Tag: nominal value

The Funds Acquired €60bn of Banking ‘Assets’ in 2017

3 January 2018 – El Economista

International funds’ appetite for Spanish real estate is proving insatiable. And that was reflected in the final days of 2017, which saw a frantic year-end in the market for the sale by banks of debt portfolios secured by real estate collateral. On the basis of the operations that were underway during the final months of the year and the transactions that were actually closed, it is estimated that debt with a gross book value around €60 billion was sold in 2017, compared to €22 billion in 2016. Of that total volume, Blackstone was, undoubtedly, the great star, with its acquisition of the largest real estate portfolio ever sold in Spain and one of the largest ever sold in Europe.

The US fund agreed with Santander to purchase 51% of all the toxic assets – doubtful loans and foreclosed properties – from Popular, which had a gross value of €30 billion. A record operation in Spain, which the bank chaired by Ana Botín closed to clean up the balance sheet of the recently acquired entity.

Cerberus was the other major purchaser of 2017, after it acquired Anida and BBVA’s real estate assets with a gross value of €13 billion, through the creation of a joint company in which the fund will hold a majority 80% stake and BBVA will retain a 20% share.

Those two operations are a clear reflection of the dynamic role that funds are playing in the Spanish real estate market, given that in addition to having provided the impetus for the new generation of property developers, they are also serving as the main clean-up tool for financial institutions. “The funds have played a fundamental role, given that they have put a price on the portfolios and have provided capital to execute purchases”, explains Manuel Ángel González Mesones, Partner in Corporate Finance for the Financial sector at KPMG in Spain, who states that in the primary market – the sale of portfolios directly by the banks – property developers, the other great consumers of debt with real estate collateral “have not been particularly active, given that their criteria are very selective”. Nevertheless, “the large property developers have been buying foreclosed assets in a selective way for years from both financial institutions and different market players, such as Sareb and funds that have acquired those assets through the purchase of portfolios”.

In this sense, Emilio Portes, Director of Financial Advisory at the real estate consultancy firm JLL, highlights that, although the role of the funds has been key, the property developers have also played their part, by converting themselves into “instrumental vehicles for the funds in terms of the development of the land acquired in portfolios such as NPLs – doubtful loans – and REOs – foreclosed assets”. Thanks to that intense activity in which, in addition to Blackstone and Cerberus, other players have also featured, including Bain, Goldman Sachs, Oaktree, De Shaw, Deutsche Bank, Lone Star and Apollo, the banks have managed to decrease the volume of toxic assets relating to the real estate sector by almost half in one year, from more than €132 billion to around €75 billion. To that figure, we have to add the €40 billion sold by Sareb, which means that the total clean up figure amounted to €115 billion by the end of 2017.

That figure is still well below the almost €400 billion that was reached at the height of the crisis, but it also well above the less than €10 billion that was registered before the burst of the bubble (…).

More moderate operations in 2018

According to González, “Activity will continue to be significant, but due to the size of the entities that still have assets let to sell, I don’t think that we will see such large operations this year. The focus will certainly be more on transactions with nominal values of between €500 million and €2,000 million, although that could lead to an equally successful year…”.

Original story: El Economista (by Alba Brualla)

Translation: Carmel Drake

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

Sareb Sells €625M in NPLs to Deutsche Bank & Oaktree

20 December 2017 – El Independiente

Sareb (…) is closing 2017 by completing two of its largest operations of the year, with the sale of two non-performing loan portfolios to two large international funds.

The German bank Deutsche Bank has been awarded one portfolio comprising €375 million in non-performing loans, whilst the US fund Oaktree is on the verge of acquiring another portfolio, containing around €250 million in NPLs. Both portfolios, known as Project Inés and Project Tambó, respectively, stand out as two of the largest transactions undertaken by the so-called bad bank this year, confirmed sources familiar with the deals to El Independiente.

Project Inés, which was initially put up for sale with a nominal value of €500 million and which has been closed with a smaller perimeter (€375 million), as tends to be the case, primarily comprises mortgage loans secured by collateral. Meanwhile, Project Tambó was placed on the market with a nominal value of €300 million and now seems to be closing at around the €250 million mark.

Sareb was constituted in 2012 with the mission of selling 200,000 real estate assets, proceeding from the banks, worth just over €50 billion.

Moreover, in July, it launched its channel for the sale of non-performing loans worth €400 million aimed at investors and professionals to boost the divestment of a proportion of its portfolio of financial assets. Its commitment is to proceed with the liquidation of the properties and loans that it has acquired, before November 2027.

To accelerate the process, Sareb plans to debut its Socimi Témpore Properties on the stock market at the beginning of 2018. The Socimi owns a selection of Sareb’s best rental homes, almost 1,400 properties in total, in the metropolitan areas of Spain’s large capitals and other areas with high demand for rental.

The Socimi’s debut will happen during the first quarter of next year, since, although Sareb has everything in place to start to trade and its original plan was to list the company by the end of 2017, its negotiations with the MAB, the alternative market where the Socimi will trade, are still on-going (…).

During the 9 months to September, Sareb sold a total of 13,796 properties, which represents an increase of 55% with respect to the same period in 2016. Of those, 7,855 related to owned properties and 5,941 were linked to loans (…).

Revenues

Sareb’s total revenues as at September rose by 3.6% with respect to the first nine months of 2016, to €2.394 billion.

The company highlights that, given the composition of Sareb’s asset portfolio – 68% of which relates to loans linked to the real estate sector – the weight of revenues resulting from the management of loans is still more significant than those generated from the sale of properties.

Meanwhile, revenues from the management of loans decreased by 6.8% during the first nine months of the year, to reach €1.599 billion, primarily due to the lower interest charged and the reduction in loan repayments and cancelations as the portfolio is smaller than it was last year.

Original story: El Independiente (by Ana Antón)

Translation: Carmel Drake

Domo Activos’s Socimi Approves €15M Capital Increase to Buy Land

12 December 2017 – Eje Prime

Domo Activos is getting down to work with its growth plan. The largest property developer Socimi, which is aimed at medium-sized investors, has approved a €15 million capital increase at an Extraordinary Shareholders’ Meeting. The funds will be used to purchase land in Spain for the construction of new homes.

The company has already identified purchase opportunities in a number of cities in Spain, according to José Luis Alba, the company’s Area Director, speaking to Eje Prime. “We will focus these acquisitions on Madrid, Málaga and Valencia in the first instance, but we are also searching for plots in Sevilla, Córdoba, Granada and Zaragoza”.

The Socimi’s capital increase will be undertaken through the issue and launch into circulation of a maximum of 7.5 million shares, granting a nominal value of €2 to each one of them.

Currently, the first project promoted by Domo Activos is the development being constructed in Madrid, in the Ensanche de Vallecas. This building will have eighty homes allocated for rent.

Original story: Eje Prime

Translation: Carmel Drake

Quonia To Invest €26.5M On New Purchases In Madrid & Sevilla

10 October 2017 – Eje Prime

Socimis have become one of the engines of the real estate business in Spain. And the latest to announce its plans for the next few months has been the Catalan firm Quonia, which is going to carry out a capital increase of €26.5 million to fatten up its portfolio of assets, as Eduard Mercader, Director General of the company, explained to Eje Prime. Although to date most of the group’s acquisitions have been undertaken in Barcelona, the company is now turning its focus towards new Spanish cities, such as Madrid and Sevilla.

Mercader has just taken over the role of Director General at Quonia, hitherto occupied by Enric Pérez (…). Pérez has just submitted his resignation to the Board and his position on that body has been filled by Fabian Gosselin, who holds a direct stake in the company (2.52%).

In this way, and with its renewed leadership, Quonia is starting a new phase of growth (…).

According to the company, on 20 September, the Board of Directors of Quonia approved an increase in the company’s share capital, to be carried out in two tranches. The first will be performed through an increase in the share capital for a nominal amount of €12.63 million through the issue and launch into circulation of more than 12 million new ordinary shares with a nominal unitary value of €1 “of the same class and series as the shares currently in circulation”.

“The new shares will be issued with a nominal value of €1 plus an issue premium of €1.10 per share, which results in an issue price of €2.10 per share”, says the group. The total amount of the capital increase, in the event that it is subscribed in its entirety, will amount to €26,522,574, in other words, €12,629,797 in the form of share capital and €13,892,777 in the form of the issue premium.

New acquisition horizon 

The company has decided to expand its spectrum of acquisitions to include Madrid and Sevilla (…). In March last year, Quonia, a vehicle managed externally by Rusiton XXI and specialising in real estate investment, with robust financial experience, acquired the building at number 60 Passeig Joan de Borbó, in la Barceloneta, one of the most touristy areas of the Catalan capital, for €7 million.

Following that acquisition, Quonia’s portfolio comprised six assets, located in Barcelona, Asturias and Sevilla. The Socimi made its debut on the Alternative Investment Market (MAB) in July 2016 (…).

Quonia’s plans now include “identifying strategic properties that respond to the economic sectors highlighted in our geographical scope of investment”, explain sources at the company (…).

Original story: Eje Prime (by C. Pareja)

Translation: Carmel Drake

Vitruvio Completes Its Merger With Consulnor

25 September 2017 – Eje Prime

Vitruvio has completed its corporate operation. On 13 September, the Socimi finalised the merger by absorption of Consulnor Patrimonio Inmobiliario, as agreed at the General Shareholders’ Meeting in June. In this way, Consulnor Patrimonio Inmobiliario has transferred all of its assets to Vitruvio, according to sources at the company. Following this change in structure, the Socimi will see its revenues soar next year to €6 million and its Board of Directors will change.

Following the merger, Vitruvio will manage a portfolio of real estate assets with a gross value of €103 million and will generate an estimated turnover of €5.2 million for this year. Thanks to the new assets, the company will have greater capillarity in the country and a more diversified portfolio of properties; it will also see an increase in its average profitability.

According to both groups, the operation will result in growth in terms of gross assets of almost 70%, “with a significant increase in revenues and profitability for shareholders”. Moreover, the company has highlighted a series of advantages that the merger of the two groups generates, including an increase in the shareholder base.

“The incorporation of Consulnor Patrimonio Inmobiliario brings with it the entry of around 70 new shareholders to the Socimi’s structure, including some institutional players, which means an increase in the marketability of the shares”, say sources at Vitruvio. Another key to the merger, according to the company, is the increase in turnover, which will result in “guaranteeing the remuneration policy for shareholders” (…).

The operation has been articulated through a €16.29 million capital increase in Vitruvio, through the issue of 1,629,907 new shares of the same class as those already in circulation with a nominal value of €10. Those shares have been issued at an issue premium of €3.20 per share and have been subscribed by the shareholders of Consulnor Patrimonio Inmobiliario. Following the merger, the market capitalisation of Vitruvio will be set at €64 million.

In terms of assets, on 25 May, Vitruvio subscribed to an “exclusive and binding” agreement to obtain a building for hotel use in Madrid for a value of between €11 million and €12 million. Although the company has not provided any more details about the operation, it has explained that the estimated annual rent from the property will amount to more than €650,000, “which represents a net return of more than 5.55%” (…).

New Board of Directors

As part of the agreement between Vitruvio and Consulnor Patrimonio Inmobiliario, the Board of Directors of the resulting company, which will retain the name Vitruvio, will result in the entry onto the Board of four new members. Most notably, Pablo de la Iglesia, Director General of Consulnor, will joins the Board of Directors of Vitruvio, having worked for other companies such as Barclays and Jopa Family Office.

José Antonio Torrealba will also have a seat on the Board of Vitruvio (…). José Ignacio Iglesias will be the representative of the Voluntary Social Welfare entity Araba Eta Gasteiz Aurreski Kutxa II (…). Finally, the fourth new member of the board will be Sergio Álvares, who is also an existing board member of Consulnor Patrimonio Inmobiliario.

Original story: Eje Prime (by C. Pareja)

Translation: Carmel Drake

Merlin Issues Debt Amounting To €600M, Redeemable In 2025

18 May 2017 – Expansión

Debt issues in Spain, which have been the focus of the financial sector in recent times, have now reached Merlin Properties. The Socimi has placed debt amounting to €600 million, with a term of eight years (maturing in May 2025) at a price of 99.417% of the nominal value and with an annual coupon of 1.75% (125 basis points above midswap). The subscription and disbursement of the issue will take place on 26 May 2017.

Merlin has received requests amounting to €1,200 million for the issue, i.e. double the amount that will be awarded. This level of demand has allowed it to lower the cost of the operation.

Initially, the Socimi proposed a price of 135 basis points above the reference index for fixed income or midswap issues. But, the strength of demand reduced that premium to 125 points.

To carry out the operation, Merlin has engaged the services of Crédit Agricole, Nabca IMI, Goldman Sachs, ING and JPMorgan.

At the Socimi’s General Shareholders’ Meeting three weeks ago, the CEO, Ismael Clemente (pictured above), confirmed plans to resort to the debt markets, although at the time he was unsure as to whether it would do so through convertible debt or senior debt issues, or by refinancing the bank debt.

The last few weeks have reinforced the truce in the debt market in Europe, after Emmanuel Macron secured victory over Marine Le Pen in the French elections.

Original story: Expansión

Translation: Carmel Drake

Blackstone Sells c. €300M Of Catalunya Banc’s Mortgages

8 May 2017 – Expansión

The banks’ non-performing assets are finally starting to generate returns for some of the entities that backed them during the worst moments of the crisis. Four and a half years after Catalunya Banc fell victim to the excesses of the real estate sector and was intervened by the State, and two years after Blackstone finalised its purchase of a portfolio of doubtful mortgages from the Catalan entity, which is now owned by BBVA, the US firm has shown that what were once toxic assets, are toxic no more.

And it has done so through the sale of some of the mortgages that it bought from Catalunya Banc. In fact, Blackstone has created a securitisation fund, with a nominal portfolio of €400 million in loans, and has placed it amongst investors at a price that represents selling almost €300 million of the total without a discount, according to official documentation submitted by the company.

Given that Blackstone purchased mortgages from Catalunya Banc worth almost €6,400 million nominal and that it paid €3,600 million for them, the fact that it has now sold the majority of the securitisation fund at its nominal value implies that investors no longer consider them to be problem loans and that they are willing to buy them without demanding an additional return for any higher risk.

Of course, there are several factors that have contributed to this. “Blackstone has included the best loans from the portfolio in the securitisation fund”, say sources in the market, who insist that the US firm still owns the majority of the loans it purchased two years ago.

In addition, the management of the loans plays a role, given that 82.75% of them have been restructured, according to figures from Fitch, which means that they have been granted grace periods or parallel financing since Blackstone took over the portfolio.

Different tranches

The result of these two factors is that Tranches A and B of the securitisation fund have been sold to investors without any discount on their nominal values. They will pay annual interest of 0.9% and 1.9%, respectively, until 2022 (from April of that year, the yield will rise to 1.6% and 3.3%).

The two tranches amount to €288 million, i.e. they represent 72% of the total fund. Meanwhile, Tranches C and D, which contain the worst mortgages and which have the lowest solvency rating, have been sold for 98% and 93% of their nominal values and will pay interest of 2.5% and 2.6%, respectively, for the first five years. Tranche E, the most risky, has been subscribed in its entirety by Blackstone, at a significant discount. (…).

Original story: Expansión (by Inés Abril)

Translation: Carmel Drake

Testa To Approve Receipt Of Homes Worth €665M From Its Shareholder Banks

30 January 2017 – Expansión

The Socimi Testa Residencial, which is owned by Merlin and the shareholder banks of the former Metrovacesa, is holding an Extraordinary Shareholders’ Meeting today to approve the contribution of new homes to its portfolio by Santander, BBVA and Banco Popular. The homes have a combined value of €665.5 million.

Specifically, the operation will be structured as a capital increase through non-monetary contributions, with a nominal value of €52.6 million and an overall value (nominal value plus issue premium) of €665.5 million.

The operation, which was announced on 15 September 2016 by the President of the Socimi Merlin Properties, Ismael Clemente, means that Testa Residencial – which owns the Group’s rental homes following the merger with Metrovacesa – may double in size thanks to the contribution of homes that the shareholder banks are expected to make.

At the time, Clemente revealed that Santander could end up contributing 4,000 homes and BBVA may provide 1,500 homes to Testa Residencial, which was initially created with 4,700 homes, a pro-forma gross asset value of €980 million and a net asset value of €617 million.

By contributing more homes, the banks may increase their stakes in the company, to the detriment of Merlin. Merlin currently owns 68.76% of the share capital, whilst the remaining 31.24% is held by the former shareholders of Metrovacesa.

Moreover, Testa Residencial’s Extraordinary Shareholders’ Meeting will approve an increase in the company’s share capital through monetary contributions for an overall value (nominal value plus issue premium) of €322.4 million with preferential subscription rights. (…).

Regarding the debut of the Socimi Testa Residencial on the stock market this year, the Corporate Director General of Merlin Properties, Miguel Ollero, said that it will not happen this year and that there is no rush, although the entity does have an obligation to debut on the market within two years.

Original story: Expansión

Translation: Carmel Drake

Realia Refinances €802.75M Debt Balance

14 December 2015 – Cinco Días

Realia, the real estate company controlled by Carlos Slim, has signed an agreement to refinance its debt, which currently amounts to €802.75 million, according to a statement made by the company on Friday to Spain’s National Securities Market Commission (CNMV).

The company has signed the agreement with the entities Puffin Real Estate, CF Aneto and Goldman Sachs International with the aim of enabling it to comply with its short and medium-term financial feasibility plan and to “significantly” reduce its financial indebtedness.

In this way, according to the agreement, the repayment of the loan has been brought forward to 30 May 2016; a new calendar has been established, which divides the repayment of the existing debt into four phases; and a discount has been established on the existing debt balance, which will be applied to the payment milestones to be made by Realia.

Similarly, the real estate company has increased the amount of the capital increase it initially launched for €87 million, which the real estate company’s majority shareholder, Carlos Slim, has committed to participate in, with the injection of around €21 million, on the basis of the 25.1% stake that he currently holds in the company.

Specifically, Realia’s Board of Directors has agreed to increase the amount of this capital increase from a nominal value of €36 million to €36.81 million, whereby increasing the total number of new shares to be issued by 3.38 million.

In this way, it will issue and put into circulation a total of 153.38 million ordinary shares, with a nominal value of €0.24 each and a share premium of €0.34.

Original story: Cinco Días

Translation: Carmel Drake