Tag: NPL

NPL Portfolio Sales Beyond Wildest Dreams

19/11/2014 – Cinco Dias

A decade back, who would have thought the REO and NPL portfolios purchase and sales would become such a lucrative business. The more that speculative funds, mainly Anglo-Saxon, decided to come to Spain around 5 years ago to buy what was considered the leftovers of the overdone sector additionally battered by crisis.

In the first two-three years, it seemed they had more equity at hand than they could acquire. They were already experienced in shopping risky assets in Italy, Germany, France or the United Kingdom but Spain looked different. Before spending a penny in the country they had known that Spain was still pending deleveraging a more than €400 billion amount, a chance they just could not miss. However, it also turned out that no one wanted to sell at prices slashed by 75% – 85%.

This started to change three years ago and ever since the business went on spreading like wildfire. So much that during that time it has been beating records to such an extent that even optimists were taken aback.

All experts asked about their opinion on the business put emphasis on the astonishing growth in non-performing portfolio sales. And the funds that only wanted to seal some deals in Spain decided to settle down and expand. From January to September, €22 billion in this type of loans has been transferred for slightly above €6 billion total. But the same specialists coincide in a guess that still before the end of the year, a €10 billion worth of NPLs might be sold, due to an effect usually seen in the last months, a genuine ‘sales boost’.

These figures could not have been predicted by anyone. For the next year, experts forecasted a €20 billion volume. One must remember that many of this year’s transactions were somehow ‘unique and difficult to repeat’, however specialists suppose the same might occur in 2015.

For instance, the sale of a €6.4 billion NPL portfolio by CatalunyaBanc to Blackstone for €3.61 billion. Still, banks ought to reduce the €300 billion load in their balance sheets.

Together with the business expansion and rise in prices the funds are willing to pay, the discounts reach 60%. This way, it is expected that the operations may see revenues of €7 billion in 2015. Moreover, the pricing gap between demand and supply narrows and now large part of these assets is secured.

 

Original article: Cinco Días (by Ángeles Gonzalo Alconada)

Translation: AURA REE

AURA REE Advises on Bankia’s NPL Amazona Project Sold to Sankaty & Starwood

24/10/2014 – Expansion, Europapress

Bankia keeps on shedding core assets and curing its balance. Yesterday, the group closed the sale of the NPL portfolio of par value of €772 million backed with property and hotels. Of the total, an €766 million amount corresponds to doubtful loans. It is said that BFA-Bankia could have received between €300 and 400 million for the package.

The buyers of the portfolio called ‘Amazona‘ were U.S. fund Starwood, successful player in the hotel business, and Sankaty Advisors, specialized in corporate debt services.

The NPL volume has been split into two parts. First is made up of secured syndicate and bilateral loans to Spanish SMEs amounting to €421 million, while the other includes hotel-backed credits worth €351 million. The two sub-portfolios jointly encompass 279 contracts.

‘Ever since the price reached its cap, the sale became an extremely competitive process among leading insitutional investors and financial entities’, Bankia said in a statement.

Thanks to the transaction, the bank may reduce its toxic asset volume by €320 million and free funds for new loans. Currently, delinquency rate of Bankia posts 14% with a 59% coverage.

This is the second NPL portfolio transferred by Bankia this October as the entity sold a part of its developer loans to Chenavari, an opportunistic fund that paid around €79 million for the portfolio called ‘Sky Project‘. Moreover, it included 419 REO assets.

‘We are delighted to invest in this Spanish portfolio and extend our path of investing in companies, operative businesses and real estate assets in Europe’, said the head of Sankaty’s division on the Old Continent, Alon Avner.

On the part of Starwood Capital Group, vice-president Peter Denton assured that the team is ‘enthusiastic about acquisition of a portfolio with hotels as underlying collaterals’.

AURA REE, Hatfield Philips International, CBRE, Hellenic Lloyd’s, KPMG and PwC provided their professional services on matters regarding finance and property valuation. Copernicus led the partners through the due dilligence stage and J&A Garrigues through the legal matters.

 

Original article: Expansión, Europapress

Translation: AURA REE

Vulture Funds Receive €50 Bn in Loans From Spanish Banks

23/09/2014 – Expansion

Opportunistic funds possess more banking loans in Spain than entites like Kutxabank, Bankinter, BMN, Liberbank, Unicaja or Ibercaja. In fact, altogether, the volume would position them as the seventh largest financial group of Spain, thanks to €50 billion in loans which they have been acquiring for the last three years. The sector estimates that they have paid between €8 and 9 billion for them in total.

The only downside is that such an entity composed exclusively of distressed or defaulting loans would show an incredibly high delinquency rate. However, more and more often one sees the funds buying performing mortgages and loans to enterprises which are considered non-core by Spanish banks.

Although this kind of investors have been known in Spain for long, the landing of big-name, foreign vulture funds burgeoned in 2012. Alike their animal counterparts, their role was to clean the sector up, additionally encouraged by rulings by the Government of Spain.

Thus, the distressed funds started to buy defaulting consumer, credit card and overdraft loans as banks thought them non-core due to lack of collaterals and provisions of 100%. For example, in 2013, Banka transferred a €1.35 billion worth of credits to Lindorff and Elliot. Also, BBVA has recently kick-started a sale of a €2 billion NPL portfolio.

Sources from the sector explain that in this kind of operations, distressed funds make no competition to banks but just the opposite, they serve them as service providers and a way of obtaining liquidity. ‘By no means are they the banks‘ rivals but they invest in economic, technical and human resources while managing the portfolios‘, says Íñigo Mato, CEO at TDX Indigo. ‘Moreover, they enhance asset rotation‘, adds Juan Hormaechea, partner at Ashurst.

Ever since 2012, the strategy of distressed funds have changed. Many of them decided to open an office in Spain, purchase a servicing platform from a bank and hunt all types of loans.

Two large transactions which took place in 2014 confirm their firm bet on Spanish market: the sale of the €6.4 billion worth of defaulting mortgages by Catalunya Banc to Blackstone for €3.6 billion and the acquisition of Eurohypo’s business in Spain for €3.5 billion paid by Lone Star.

Both the funds and experts from the market foresee more future sales of non-performing loans by banks to vulture funds. Some of the latter decided to take a step forward and compete with the entites. Apollo may serve as an example as last year the fund bought Evo Banco for €60 million. Other international investors also strive at buying banking licences but the Bank of Spain puts many impediments on their way to them.

Another path to the banking business of Spain leads through credit cards. This way was chosen by, for instance, Värde that purchased 51% of affiliates of Popular and Citi.

If that all was not enough, many funds want to finance through direct lending.

 

Original article: Expansión (by Jorge Zuloaga)

Translation: AURA REE

CEISS Sells a €485 Mn NPL Portfolio

19/09/2014 – Expansion

Banco de Caja España de Inversiones, Salamanca y Soria (one of Spain‘s savings banks abbreviated to CEISS) has marketed a 100%-provisioned, non-performing loan portfolio for €485 million.

The transaction has been advised by KPMG Corporate Finance and KPMG Abogados (Lawyers – translator‘s note). It allows CEISS to cut in default rate by the aforementioned amount. Still, its REO portfolio contains 36.500 loans to individuals and small/medium-size companies.

With the sale, Banco CEISS takes the next step in its Strategic Plan assuming divestment in all non-core assets.

 

Original article: Expansión (after E. P.)

Translation: AURA REE

David E. Shaw Acquires a NPL Servicing Platform in Spain From GFKL

15/07/2014 – Expansión 

Spain continues to glow on investment maps as today´s hottest market in the world. David E. Shaw, one of the leading opportunistic funds of the United States, has bought a non-performing loans servicer in the country, togther with its 400 experts, from German GFKL.

The fund´s owner David E. Shaw is an ex- Morgan Stanley advisor serving which his scientifical and technological knowledge about investment to Bill Clinton and Barack Obama. His fund disposes of €23.48 billion in managed assets and employs around 1.000 specialists.

With this purchase of Multigestión Iberia, D. E. Shaw seeks growing in Spain where he has bought many defaulting portfolios over the past years. Own platform will allow him to focus on the real estate-backed loans.

The transaction is similar to the one conducted by Elliot that acquired Gesif last year. Also, it takes place in a very fortunate moment as the Spanish banks eagerly shed their NPLs.

Multigestión is one of the principal firms in the sector, just behind Norwegian Lindorff, Centerbridge´s Aktua and German EOS. Its main rivals will be Gesif, Savia Asset Management, Gescobro, Aktiv Kapital and Hipoges.

Founded in 1992, Multigestión administers €15 billion in default.

 

Original article: Expansión (by Jorge Zuloaga)

Translation: AURA REE

Funds Explore the NPL Portfolio & Bid For 38.000 Houses of CatalunyaBanc

11/07/2014 – Expansion

In total, the Hercules Project portfolio includes mortgages valued at €6.5 billion which are backed by 41.000 real estate assets. Among them, 38.000 corresponds to dwellings and the rest to retails, offices, parking spaces and storage rooms.

The international bidders have it clear already what to do with the loans: they will restructure the debt with relatively solvent debtors and sign with the rest of them settlements on overtaking the properties in exchage for the debt release.

With this view, the funds have analyzed the real estate portfolio which backs the loans for sale and they are delighted to discover that great majoroty of the homes stand in the regions experiencing the fastest recovery. For example, the province of Barcelona accounts for a half of the Hercules lot.

Enormity and complexity of the portfolio inclined several investors towards joinging forces up. Thus, Apollo, Centerbridge and Lone Star allied up, as well as Pimco, Marathon, Oaktree, Deutsche Bank and Finsolutia, Cerberus and Goldman Sachs, Blackstone and TPG, Soros and Värde. N+1 and Baker & McKenzie were named the advisors.

Depending on their quality, the mortgages embraced by the Hercules are divided among the three groups:

1. Outstanding: they are regularly redeemed loans. In total, they amount to 35.000 agreements worth €2.76 billion, backed by 18.700 properties. In spite of being still performing, around 90% of them are restructured or refinanced, “many of them floating”. Therefore, a part of these credits might receive the “unpaid” label in short-term. The funds study each case separately and forgiveness for debtors with ability to pay is not ruled out. “The alternative can be considered by funds but not by banks, as many other people would demand the same from their lenders”.

2. Sub-performing: this slice includes loans which were failed to pay or redeemed with delay for once. This happened any time in case of 11.000 contracts valued at €975 million. The bidders estimate around a half of this cluster may be renewable via debt restructuring with the rest apt for execution.

3. Non-performing: The worst-quality portion valued at nearly €2.77 billion. Out of the 48.000 unpaid loans, two thirds are in the course of proceedings. However, the funds would rather avoid this measure and go for out of court settlements, such as in lieu payments when possible. Thus, they will be able to foreclose the houses as soon as possible. The auction winner will be obliged to follow the Code of Good Practice requiring an affordable rent after the in lieu payment execution.

 

Original article: Expansión (by Jorge Zuloaga)

Translation: AURA REE

CaixaBank, Sabadell & Kutxabank Sell Jointly €2.4 Bn in Non-Performing Loans

8/05/2014 – Expansion

Vulture funds prep for new carcass drop. Many banking entities and among them CaixaBank, Banco Sabadell and Kutxabank are giving the finishing touch to launch at least €2.4 billion in nonperforming loans.

It is expected that the three transactions will have been closed by the end of June so that the banks could add gains and cut-off default scope in their biannual balance reports.

Loan portfolios of CaixaBank, Banco Sabadell and Kutxabank contain all types of nonperfoming loans: customer lent to individuals, to SMEs (with and without collateral property) and big companies (some of them property-backed).

The three operations ought to be added to two other ongoing sales of CaixaBank and Fortress (Santander´s loans). Altogether, they amass a €4.5 billion volume of NPLs.

Once CaixaBank transferred the credits inside the “Flanders Project“, it is going to put up for sale another lot of default €1 billion. Unlike the first sale, the second called the “Valonia Project” will include €700 million in default without any guarantee and €350 million of property-backed loans. More than a half of the credits belongs to companies in bankruptcy process which suspended payments in 2009. Also, more than 50% of them are located in Andalusia (where Banca Cívica operated) and Madrid.

In turn, Sabadell that announced sale of €1 billion in NPLs in February claims that it prefers to shed them and focus on its Solvia instead of collecting the debt. Last year, the entity sold a default portfolio inside the €632 million worth “Garbi Project” to Elliot and Lindorff for €41 million.

When it comes to Kutxabank, the transaction is less complex as the bank sells only customer loans of individuals and SMEs without property as collateral. The Basque group´s lot is worth €350 million and includes 47.000 loans which have been defaulting since 2008. Nearly half of the portfolio corresponds to debtors in Andalusia (through Cajasur).

 

Original article: Expansión (by J. Zuloaga & S. Saborit)

Translation: AURA REE

Reyal Submits Preliminary Agreement That May Bring the Group to Liquidation

Rafael Santamaría´s real estate company owes 732 millions to Sareb and 463 millions to the Ministry of Finance. It claims to hold assets worth 200 millions. Moreover, it presents a bancruptcy incident against Sareb and slows the process down.

(…) Reyal Urbis pretends to hold the best assets of the company, leaving for the arrangement with the creditors devaluated properties and debt cut-offs which the firm would have to pay-off over few years. (…)

If the company having a 4.188 million debt maintains the offer, it “will have no way out but facing the liquidation”.

Reyal Urbis entered the arrangement on February 19th. This is the second arrangement of a larger Spanish company, after the one of Martinsa Fadesa (which reached 7.000 millions of debt). In its preliminary arrangement Reyal offers the creditor bank cancelation of mortgage guarantees on the relevant assets. For the creditors with preferential credits guaranteed with bilateral mortgage, such as Sareb, Reyal will provide conveyances in payment to cancel the loans. For the Tax Agency, Reyal considers an adjustment of the conveyances in payment of the assets which guarantee its indebtedness.

Among the assets that Reyal pretends to hold, valued at more than 97 million Euros, there are Atocha and La Plata hotels, buildings in Madrid like the ones at 56 O´Donell or 3 Alcala, and properties in Algete and Altea.

The company owned by Santamaría wishes to keep shares of the companies like the one that manages 200 Castellana, Reyal Hoteles and Urbis USA, among others. These shares are valued at almost 100 million Euros.

The report of KPMG

The report released by the advisory company shows that at the nearby end, Reyal Urbis will earn very little from now on by2020. (…) Another report on the arrangements issued by BDO and the Tax Agency concludes that Reyal presents a patrimonial hole of 1.699,36 million Euros, given that it disposes of 2.419,56 millons for facing the debt 4.118,55 millions.

Company slows the arrangement down

(…) The arrangement administration urged Reyal to reach an agreement with its creditors by the end of January – the judge informed. “The asset transfer to Sareb is not sufficiently justified” – he said. (…)

The 732 million Euros which Reyal owes to Sareb comply to the assignments carried out by the credit institutions to the body, 460 millions conveyed by Bankia and other 190 millions by ING. (…)

 

Source: Cinco Días