Moonlake Capital Launches a Vehicle to Invest €600M in NPLs

27 May 2019 – Eje Prime

Moonlake Capital is going to launch a vehicle to invest €600 million in large portfolios of non-performing loans in Madrid, Barcelona, the Costa del Sol, the Balearic Islands, Valencia and Sevilla.

The new vehicle will operate as a servicer for the fund and so will manage and divest the portfolio of properties that the banks were left with after their owners were unable to keep up the repayments on their mortgages.

As such, the investment group created in 2016 and headquartered in Madrid will enter the market to compete with the likes of Servihabitat, Altamira, Solvia and Haya Real Estate, amongst others.

In parallel, Moonlake is also planning to create a joint venture with an as yet unidentified investor to develop a 2.5 million m2 project in Málaga’s technology park, involving the construction of 5,000 homes, 110,000 m2 of industrial warehouses and 30,000 m2 of commercial premises.

Original story: Eje Prime (by Marta Casado Pla)

Translation/Summary: Carmel Drake

S&P Encourages Spain’s Banks to Divest More Property & NPLs

18 April 2019 – Ya Encontré

Spain’s banks got rid of €90 billion in foreclosed assets and doubtful loans last year, almost doubling the transaction volume recorded in 2017 (€52 billion) and setting a new annual record. But they still have a lot of homes left to sell and Standard&Poors is encouraging them to divest more of those properties, with a view to restoring their pre-crisis risk levels of 4% within two years.

According to the ratings agency, the banks still hold properties worth €80 billion, representing one of the highest stocks in Europe and accounting for 7% of the balance sheets of the domestic financial sector. In this context, S&P considers that the banks still need to get rid of another €30 billion in assets, at least, if they are to properly clean up their accounts.

The active buyside players in the market include many overseas investors and funds, such as Lone Star, TPG, Apollo, Blackstone, Bain Capital and Cerberus, which have played an important role in reducing the stock of major financial institutions, such as Santander, BBVA, CaixaBank and Banco Sabadell.

S&P is not alone in its stance. Both the European Central Bank (ECB) and the International Monetary Fund (IMF) are also urging Spain’s banks to divest the last of their property portfolios as quickly as possible to ensure financial stability ahead of the next recession.

Original story: Ya Encontré

Translation/Summary: Carmel Drake

Bain Capital Launches a €1.25bn Fund to Invest in Europe

10 March 2019 – Eje Prime

Bain Capital has created a fund to invest €1.25 billion in European real estate. The US investment group is expected to concentrate a large part of that investment in Spain, where it already controls the property developer Habitat.

The target of the new fund will be portfolios of non-performing loans and non-strategic assets, of which there are plenty in the Spanish market.

Bain Capital has acquired several portfolios from financial institutions in Spain in recent years with a gross value of €3.5 billion.

Original story: Eje Prime

Translation: Carmel Drake

Haya to Sell €188M in Secured Loans from Sareb

19 February 2019 – Expansión

Yesterday, Haya Real Estate put up for sale a package of non-performing loans (NPLs) with real estate guarantees, owned by Sareb, worth €188 million. The portfolio, baptised Project Marconi, comprises loans with an average value of €5.7 million, which are backed by around 1,445 properties.

Original story: Expansión

Translation: 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

Kutxabank Sells a €700M Property Developer Loan Portfolio to Bain

21 December 2018 – Cinco Días

Kutxabank has sold a “problem property developer loan” portfolio with a gross valuation of €700 million to a subsidiary of Bain Capital Credit. The portfolio includes doubtful assets and non-performing loans to property developers, according to a statement issued by the entity chaired by Gregorio Villalabeitia (pictured below).

The divestment includes both loans with mortgage guarantees, secured by land for the most part (48% of the total), as well as finished homes (another 29%). They are located in Andalucía and Euskadi.

The transaction has materialised through a competitive bidding process, which has been coordinated by the investment bank Alantra.

Sources at the vendor bank indicate that there is “a great investor appetite” in the market for this type of asset at the moment, a situation that has encouraged the entity to take the decision to divest these assets, the first operation of this kind that it has undertaken in its history.

The divestment will improve Kutxabank’s results this year and will reduce its exposure in the courts, due to the costs associated with the litigation relating to these assets. The bank has already calculated that, following this operation, its default ratio will improve by 50 basis points to fall below 4%.

The sale of the real estate portfolio will also have a positive impact on the bank’s CTE 1 capital ratio, which will increase by 10 basis points. According to the bank, it will thereby consolidate its position of leadership as the most solvent entity in the country.

Bain Capital Credit, with 200 employees, invests in the entire spectrum of loans, including leveraged loans, high-yield bonds and structured products, amongst others. Bain Capital has been advised in this operation by Copernicus, Aura, JLL and Allen & Overy.

Original story: Cinco Días

Translation: Carmel Drake

Apollo’s Sale of Altamira Enters the Home Stretch with DoBank & Intrum as Favourites

17 December 2018 – La Información

The market for servicers is still in a spin and, following the sale of the majority of Solvia last week, now it is Altamira’s turn. According to assurances provided to La Información by sources close to the process, the US fund Apollo is facing the home stretch of the operation, which is expected to close within the next few days. Of the offers received by the US entity, those submitted by the Italian entity DoBank and the Swedish firm Intrum, have managed to make it through to the final found.

In fact, according to the same sources, it is DoBank, the former UniCredit Management Bank, that has the upper hand, in a transaction that is being led by Goldman Sachs. Currently, the entity is the largest owner of doubtful loans in Italy, and so its experience with this type of company is more than clear. Moreover, the most recent major operation that it carried out was in Greece, with the acquisition of a portfolio of non-performing loans in the Hellenic country worth €2 billion.

In total, the Italian firm currently manages more than €77 billion in loans and has agreements with most entities in its home country. For that, it employs a workforce of almost 1,200 and works with 1,600 external collaborators.

Apollo engaged Goldman Sachs last summer to carry out the sale of its servicer but after months of offers – including from Haya and Cerberus – it has decided to select the aforementioned two entities for the final round. The US fund has decided to take advantage of the good times in the market to divest and obtain profits after four years at the helm of Altamira (…).

Apollo acquired the servicer in January 2014 after paying €664 million in exchange for the 85% stake that it currently owns. Its primary function is based on the recovery management of loans from banks and the management and sale of properties proceeding from that activity. In 2017, the last year for which data is available in the Mercantile Registry, Altamira had more than 500 employees and generated an annual turnover of more than €300 million.

This servicer has become one of the major managers of financial and real estate assets in the country, with more than €53.8 billion in assets and more than 82,000 properties. Its main clients include its shareholder Banco Santander, and Sareb (…).

Intrum has already purchased 80% of Solvia

In the event that the tables turn and it is Intrum that ends up acquiring Altamira, it would be the second operation by the Swedish firm in one week. On Friday, Sabadell announced the sale of 80% of Solvia Servicios Inmobiliarios to Intrum for €300 million, whereby converting the fund into one of the new property giants (…).

The sale of Altamira by Apollo would serve to further close the door to Spain for the Americans. Since the sale of Evo Banco in September – the fund’s other major project in the country – to Bankinter, speculation has been rife regarding Apollo’s withdrawal from the Spanish market (…).

Original story: La Información (by Lucía Gómez)

Translation: Carmel Drake

Cerberus Plans to Create a Real Estate Giant by Acquiring Altamira & Solvia

10 November 2018 – Expansión

Cerberus is increasing its commitment to the Spanish real estate market. The US fund is the favourite candidate to take over the reins at Altamira, the manager of property loans and foreclosed real estate assets currently owned by Apollo and Santander. Moreover, Cerberus is battling it out with the fund Lindorff (now Intrum) and other investors to purchase Solvia.

As Expansión revealed on 8 October, Apollo renewed its contract with the investment bank Goldman Sachs at the beginning of the summer and distributed the teaser (the sales document containing a general description) to potential interested parties to dispose of this asset for between €500 million and €600 million. Although it is not alone in the process, Cerberus is the candidate that has the best chance of acquiring that company.

But Cerberus is not going to settle for that asset only. Financial sources assure that the US fund is also bidding for Solvia, in a process in which it is also competing with Lindorff. The CEO of Sabadell, Jaume Guardiola, noted, during the presentation of the results on 26 October, the “good appetite” in the market for Solvia, “whose sale will close “soon”. He whereby confirmed the sale of Solvia Servicios Inmobiliarios (SSI) and Solvia Desarrollos Inmobiliarios (SDI). For the sale of SSI, in which it is being advised by Alantra, the bank hopes to receive up to €400 million.

Concentration of the market

If Cerberus ends up being the winner of both processes, it will become the clear leader of the servicer sector and a proponent of concentration between the servicers. These companies, created from the former real estate subsidiaries of the banks, have become some of the stars of the new real estate cycle.

Currently, almost all of the assets under management of the banks are in the hands of a few companies such as Altamira, Servihabitat, Haya Real Estate, Aliseda, Anticipa, Solvia and Divarian (previously Anida). These firms are mainly responsible for the management and recovery of debt and transformation of loan obligations into foreclosed real estate assets, as well as the sale and rental of assets.

If Cerberus ends up taking control of Altamira and Solvia, it will control almost 65% of the market for servicers, which will allow it to mark a differentiation in its strategy. Currently, the US fund controls Haya Real Estate, one of the large servicers with €40 billion in assets under management. Moreover, it took over the reins at Anida, which was in the hands of BBVA, and which manages €13 billion.

If it adds Altamira and Solvia to its portfolio, the volume of assets under management will soar to €138.9 billion, with a market share in the servicer segment of 65%. According to numbers managed by the consultancy firm Axis, the other two dominant funds are Blackstone, with Anticipa and Aliseda (also from Santander) and LoneStar, which controls Servihabitat after purchasing that company from La Caixa in the summer.

Other assets

In addition to the servicers, Cerberus is also the owner of the property developer Inmoglacier; the online estate agency between individuals Housell; and the debt recovery company Gescobro (…).

Original story: Expansión (by R.Arroyo and D.Badía)

Translation: Carmel Drake

Cerberus Fights Off Blackstone to Acquire €9.1bn in Toxic Assets from Sabadell

19 July 2018 – El Confidencial

Banco Sabadell has chosen who is going to take over its toxic assets. In the end, after an express process that has seen the bank receive several binding offers, Cerberus has fought off competition from the other interested parties, including Blackstone, Lone Star and Oaktree. According to a relevant fact filed by the entity with Spain’s National Securities and Market Commission (CNMV), “the real estate assets involved in the operation have a combined gross book value of approximately €9.1 billion and a net book value of approximately €3.9 billion”.

They correspond to two of the four foreclosed property portfolios that Sabadell had put up for sale, “Challenger” and “Coliseum”, which will be transferred to one or more newly constituted companies in which Cerberus will own a direct or indirect stake with 80% of the capital and Banco Sabadell will retain the remaining 20% share.

As for Solvia Servicios Inmobiliarios, it will continue to be wholly owned by the Catalan entity and will also continue to provide integral management services for the real estate assets of both portfolios included in the operation “on an exclusive basis”, according to the statement.

Once the operation, which is subject to the corresponding authorisations, has been closed, control over the real estate assets will be transferred and, therefore, those assets will be deconsolidated from the bank’s balance sheet. In this way, according to explanations from Sabadell, the sale “contributes positively to improving the group’s profitability, although it will require the recognition of additional provisions with a net impact of approximately €92 million”, which will improve the Catalan entity’s Tier 1 capital ratio by around 13 basis points.

The operation forms part of a restructuring plan designed by the entity at the end of 2017, through which it is seeking to remove €12 billion in toxic assets from its balance sheet. Sabadell closed last year with gross foreclosed assets amounting to €8.023 billion and non-performing loans amounting to €5.695 billion, according to real estate exposure data filed with the CNMV.

The other two portfolios that the entity wanted to divest are known as Project Galerna, containing €900 million in non-performing loans, which was acquired by the Norwegian firm Axactor, and Project Makalu, with €2.5 billion from the former CAM. With their sale, the entity will complete its real estate clean-up, just like Santander and BBVA have already done.

Original story: El Confidencial (by María Igartua)

Translation: Carmel Drake

Alantra Creates Leading European Advisor for Sale of Toxic Asset Portfolios

12 July 2018 – Expansión

Alantra has just signed a document that is going to make it the leading advisor to banks in Europe for the sale of toxic asset portfolios. The deal was signed yesterday in London and involves the purchase of KPMG’s international business specialising in those kinds of bank cleanups. The team comprises more than 35 professionals, mainly seniors, who will move across to form part of Alantra and who will take with them the sales mandates, worth €16 billion, that they are working on at the moment, according to sources at the firm.

After almost a year of negotiations with KPMG, the division is finally going to join forces with the investment banking team led by Santiago Eguidazu (pictured above) to create a new company with more than 75 professionals. The new company will be a subsidiary of Alantra and will be dedicated to advising banks regarding the best exits options for their portfolios of non-performing assets.

To date, Alantra has advised 80 operations in this business across five countries since 2014, for a total nominal value of more than €65 billion. Meanwhile, KPMG’s team has advised on more than 100 transactions worth €180 billion during the same period. The resulting company has averaged 45 transactions per year for the last four years and has advised an operation volume of more than €61 billion. The transaction will involve a cash disbursement for the Spanish firm of €2.83 million.

Banks and funds

The new division will be particularly active in the medium-sized transaction market generated by both banks and funds. The focus will be primarily on Europe, but also other countries around the world where the firm has a presence. In its activity, Alantra will compete above all with PwC, the other major player in the European portfolio business alongside KPMG, and with the US giants Morgan Stanley and Goldman Sachs for the largest contracts.

KPMG’s international team is headquartered in London, with local offices in Milan, Athens, Dublin and Lisbon. Alantra adds Madrid to that list, from where it has organised its global coverage of the portfolio business to date, which has seen it advise operations not only in Spain but also in Portugal, Italy, Greece and Eastern Europe.

The team at Alantra has been responsible for the sale of portfolios by almost all of the Spanish banks, ranging from Sabadell (with which it is working at the moment) to Santander, and including BBVA, CaixaBank, Bankia, Liberbank, Ibercaja and the domestic subsidiary of Deutsche Bank.

The current Head of Alantra’s Portfolio Business, Joel Grau, will lead the new subsidiary, together with Andrew Jenke and Nick Colman, from KPMG.

Global advice

Between the three of them, they will pursue the objective of replicating on a European scale the model that Alantra has been adopting in Spain, and which is based on providing global advise to banks from three perspectives: corporate operations, real estate (large properties and loans from financial entities, as well as those relating to shopping centres and hotels) and portfolios of toxic assets, according to sources at Alantra.

They will operate from two main centres: Madrid and London, where many of the funds that buy the banks’ portfolios are located and thanks to which the business is expected to soar, by reselling financial assets acquired or securitising them to put them on the market.

Original story: Expansión (by Inés Abril)

Translation: Carmel Drake