Bankia Puts 3,000 Foreclosed Flats Worth €500M Up for Sale

4 June 2019 – El Confidencial

Bankia has put another problem asset portfolio up for sale as it continues to take the Spanish real estate market by storm in 2019. Project Jarama contains 3,000 flats worth €500 million and is one of the bank’s largest operations involving foreclosed assets to date.

The bank chaired by José Ignacio Goirigolzarri has engaged KPMG to coordinate Project Jarama, which is complicated by the fact that more than half of the assets have not yet been fully repossessed by the bank.

In those cases, rulings have been made in the courts to award the property to the bank in exchange for the defaulted debt, but the entity does not yet hold the deeds or the keys, and the final stage of the foreclosure process could take several months in each case.

This sale forms part of Bankia’s strategy to accelerate its strategic plan. At the beginning of 2018, it set itself the target of divesting non-performing assets worth €9 billion from its balance sheet. By March 2019, it had already sold €6.5 billion.

In recent weeks, it has sold a €300 million portfolio to Blackstone and a €150 million portfolio to Cerberus and Kruk.

Original story: El Confidencial (by Jorge Zuloaga)

Translation/Summary: Carmel Drake

Unicaja Puts NPLs Worth €1bn+ Up for Sale Ahead of Merger with Liberbank

8 April 2019 – El Mundo

Unicaja has placed non-performing loans and assets worth more than €1 billion up for sale ahead of its merger with Liberbank, which was launched at the beginning of last year and whose completion is scheduled for the autumn.

The Málaga-based entity, which started 2019 with €3.6 billion in non-performing assets (NPAs) on its balance sheet, wants to clean up 30% of that amount over the next six months.

Meanwhile, Liberbank has carried out several operations in recent years to substantially reduce its volume of NPAs, but still wants to cut the figure of €3.2 billion as at December 2018 by half.

Both entities have actually been in the process of liquidating doubtful loans and foreclosed assets since 2015. But the upcoming merger and need to assign a value to their balance sheets is putting pressure on them to accelerate their respective clean-ups.

Last year, Unicaja divested €995 million in doubtful loans and foreclosed homes, land, garages etc.

Original story: El Mundo (by César Urrutia)

Translation/Summary: Carmel Drake

Unicaja Considers the Sale of a Large RE Portfolio in 2019

12 February 2019 – Expansión

Unicaja accelerated the clean up of its balance sheet during the course of 2018. The Málaga-based entity decreased its volume of non-performing assets by 22%, in such a way that it is now close to the reduction objective it established in its latest strategic plan for 2020. That is according to the figures provided by the bank itself during the presentation of its results for last year.

The entity chaired by Manuel Azuaga (pictured above) ended 2018 with a volume of non-performing assets (NPAs) amounting to €3.6 billion, of which €1.7 billion were foreclosed assets and €1.9 billion were non-performing loans.

In five years, the bank has reduced its toxic legacy by 51% or more than €3.8 billion. Unicaja’s commitment to investors was to bring its exposure to problem assets down below the €3.5 billion mark before the end of 2020. The rate of sales of small NPA portfolios has allowed it to get ahead in the calendar that it established in its strategic plan. But the entity will continue its clean up.

The heads of Unicaja have reported their intention to continue with small portfolio sales during 2019. Moreover, they do not rule out carrying out the sale of a large portfolio in order to segregate a majority of the non-performing exposure, in a similar way to what most of the Spanish banks have been doing over the last two years.

Unicaja’s decision to carry out a massive property sale will depend, like in other cases, on the discounts that the entity will have to apply to its portfolio. The NPAs of the Malagan bank have an average coverage level of 57%, which means that a discount of a similar percentage could be applied to the book value without resulting in accounting losses for the entity this year.

High asset quality

Unicaja is, together with Abanca, the only Spanish bank entity that still retains ownership of its servicer, the real estate subsidiary through which it sells its homes and commercial premises.

The recent decision by Sabadell to sell 80% of Solvia to Intrum followed other previous operations that have seen the Spanish banks undoing their positions in the property segment, including the sale of Servihabitat to Lone Star by CaixaBank, and of Aliseda to Blackstone by Santander.

Beyond Unicaja’s plans for its property, the entity has been recording a positive trend in terms of the quality of its assets for several years now. The net inflows of problem loans have registered eight consecutive quarters of decreases, and between September and December, they recorded the largest decrease in the bank’s historical series.

Since 2014, Unicaja’s default ratio has also decreased by almost half: from 12.6% recorded in December 2014, the Málaga-based entity has managed to clean up its balance sheet to bring the rate of toxic loans down to just 6.7%.

Original story: Expansión (by Nicolás M. Sarriés)

Translation: Carmel Drake

Spain’s Banks Plan to Sell Real Estate Worth €12.5bn+ over the Next 2 Years

19 November 2018 – El Economista

The banks have set themselves the deadline of 2020 to reduce the property that remains on their balance sheets to an absolute minimum. On the basis of the strategic plans set out by Bankia, Liberbank, Ibercaja and the portfolio of commercial premises put up for sale by Santander, the entities are planning to divest at least €12.5 billion in non-performing assets over the next 24 months.

At this stage, we do not yet know which objectives CaixaBank will set itself in this regard; the entity will unveil its new strategic plan in London on 27 November. Meanwhile, the entity led by Ana Botín has delayed the presentation of its new objectives to the beginning of next year, as it awaits the evolution of the outcome of the elections held in Brazil in October. The exit of the United Kingdom from the European Union, which must take place in March, is also important for the group.

Spain’s entities have accelerated the divestment of their real estate in a frantic fashion over the last 15 months. This summer, Banco Sabadell sold four portfolios of non-performing assets for a combined gross value of €12.2 billion. Those operations allowed the entity to fulfil in one fell swoop the objective that it had set itself in its Strategic Plan 2018-2020 to reduce its non-performing assets by €2 billion per year.

At the end of the third quarter of this year, the entity led by Josep Oliu held €13.62 billion in toxic property left on its balance sheet, nevertheless, once the sales undertaken this summer have been completed, that exposure will be reduced by almost half to €7.67 billion, most of which comprises doubtful loans. The exposure of foreclosed assets has been reduced to around €1.2 billion.

Orderly reduction

With respect to Bankia, in its Strategic Plan to 2020, the entity projected an annual reduction in non-performing assets of €2.9 billion, which would result in the clean-up of €8.7 billion over three years. The bank chaired by José Ignacio Goirigolzarri has divested €2.4 billion during the first three quarters of this year, according to its latest accounts at the end of September, which means that it needs to sell only another €500 million during the final quarter (…).

In the same way, Liberbank closed the third quarter of the year with gross non-performing assets amounting to €3.6 billion, 25% less than it held a year ago. The bank has set itself the objective of leaving €1.7 billion on its balance sheet by the end of 2020, in other words, €1.9 billion less than it currently has.

Finally, Ibercaja, which also unveiled its objectives to 2020 in March, announced its plans to reduce its toxic assets by 50% in three years, which would mean decreasing the balance by around €1.85 billion.

15 months of sales

Santander fired the starting gun on this race with the sale of 50% of Popular’s property to Blackstone, in an operation announced in August last year. Since then, the largest sale by the bank was a portfolio of flats and garages to Cerberus in September, for a purchase price of around €1.535 billion. Thus, the bank still has a second portfolio of foreclosed assets up for sale with a gross value of around €2.4 billion (…).

The most active investment funds to purchase portfolios over the last few months have been Cerberus, Blackstone and Lone Star. Between then three of them, they have made acquisitions of foreclosed assets and doubtful loans from the Spanish banks and Sareb amounting to €48 billion (…).

Original story: El Economista (by Eva Díaz)

Translation: Carmel Drake

Cerberus & Blackstone Compete to become Largest RE Firm in Spain

16 October 2018 – Expansión

The US funds Cerberus and Blackstone are battling it out for first place on the podium in the Spanish real estate sector. Cerberus, which has just completed the purchase of 80% of BBVA’s real estate business, has invested more than €10 billion in real estate transactions in the country over the last year. Specifically, Cerberus will now control 80% of Divarian Propiedad, the company to which BBVA has transferred its real estate business and in which the bank will retain the remaining 20%. The groups have not disclosed the price of the transaction or the value of the assets included in Divarian, although the bank did indicate at the time that its intention was to transfer assets with a gross accounting value of approximately €13 billion at an estimated price of around €4 billion.

Anida’s workforce

Divarian, which is going to be managed by Cerberus, will incorporate the specialist staff from BBVA’s former real estate platform, Anida, comprising 400 professionals, into its team.

In addition to this operation, known as Project Marina, Cerberus reached an agreement with Santander in the middle of September to purchase a portfolio of residential properties for around €1.535 billion comprising 35,700 properties, including parking spaces and storerooms. This transaction followed Project Jaipur – a portfolio of property developer loans also acquired from BBVA -; the portfolios Challenger and Coliseum, with a combined gross value of around €9.1 billion, acquired from Sabadell; and Ágora, the portfolio that Cerberus purchased from CaixaBank.

In addition to the purchase of real estate portfolios, Cerberus is the owner of: Haya Real Estate, the largest independent Spanish servicer with €40 billion in assets under management; the property developer Inmoglacier; the online real estate agency between individuals Housell; and Gescobro, the debt recovery company.

The fund, which has not specified how much it has invested since it arrived in the country, has become, together with Blackstone, one of the most active players in the purchase of doubtful debt portfolios (NPLs) and foreclosed assets (REO) with real estate collateral, and has closed more than 30 transactions in Spain over the last five years, even before the recovery of the sector.

Testa

Meanwhile, Blackstone has acquired around €20 billion in property since 2012, to which the Socimi specialising in residential rental assets, Testa, must be added, given that the US fund now controls 70% of that firm’s share capital. The fund marked a milestone last year when it purchased 51% of Banco Popular’s real estate business from Santander, with a book value of around €10.3 billion. To group together the assets, Blackstone and Santander created Project Quasar Investment, a company that includes Aliseda.

The fund is also the largest owner of hotels in Spain through HI Partners and Hispania, one of the leaders in the logistics and office ownership market in Spain.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Bankia Puts €450M Rental Property Portfolio Up For Sale

27 June 2018 – Expansión

Bankia is going to start a sales process for a portfolio of rental properties with a market value of €450 million, reports Reuters, citing two sources familiar with the operation.

The entity chaired by José Ignacio Goirigolzarri expects the interested groups to present their non-binding offers over the summer, so as to finalise the process with definitive offers from September onwards, indicates one of the sources.

This portfolio of rental properties forms part of the €4.9 billion in assets and loans foreclosed during the crisis that Bankia is trying to eliminate from its balance sheet.

At the end of March, Bankia had a gross exposure of around €16.6 billion on its balance sheet comprising non-performing loans and assets. The bank’s objective is to reduce its non-performing assets by around €9 billion.

Original story: Expansión

Translation: Carmel Drake

Spain’s Banks Race Against the Clock to Sell Off Their Problem RE Assets

28 May 2018 – Eje Prime

The banks are facing a new record. The entities have cut their problem assets almost in half over the last four years, but now they are trying to get rid of thousands of properties in record time to keep the supervisor happy, along with investors. The Bank of Spain warned just this week that the volume of impaired assets continues to be high, given that foreclosed assets amount to €58 billion and doubtful loans still amount to almost €100 billion, something that concerns the ECB and penalises the sector on the stock market.

Specifically, Spanish banks’ problem assets amounted to €152 billion at the end of 2017, a very high volume, but 46% lower than the €280 billion registered as at December 2013.

In addition to the cost that maintaining these assets on the balance sheet has for entities, they also prevent them from allocating resources to other activities more in keeping with the banking sector that would generate higher returns, which worsens the problems of returns in the sector especially at a time of very low interest rates.

In 2017, in the face of clear pressure on the banks to significantly reduce their problem assets, the Spanish market resurfaced to account for approximately 50% of the European market for the sale of problem assets, recall the experts.

The announcement by Cerberus of its purchase of 80% of BBVA’s problem assets and the acquisition by Blackstone of 51% of Aliseda and of Popular’s non-performing assets clearly marked a turning point.

And currently, taking into account the portfolios that are up for sale and the forecasts for the reduction in non-performing assets in the plans of many Spanish banks, a high volume of transactions is also expected in 2018.

The entities are on the case

Sabadell is planning to decrease its non-performing assets by €2 billion per year until 2020, although, depending on investor appetite and the agreements with the Deposit Guarantee Fund (FGD), that figure may rise considerably in 2018, explain sources at Funcas.

Meanwhile, in its strategic plan for 2018-2020, Bankia is forecasting the sale of €2.9 billion problem assets per year, even though the entity got rid of much of its real estate hangover with the creation of Sareb, the bad bank.

The placement on the market of this significant volume of assets is not only limited to the large entities; it is also involving smaller firms such as Ibercaja and Liberbank, which are also planning to divest assets.

In the case of the former, its plans involve cutting its problem assets in half between now and 2020, which translates into a decrease of around €600 million per year, whilst Liberbank is looking at reductions of €900 million per year until 2020.

For 2018, Santander has set itself the objective of €6 billion, whilst Sareb is aiming for €3 billion, which shows the real commitment that the entities have to cleaning up their balance sheets and to keeping the supervisor, and the markets, happy. Now they just need to deliver.

Original story: Eje Prime

Translation: Carmel Drake

Liberbank Transfers €180M in Toxic Assets to JV with G-P-Bolt

18 May 2018 – El Economista

Liberbank has transferred real estate assets with a gross accounting debt of around €180 million to a joint venture with G-P-Bolt, in which it will hold a 20% stake, according to a statement filed by the financial institution on Friday with Spain’s National Securities and Exchange Commission (CNMV).

This joint venture, in which G-P-Bolt will hold the remaining 80% stake, has been constituted with the purpose of managing, developing and owning a portfolio of foreclosed assets from Liberbank and its group.

Liberbank has highlighted that the close of this transaction, which has a neutral effect on its income statement, forms part of the strategy to reduce its non-performing assets (the most doubtful foreclosed assets), which has resulted in a decrease of €1.82 billion between 31 March 2017 and 31 March 2018, equivalent to a 30% reduction in its stock.

Finally, Liberbank has reiterated its objectives in terms of the quality of its assets communicated to the market and expects to achieve an NPA (non-performing assets) ratio of less than 12.5% by the end of this year.

Original story: El Economista

Translation: Carmel Drake

Unicaja Sells 4,000 Properties to Axactor

14 December 2017 – El Confidencial

Another transaction involving the sale of real estate assets by one of the banks. Grupo Unicaja has sold a portfolio of 4,000 real estate assets, whose gross value amounts to €252 million, to the Norwegian player Axactor.

The foreclosed assets are divided into two companies in which the Andalucian entity will continue to control a 25% stake, whilst the other 75% stake will be taken over by the Nordic fund. The operation will not have a significant impact on Unicaja’s income statement, according to a report sent by the bank to the CNMV.

This agreement follows the path marked by Santander, which in the summer fired the starting gun for a generalised move in the sector towards the rapid deconsolidation of the bulk of its real estate exposure.

The entity chaired by Ana Botín transferred 51% of a €30 billion portfolio to Blackstone; BBVA then sold 80% of a €13 billion portfolio to Cerberus; and Liberbank recently sold 90% of a €600 million portfolio to Bain and Oceanwood.

Axactor and Unicaja have agreed that one of the entity’s subsidiaries, the company Gestión de Inmuebles Adquiridos (GIA), will be responsible for the administration and marketing of the properties.

Over the last year, Unicaja has reduced its non-performing assets by €1.19 billion, equivalent to 21% of the non-performing assets (most doubtful foreclosed assets) that it held on its balance sheet at the end of 2016.

Original story: El Confidencial

Translation: Carmel Drake

Fitch: Banks Will Continue To Discount Their Foreclosed Assets For 2+ Years

24 October 2017 – Expansión

Fitch report / Financial institutions are selling their real estate portfolios at discounts of between 50% and 70%; those levels are expected to be maintained for at least the next two years.

“We do not expect to see a close correlation between the improvement in the macroeconomic situation and lower discounts on the sale of portfolios of foreclosed real estate assets by the banks. In fact, we expect those discounts to remain at their current levels for at least the next two years”, said Alberto Faraco and Juan David García, analysts at the ratings agency Fitch.

Spain’s banks still hold significant volumes of real estate, inherited from the crisis, which they must get rid of by order of the supervisor. To accelerate the process, entities are selling portfolios of foreclosed real estate assets to international funds and, in exchange, they are demanding significant discounts with respect to the initial value of the properties.

According to Fitch, these discounts amount to between 50% and 70% of their value and the probability that they will continue for a while yet is high. “It is likely that not even the better tone of the Spanish real estate sector will lead to an increase in the prices at which the banks are selling their portfolios of foreclosed assets, given that there is a significant over-supply, which is exercising considerable pressure”, said Faraco and García, authors of the most recent report published by Fitch.

“The foreclosed properties are competing against a stock of around 500,000 recently built homes, which are ready for sale. Moreover, they are suffering from downwards pressure in terms of prices due to the profitability premiums that buyers require of the banks to cover uncertainties in the process”, said the analysts. The entities’ real estate portfolios carry a series of risks that can detract from the profitability obtained by a potential buyer, such as the fact that the dwelling cannot be accessed until the inhabitant is evicted.

Homes that the banks are responsible for placing directly with end buyers are treated differently. Such properties are sold with lower discounts but require much more time and resources go shift, something that the entities, under pressure from the supervisor to decrease their share of non-performing assets, cannot afford.

What Fitch does expect is a reduction in the number of new assets being foreclosed by the banks, in line with the improvement in the macroeconomic situation in Spain. “In this environment, it is also fundamental that the banks adopt a new strategy that favours handling doubtful loans through debt restructurings rather than as foreclosures”, said the experts.

Localised bubbles

Besides the banks’ assets, Fitch is observing an overall improvement in the fundamentals of the Spanish real estate market, with prices on the rise. “Despite the recovery, we do not see the risk of a new real estate bubble in Spain arising anytime soon. There is a large supply of homes that still needs to be absorbed. Nevertheless, we are seeing very localised bubbles in premium areas of certain neighbourhoods of Madrid, Barcelona and the Balearic Islands”, they explained.

Original story: Expansión (by Andrés Stumpf)

Translation: Carmel Drake