Tag: N+1

Fortress Puts Its ‘Paratus’ Platform Up For Sale

29 May 2015 – Expansión

Project Coast / Fortress wants to dispose of one of its platforms, with 40 employees and a portfoliol of loans and homes amounting to €700 million.

(Photo: Michael Novogratz, Director at Fortress Investent Group)

Fortress, one of the first opportunistic funds to arrive in Spain has put up the ‘for sale’ sign over part of its business in Spain. The US fund has announced the disposal of its distressed debt management platform and of a portfolio of loans and homes amounting to almost €700 million.

The possible sale comes at a time when international investors are reviewing their strategies in Spain following the results of the regional and local elections. Even so, sources close to the transaction indicate that this deal was launched long before the election results were announced and that the fund remains firm in its commitment to Spain.

The investor has taken the decision after it completed the purchase of Lico Leasing from savings banks last year, with 500 employees and assets worth €600 million.

Former GMAC

Following this purchase, Fortress wants to sell its Paratus platform. The firm originated from General Motor’s former financing arm, GMAC. After being rescued by the US Government in 2008, GMAC – currently known as Ally Financial – sold its European business to Fortress, which represented the fund’s first foray into Spain. The fund started to purchase non-performing loan portfolios in Spain in 2009, and ended up managing a portfolio amounting to €4,000 million.

The opportunistic fund has engaged N+1 to advise on the sale of Paratus; several weeks ago the consultancy firm distributed information to potential investors regarding the so-called Project Coast. Following the first phase of the process, this week N+1 will announce which funds and platforms will go through to the final phase, which is expected to close at the beginning of July.

According to sources in the financial sector, this transaction is primarily targeted at overseas funds that want to establish a base in Spain. Investors such as Elliot – with Gesif -, D.E. Shaw – with Multigestión – and Cerberus – with Gescobro – have closed similar deals in recent years.

According to the information distributed by N+1, Paratus currently manages four asset portfolios and has two service contracts, which in total correspond to assets under management amounting to almost €1,000 million. The sale also includes the current team, comprising 43 professionals.

Almost €700 million of the loans and homes managed by Paratus will be transferred into the hands of the buyer. Of those, €426 million are unsecured loans without any kind of collateral; €152 million are loans secured by 866 properties; and another 500 homes are worth just over €100 million. Most of the real estate exposure is located in Cataluña, Andalucía and Valencia.

New strategy

Following this sale, Fortress will focus its strategy in Spain on Lico Leasing and on its subsidiary Geslico – where it recently undertook an ERE –, which render similar services to those offered by Paratus. Through Lico, the fund has a banking licence as a financial credit establishment, which was granted by the Bank of Spain in December 2014.

Fortress has altered its strategy in Spain after its failed attempts to buy a real estate subsidiary, such as Altamira and Aliseda, and to enter Sareb’s capital.

Following those endeavours, it completed its largest purchase in Spain, by purchasing debt in Realia amounting to €440 million, and since then, it has acquired small real estate portfolios and participated in the financing of indebted companies.

The fund in Spain is led by the banker José María Cava, founder of Gladia Capital and a former director of BBVA.

Original story: Expansión (by Jorge Zuloaga)

Translation: Carmel Drake

Project Formentera: Santander To Sell €170M Hotel Debt Portfolio

18 May 2015 – El Confidencial

A new portfolio of hotel debt has just come onto the market. At a time when investors’ interest in these transactions is at an all time high, Santander has put loans worth €170 million relating to 17 hotels up for sale.

A new portfolio of hotel debt has just come onto the market. At a time when investors’ interest in these transactions is at an all time high, Santander, the largest Spanish bank, has decided to pique the insatiable interest of international funds in this type of transaction through the launch of an operation known as: Project Formentera.

It involves a portfolio of loans worth €170 million, linked to 17 hotels. The majority are located in the Community of Valencia and the Canary Islands, which encourages operations with investors interested, primarily, in the holiday segment and in the (Canarian) archipelago.

The portfolio that Santander has just launched joins those being promoted by two of its main rivals, BBVA and Bankia, which have also decided to take advantage of the window of opportunity that has opened to try to offload some of their debts, which include loans that the financial entities are very keen to divest.

According to sources in the market, unlike what may happen in the residential market – a business the banks know very well, since historically they have had the best prepared teams to manage such assets when they fail – the hotel business is a very specialised segment, whose incident rate (casuística) is more difficult for financial entities to manage.

This means that their priority, in general terms, is to try and sell debt, rather than foreclose it and take ownership of assets that they are much less familiar with than residential. If we add the insatiable appetite of the large international investors for the hotel sector, fuelled by the perfect combination of low prices and a strong recovery in the tourism sector, now is the perfect time to carry out these kinds of transactions.

A string of transactions

In fact, at the end of last year, Bankia closed the sale of a batch of hotel loans to Starwood and Sankaty for €400 million (Project Amazona) and is now finalising the second part of that transaction, known as Castle, whose finalists are Apollo, Oaktree and Bank of America. BBVA has also just opened the bidding for 14 hotels it inherited from unpaid loans, a process known as Project Otelo; meanwhile Sareb has just engaged N+1 to manage the sale of a portfolio with a nominal value of €500 million, which is linked to the property developer Polaris World, in an operation known as Project Birdie.

And so the list goes on. A few weeks ago, the German bad bank FMS Wertmanagement sold the portfolio known as Gaudí to Oaktree for close to €500 million – a batch of problem loans linked to, amongst others, the iconic luxury hotel Arts de Barcelona, as well as another high-end property in Cascais (Portugal), five shopping centres, including Plaza Éboli and Heron City, several storage buildings, and residential and industrial assets.

Moreover, the large financial entities that signed the €152 million syndicated loan with the Basque property developer Urvasco, which, in turn, owns the hotel chain Silken, have spent the last few months selling their stakes both in this debt, as well as in those linked to certain establishments, including the Puerta de America hotel in Madrid; Bank of America is taking advantage of this window to enter through the ‘front door’ of what is considered to be the last great Spanish hotel chain up for sale.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

Sareb Is Selling The Assets It Inherited From Polaris

7 May 2015 – Expansión

The company has appointed N+1 to manage the sale of 3 golf courses, two 5-star hotels and several residential estates.

Sareb wants to cut its ties with one of the ‘great chapters’ of the real estate bubble as soon as possible. In the last few days, the company chaired by Jaime Echegoyen has started the process to dispose of the property it inherited from Polaris World, by putting a portfolio with a nominal value of €500 million up for sale. The market price may amount to less than half of that value.

The portfolio comprises three golf courses, two five-star hotels and several residential complexes, built in Murcia by Polaris, which Sareb inherited in the form of property developer loans from Banco Valencia and Bankia. The sale also includes loans with real estate collateral that have not yet been foreclosed.

Sareb has appointed N+1 to manage the process and according to sources at funds consulted by Expansión, the firm has already distributed information to potential investors (corresponding to the so-called) Project Birdie.

The assets and loans up for sale come from Inversiones en Resorts del Mediterráneo (IRM), a company created in 2009 by Bancaja, Banco de Valencia, Popular and CAM to manage the Polaris assets that were left after the property developer’s debt was restructured.

Sareb’s decision to sell has generated confusion for the other two creditors, Banco Popular and Sabadell – following the latter’s absorption of CAM – because they were not notified (in advance) and because they believe that the best way of maximising the value from IRM’s assets is a block sale, given that they comprise a single residential estate and six golf courses. As a result, it is likely that these entities will contact Sareb over the next few days with a view to repositioning the sale.

When IRM was created, the company held assets worth €991 million, although by the end of 2013 – the latest available accounts – they had deteriorated (in value) by almost €500 million. The owners of its capital are Sabadell – covered by CAM’s EPA (Asset Protection Scheme or Esquema de Protección de Activos) – Bankia, CaixaBank and Popular.

Original story: Expansión (by Jorge Zuloaga)

Translation: Carmel Drake

Bankia And BMN Both Put NPL Portfolios Up For Sale

27 March 2015 – Expansión

Divestments / Bankia and BMN are seeking to replicate the transaction completed by Catalunya Banc in 2014 on a smaller scale. The market expects a “boom” in these sales in 2015.

After two years divesting shareholdings and bad debts, Bankia considers that the time has come for it to transfer some of the non-performing mortgages that it deems to be unrecoverable. The entity led by José Ignacio Goirigolzarri has put a portfolio amounting to €1,300 million up for sale, of which more than €900 million relate to unpaid mortgages. BMN has also put a similar package of loans up for sale, amounting to €160 million, of which €52 million relate to mortgages.

Investors have received these operations with a great deal of anticipation, because since Catalunya Banc transferred a portfolio of problem mortgages amounting to €6,500 million to Blackstone last summer, no other entity had decided to follow suit.

After the step taken by Bankia and BMN, a number of entities are expected to join the band wagon and put some of their real estate loans to individuals up for sale.

Change of course

Until now, the bank had been reluctant to sell mortgages to opportunistic funds for reputational risk reasons. To avoid this, Bankia and BMN have decided to exclude loans relating to subsidised and social housing (from their portfolios). Moreover, sources in the financial sector explain that overseas funds may offer more alternatives for non-performing loans than the banks, since they purchase the loans at a discount and so can offer discounts themselves. These investors, just like the banks, must comply with the Code of Good Practice developed by the (Ministry of) Economy in 2012.

The sale launched by Bankia forms part of Project Wind, advised by KPMG . In total, the portfolio contains overdue loans amounting to €1,300 million, which are split into three sub-portfolios: mortgages; loans to SMEs and real estate developers, secured by properties, worth €180 million; and unsecured loans amounting to €210 million.

The mortgage portfolio comprises 4,300 loans, with an average value of €214,000. Most of the mortgages were granted to purchase property in Cataluña (32%), Madrid (25%) and Valencia (18%). Furthermore, 83% of the 4,300 non-performing loans are involved in judicial proceedings.

These types of transactions allow banks to remove non-performing assets from their balance sheets, release provisions and devote new resources to new more profitable activities.

Foreign funds will monitor this transaction very closely, especially those who have purchased a real estate platform in recent years: Cerberus (Haya Real Estate), Apollo (Altamira), Centerbridge (Aktua), TPG (Servihabitat), Blackstone (Catalunya Caixa Inmobiliaria) and Värde Partners y Kennedy Wilson (Aliseda). Having purchased the real estate management platforms in 2013, these investors are now keen to nurture (feed) them with their own assets, and whereby obtain profitability from their investments.

In addition to this transaction, Bankia has two other deals in the pipeline: the sale of hotel loans – Project Castle – for which it has received non-binding offers of between €200 million and €300 million; and the transfer of syndicated and bilateral loans amounting to €500 million – Project Commander – which Deloitte is advising.

On a smaller scale

In the meantime, BMN has put a similar portfolio up for sale to that offered by Bankia as part of Project Wind. It amounts to €160 million, of which one third are unpaid mortgages. The sale of this portfolio, known as Project Pampa, is being managed by N+1. Almost all of the 300 mortgages included in this portfolio are secured by properties in Cataluña.

BMN hopes to close the sale of its portfolio by the end of May. In the case of Bankia, the transfer process may last until the middle of the year.

Original story: Expansión (by Jorge Zuloaga)

Translation: Carmel Drake

Frob Preps for Transfer of Catalunya Banc´s Mortgages

(…) The Restructuring Fund of Spain (Frob) intents to copy the auction scheme of NCG Banco in case of Catalunya Banc. The public fund wants to draw benefit from the great interest of the international investors in Spain to push the asking price up.

To achieve that, it has already began negotiations with some of the principal U.S. investors on the possibility of putting a part of the Catalonian banks´mortgage portfolios up for auction, according to the sources close to the talks.

On the market it is said that the portfolio could reach an amount of 5.500 million Euros, however Frob denies the information. (…).

According to financial sources, among the funds extremely interested in the operation there are Centerbridge, Kennedy Wilson, Värde Partners, Lone Star and Apollo. They are among the biggest companies in the world and have already acquired a few real estate platforms from Spanish banks in last months. (…).

The talks are preliminary in nature. N+1, investment bank responsable for the auction of Catalunya Banc, wishes to look closely into the real interest on the part of investors and then advise the best choice to the Frob.

To Avoid EPA

Together with the possible mortgage portfolio sale, the Frob hopes to put a pressure on the Spanish banks interested in Catalunya Banc´s property in order to avoid the Asset Protection Scheme (EPA in Spain) at the auction. The public fund prefers to sell the entity piece by piece before granting new public aids.

Thanks to the strategy, Frob has already gained 100 million Euros more at the NCG auction. (…).

This time no one expects that all the investors will bid for the portfolio of Catalunya Banc as “they do not have enough capacity to buy a large mortgage portfolio”. Thus, the price for a portfolio of mortgages up-to-date with payments could be much higher compared to the 4% – 5% that the failed mortgages of the bank are valued at.

The transaction would fit very well to some of the foreign investors that have bought real estate platforms from banks in last months: Centerbridge that acquired Aktua from Banesto; Cerberus bought Bankia Habitat; TPG – ServiHabitat from CaixaBank; Apollo – Altamira from Santander; Kennedy Wilson and Värde Partners got Aliseda and reached an agreement about the real estate company of Catalunya Banc.

Together with the mortgage loans, the Frob and N+1 could sell the failed mortgages and other Catalunya Banc´s enterprises. (…).

Source: Expansión