto the radar of investors, who are analysing this real estate segment as an alternative to allow them to diversify their investment portfolios in light of the uncertainty over sovereign debt and the volatility in the stock markets. Thus, the gross return on residential rental assets amounted to 4.3% at the beginning of 2017, above the yields offered on other options for more conservative investors.

In this way, the interest from the professional residential market caused the volume and number of operations carried out in this business segment to soar last year. Specifically, investment in the residential sector in Spain reached €2,100 million, which represented an increase of 300% with respect to last year. Moreover, the push was maintained during the first three months of 2017, with operations closed amounting to €486 million, according to a report compiled by the real estate consultancy firm CBRE.

Last year, two operations accounted for 75% of the market. The first of these transactions was the American fund Blackstone’s purchase of 4,500 rental homes from Banco Sabadell for €600 million.

Another of the major operations in the sector was so-called Project Crete, which initially comprised the divestment by Merlin of a portfolio of homes inherited from Testa which the Socimi considered to be non-strategic.

During the execution of the process to divest those assets – with a target of around €300 million – Merlin reached an agreement with the banks that own Metrovacesa to acquire that real estate firm. During the subsequent integration negotiations, Merlin and Metrovacesa decided to combine their residential portfolios to constitute a new firm, Testa Residencial – to be managed by Merlin, in which it holds a minority stake – with a volume of assets worth €1,000 million and comprising more than 4,600 homes. This portfolio was expanded to include almost 8,000 homes in April, with the incorporation of assets proceeding from Santander, BBVA and Banco Popular.

Besides these two operations, the main investor in these kinds of assets are the Socimis and real estate companies, and typical operations involve the sale of assets for between €10 million and €15 million. In terms of the vendors, above all, they are financial institutions and small domestic owners.

The report indicates that the rental home market continues to be a less professional sector and, with the exception of Blackstone, interest from the funds has not been translated into the creation of large portfolios, at least for the time being, which means that this segment offers business opportunities. In this sense, although the rental market is growing, Spain is still an owner-dominated market, and so there is still potential for expansion.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Meridia Acquires Minority Stake In Andilana

30 January 2017 – Expansión

The private equity firm Meridia Capital has acquired a minority but significant stake in the restaurant group Andilana, which operates 25 restaurants in Cataluña and Madrid and five hotels in Barcelona, the Costa Brava and Madagascar.

The aim of the operation is to simplify Andilana’s ownership structure and support its growth plan, which involves new openings in the Spanish capital, as well as in other cities with tourist potential.

Andilana generates turnover of €40 million, employs 645 people and receives 2.5 million clients per year.

Original story: Expansión

Translation: Carmel Drake

B&B Hotels Takes Control Of Hotel Group Sidorme

20 October 2016 – Expansión

The French hotel chain B&B Hotels, controlled by the French private equity firm PAI Partners, has acquired the Spanish group Sidorme, which has 1,367 rooms across 15 establishments in Spain.

With this operation, B&B Hotels now controls 19 establishments in Spain. The French group already owned four hotels in Valencia, Alicante, Madrid and Gerona, and plans to open a fifth, in Vigo, at the end of 2016.

The Sidorme brand will disappear and will be absorbed by B&B, which is more widely recognised and has a strong international presence. B&B Hotels manages and operates almost 370 hotels in France, Germany, Italy, Spain, Poland, Czech Republic and Morocco.

The head of Sidorme until now, Jairo González, who has purchased a minority “but significant” stake in the hotel chain, will be the CEO of B&B in Spain and Portugal.

The Director has explained that the company plans to enter the Portuguese market soon and grow at double digits over the next three years.

The hotel group expects to increase its sales by 49% in 2016, to exceed €15 million. The company, which increased its sales by 45% in 2015, to more than €10 million, tripled its profits during the same period, to generate a net profit of more than €1 million. “The aim is to achieve cumulative EBITDA growth of 30% over the next three years and to double the size of the hotel chain”, said González.

Sidorme was founded in 2014 by fourteen family offices from across Spain, including the New Windows Group, the Del Castillo family, José Manuel Loureda and the Sansalvadó family, who invested around €25 million in total.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Husa Proposes Discount Of More Than 70% To Its Creditors

3 June 2015 – Expansión

The hotel chain Husa, chaired by Joan Gaspart, presented a proposed agreement yesterday, in which it committed to paying around €70 million of its €240 million debt. The company has proposed that its lender banks take ownership of its assets and that a new manager, controlled by Park Street, in which Husa would own a minority stake, takes care of the operation of the assets.

Husa’s proposal represents an average discount of more than 70%, although it would be distributed very differently depending on the type of creditor. For public and privileged loans, the discount would be around 10%; and for ordinary and subordinate creditors, the discount would increase to 95%.

Original story: Expansión (Marisa Anglés)

Translation: Carmel Drake