Tag: mortgage debt

Merlin Raises Issues 12-Year Bonds Worth €300M

12 September 2017 – Expansión

Merlin Properties has returned to the capital market, taking the Socimi‘s visits so far this year to two. Yesterday, it managed to raise €300 million from the issue of 12-year bonds, in an operation for which it offered a coupon of 2.375%

To effectively manage the placement, Merlin engaged the services of Morgan Stanley. The issuance received robust demand, which allowed the firm to reduce the cost from 150 basis points above mid-swap (the reference rate for the placement of fixed income bonds in euros) considered initially, to 140 basis points above mid-swap.

This is the fifth issue that Merlin Properties has undertaken since its constitution. The first three, for a cumulative sum of €2,350 million, were carried out in 2016. This year, the Socimi has already raised €900 million.

According to the company, the funds raised will be used to early repay its mortgage debt, as well as for “general corporate purposes”. Merlin is the fourth non-financial company to resort to the debt market after Telefónica, Iberdrola and Cortefiel.

Original story: Expansión (by A. Stumpf)

Translation: Carmel Drake

Blackstone Builds Rental Home Giant In Spain

18 May 2017 – Cinco Días

The fund Blackstone is the largest property owner in the world and has been backing real estate Spain for a while now. And, it is going to continue to do so in the short to medium term. For the time being, the fund’s plans involve becoming a giant in the rental housing segment and it is already starting to show its investment strategy through several companies, including three new Socimis.

Blackstone’s first major step was to create the servicer Anticipa Real Estate, under the structure of the former entity Cataluña Caixa Inmobiliaria. This asset management platform purchased 40,000 mortgages from the extinct Catalan entity for €4,123 million in 2015. Since then, it has continued acquiring these kinds of mortgage portfolios, to accumulate a total investment to date of almost €7,000 million.

The latest acquisitions made by Blackstone – which is headquartered in New York – have included a €400 million portfolio of loans backed by property developer collateral and another portfolio from BBVA comprising 3,500 properties, for around €300 million.

This entire portfolio of mortgage debt and properties is managed by Anticipa, a company that is led by its CEO, Eduard Mendiluce, a veteran director in the sector. (…).

The work that the servicer performs for Blackstone involves managing the loans granted by banks to individuals and property developers. In many cases, that task ends with the “dación en pago” or foreclosure of the property or development, due to non-payment. The company says that it treats each client on a case by case basis, and the process often means it has to accept a discount on the debt.

Of the portfolios acquired from banks, “daciones en pago” and foreclosures, Anticipa already owns 12,000 properties, which are leased out (in around 75% of cases) and put up for sale. “The idea is for it to become one of the large owners of rental housing in Spain”, explains a spokesperson.

The opportunistic fund – which purchases problem assets at a discount – is planning to remain in the Spanish market beyond the short term, and has absolutely no interest in selling its businesses within the next 5-7 years, but rather intends to benefit from the upwards trend in property.

To create the residential giant, the US firm has started to create vehicles to which it will transfer properties for rent. The first of these companies is Albirana Properties, a Socimi that started to trade on the Alternative Investment Market in March. That listed investment company, which benefits from certain tax advantages, already manages 5,000 homes.

But it is only the first to be listed. Other Socimis, namely Pegarena and Tourmalet, which have already been constituted and are already owned by several Blackstone funds, will follow. These firms, in turn, operate using Anticipa as their manager. (…).

Packaging up these homes into different companies will facilitate the sale of those companies in the future to various interested parties.

Blackstone decided to back the rental sector rather than the sales market at a time of change in the type of demand, according to experts in the sector. In particular, the generation of millennials, for cultural reasons – are more inclined to live without the tie of a mortgage – and, above all, the difficulties being faced by young people to obtain loans given the job insecurity.

Unlike other Socimis that specialise in rental housing, the management of assets by Albirana is more complex, given that its properties are relatively scattered geographically, as they proceed from individual mortgages. Typically these companies opt to manage entire buildings, but Blackstone’s company has specialised in what is known as granular management.

Currently, the majority of these properties are located in Cataluña. They are followed – at some distance – by homes in Madrid, Comunidad Valenciana and Andalucía.

Original story: Cinco Días (by Alfonso Simón Ruiz)

Translation: Carmel Drake

Project Tour: Bankia Puts €166M Property Portfolio Up For Sale

3 February 2017 – Idealista

The banking sector is starting 2017 with a bang as it accelerates the sale of properties. Bankia has put a new real estate portfolio on the market – it does not contain debt, but rather comprises 1,800 properties, including finished homes, plots of land, retail premises, industrial assets and hotels. Known as Project Tour, the package is valued at €166 million.

Bankia is one of the most active banks at divesting real estate assets once again, as it seeks to focus on its pure banking business. It is a technique that has worked well for the banks in recent years and not just in Spain, but in other countries around the world as well.

In this case, so-called Project Tour is in the hands of the firm Alantra (formerly N+1) which intends to place this property portfolio (known by its initials in English as an REO) with international investors. Its value amounts to €165.9 million, according to financial sources consulted by Idealista.

The portfolio comprises 1,292 finished homes (it does not include any subsidised housing), 324 plots of land, 159 retail premises, 20 industrial assets and 9 hotels. None of the assets in the portfolio are rented or co-owned.

The properties are primarily located in the Community of Valencia, mainly in Valencia; Cataluña, mainly in Barcelona; the Canary Islands, mainly in Las Palmas; Madrid and Castilla y León (Segovia is home to most of these assets).

According to sources consulted by Idealista, Bankia expects to receive non-binding offers from a small number of investors by the beginning of February and binding offers by the middle or end of March. In this way, it plans to close the sale of the package during the month of March.

The entity chaired by José Ignacio Goirigolzarri (pictured above) is known as one of the most dynamic in the market: in 2016, it put several portfolios up for sale, including Project Ocean, a real estate loan portfolio worth almost €400 million, which was sold to Deutsche Bank; Project Tizona, a mortgage debt portfolio worth €1,000 million; and Project Lane, containing properties worth €288 million.

Original story: Idealista (by P. Martínez-Almedia)

Translation: Carmel Drake

Popular Places €1,500M 6-Year Mortgage Bond Issue

26 February 2016 – Cinco Días

Banco Popular has issued €1,500 million in mortgage bonds with a six year term and a price of 88 points above the mid-swap rate. Demand for the bonds has exceeded €2,800 million, according to market sources.

This is the first debt issue that the entity led by Ángel Ron has completed in 2016. Last year, the bank issued debt amounting to €5,050 million in total.

Popular’s most important debt issuances in 2015 included: the issue of senior debt amounting to €500 million, of which 74% was acquired by international investors; €3,000 million in bonds with interest rates that were “historically low” for the entity; and €750 million in Additional Tier 1, which was placed entirely with qualifying international investors within just a few hours.

Original story: Cinco Días

Translation: Carmel Drake

CaixaBank Places €1,500M 7-Year Mortgage Bond Issue

2 February 2016 – Cinco Días

The bank chaired by Isidro Fainé…has placed a 7-year mortgage bond issue amounting to €1,500 million. The entity has been helped by Barclays, Goldman Sachs, Société Générale and UBS.

CaixaBank has placed the debt issue at a price of 78 basis points above the 7-year midswap rate (the risk free interest rate corresponding to that term), slightly below the reference rate of 80 basis points sought at the beginning of the placement. The coupon has therefore been left untouched at 1%.

Demand for the issue has amounted to more than €2,500 million, with more than 125 investors expressing interest in it, of which a significant number were foreigners. This has allowed the entity to reduce the price of the issue. CaixaBank’s last debt issue, which was placed on 4 November 2015, amounted to €1,000 million. It had a five-year term and a coupon of 0.625%. The entity is strengthening its surplus liquidity, which amounted to more than €54,000 million at the end of last year.

Spanish banks are rushing to raise funds on the capital markets. In January, BBVA placed a 5-year senior debt issue amounting to €1,000 million; meanwhile, Bankia placed mortgage debt amounting to €1,000 million; Santander issued 10-year bonds for the same value; and Deutsche Bank issued bonds amounting to €500 million with a 7-year term.

Santander achieved a price of 65 basis points over the midswap rate – the reference index for this kind of debt issue – on its placement. It will pay a coupon of 1.5%. Mediobanca, Natixis and Nomura accompanied the Santander group in the management of the operation.

Javier González, Head of Debt Issues by Financial Entities at BNP Paribas, which participated in the placements of BBVA, Bankia and the Treasury, confirmed that the money invested in these operations has been coming from end investors, such as investment and pension funds.

Banco Santander and Bankia have chosen to issue mortgage bonds because the volatile environment makes this type of asset very popular with conservative investors.

Original story: Cinco Días (by Pablo Martín Simón)

Translation: Carmel Drake

Sareb Owns One Third Of Spain’s Problem Banking Assets

17 September 2015 – Expansión

Sareb is playing a key role in the clean up of Spain’s financial sector. According to a study conducted by the consultancy RR de Acuña y Asociados, proof of that is the fact that it now owns one third of the sector’s problem assets.

The firm calculates that the Spanish banking system’s exposure to problem real estate assets amounts to €259,049 million in gross terms, plus a further €32,337 million in doubtful mortgage debt.

According to the study, which is based on the latest available figures, Sareb has loans and real estate assets worth €44,263 million, which in gross terms – before they were transferred – would have been worth €94,750 million.

RR de Acuña y Asociados also highlights that the transfer of assets from entities with public aid to Sareb meant that the first (entities) recorded extraordinary valuation adjustments of €12,700 million. The assets transferred by Bankia, Catalunya Banc, NCG Banco – now Abanca -, Banco de Valencia, BMN, Ceiss, Liberbank and Caja 3 had an initial appraisal value of €106,970 million. Excluding provisions, RR de Acuña y Asociados has identified a mismatch of €12,694 million between the transfer value to Sareb, which the entities must have borne themselves.

Forecast

Although the volume of problematic banking assets has stopped increasing over the last few years, the consultancy warns that it will take time for the entities to digest the leftover real estate assets: “Although the trend in the volume of doubtful assets is stable and is even recording some small downward variations, if we take into consideration the precarious financial situation of the property development and real estate construction companies, all indicators show that the level of exposed assets will continue to behave in the same way, for the next two years at least”, says the report. This means “a decrease in the volume of loans and an increase in the volume of real estate assets”.

As such, the real estate firm observes “an over-supply”, which means that it is “unlikely that house prices will begin to increase in the coming years”.

Meanwhile, yesterday, Sareb announced the repayment of a senior debt tranche amounting to €47.3 million after amending the asset transfer contract it holds with Catalunya Banc.

The asset transfer agreement between the two entities established that either of the parties could make adjustments to regulate the transfer completed in 2012, for a period of 36 months following its signing.

Original story: Expansión (by J.Z. and J.M.L.)

Translation: Carmel Drake