Santander Studying €12-Billion Sale of NPAs

20 August 2019

Banco Santander is considering a potential sale of a €12-billion portfolio of real estate loans by the end of the summer.

The bank is looking to improve its capital ratios in Spain, which are still weighed upon by assets the bank took over from Banco Popular, in spite of a €30 billion sale of assets to Blackstone in 2017, Project Quasar.  On Tuesday, the bank reported that its NPL ratio stood at 7%, above rival banks such as BBVA Spain (-4.9%) and CaixaBank (-4.6%).

Original Story: El Confidencial – Jorge Zuloaga

Adaptation/Translation: Richard D. K. Turner

Spain’s Banks Continue to Suffer from High Levels of Exposure to Non-Performing Real Estate Assets

13 August 2019

Spain’s largest financial institutions still have more than 37 billion euros worth of non-performing real estate assets on their books, not counting non-performing loans, even after a series of major disinvestments over the past two years. The bank with the most significant exposure, Santander, sold €30 billion in assets to Blackstone; while BBVA sold another €13 billion to Cerberus. CaixaBank unloaded a €12.8 billion portfolio to Lone Star as Banc Sabadell sold assets totalling €10.1 billion to Cerberus and Oaktree.

EU banking regulators are pressuring the banks to quickly reduce their exposure even further, setting a high bar for the expected pace of disinvestment over the coming years.

Santander still has €10.132 billion in foreclosed assets, over 16% more than the bank with the second-highest exposure: Sabadell (€8.732 billion). Santander’s exposure to land is especially high, with a portfolio with a gross value of €4.37 billion. Thus, the bank recently created a company to prepare the portfolio for an eventual sale. The new company, Landmark Iberia, has 400,000 square meters of developable land for sale.

Original Story: El Confidencial – Jorge Zuloaga

Adaptation/Translation: Richard D. K. Turner

Banco Sabadell Sells Solvia Desarrollos Inmobiliarios to Oaktree for €882 Million

5 August 2019

Banco Sabadell has agreed to sell its developer, Solvia Desarrollos Inmobiliarios (Sdin), to the US-fund Oaktree. The sale, which includes a significant stock of land holdings, closed for 882 million euros and will generate an accounting gain of 23 million euros.

Sabadell split Sdin Residencial from the larger Solvia Real Estate before its sale to the Swedish group Intrum.

With this deal, Sabadell has practically eliminated toxic assets from its balance sheet, selling more than €12.5 billion in non-performing assets over the last year.

Thanks to the sales, Sabadell will now have a Tier 1 Common Capital Ratio of 11.6%, up from 11.2% in June. The bank hopes to reach 12% in 2020.

Original Story: Expansión – Sergi Saborit

Adaptation/Translation: Richard D. K. Turner

BBVA Finalises Transfer of Most of its Anfora Portfolio

28 June 2019

BBVA has closed the transfer of most of the credits rights that comprise the Anfora portfolio. The transaction was announced in December 2018.

At the end of 2018, BBVA reached an agreement with Canada Pension Plan Investment Board (CPPIB), to transfer a credit portfolio in Spain, which was composed by mortgages credits (mainly non-performing and in default).

Today the great majority of the loans in this portfolio (with a gross value of about €1.2 billion) were transferred to Anfora Investing U.K. Limited Partnership, which is owned by the Canada Pension Plan Investment Board. The transfer of the small amount of credits that remain in the Anfora portfolio (with a gross value of approximately €130 million) is expected for Q3-19.

BBVA expects the transaction to have a positive impact on the Group’s net attributable profit of approximately €130 million, which will be reported in Q2-19 financial results. In addition, it is also expected to have a slightly positive impact on the fully-loaded CET1 ratio.

Link: BBVA

doValue Finalises Acquisition of 85% of Altamira for €360MM

28 June 2019

doValue, the Italian NPL specialist, acquired 85% of Altamira Asset Management from firms controlled by Apollo Global Management, Canada Pension Plan Investment Board and the Abu Dhabi Investment Authority. The Italian firm paid 360 million euros.

The operation had been originally announced in December. doValue finalised the acquisition this month after Banco Santander decided not to exercise its tag-along rights, maintaining its 15% stake. DoValue had offered to acquire 100% of the firm.

After the acquisition, DoValue will have €130 billion in assets under management.

Original Story: EjePrime

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

Offers for Gescobro Fall Short of Cerberus’s Asking Price

13 May 2019 – La Información

Cerberus Capital Management cannot find a buyer for Gescobro. The US investment fund put the debt recovery specialist on the market at the beginning of the year, but so far the offers submitted have fallen well below its expectations in terms of price.

Hoist Finance, the Spanish subsidiary of a Swedish bank, and Cabot, a British fund dedicated to the purchase of non-performing loans (NPLs), have expressed the greatest interest in Gescobro, but their offers, amounting to around €200 million each, fall well short of Cerberus’s initial expectations of between €300 million and €350 million.

Sources in the market are questioning the value that Cerberus is assigning to Gescobro, given the current market prices and its operating profit (its EBITDA amounted to €11.3 million in 2018). Nevertheless, the US fund is defending its price thanks to the high number of problem loan portfolios that the company has acquired in recent years, whose gross value amounts to more than €8.6 billion.

Specifically, Gescobro is currently managing 12 unsecured loan portfolios with a combined nominal value of €8.3 million and 2 secured loan portfolios with a nominal value of €300 million. The prices of such portfolios typically reach less than 5% and around 30%, respectively. The debt recovery firm also employs 410 workers and has agreements to manage €3.5 billion in NPLs for the main Spanish banks.

Original story: La Información (by Pepe Bravo)

Translation/Summary: Carmel Drake

Unicaja Negotiates Sale of 3,700 Refinanced Mortgages Worth €250M

24 April 2019 – El Confidencial

Unicaja Banco could become one of the first entities in Spain to sell refinanced mortgages whose borrowers are now up to date with their payments.

The Málaga-based entity has engaged EY to coordinate the sale of 3,700 doubtful loans worth €250 million. The mortgages went unpaid during the crisis and were all refinanced, such that the borrowers are now up to date on their payments.

To date, barely any Spanish entities have tried to sell assets of this kind. But pressure from the ECB to improve returns is forcing Unicaja to give it a shot. The mortgages are still classified as doubtful, since the Bank of Spain establishes that a borrower has to pay 12 monthly instalments and reduce some of the capital for a loan to be considered normal.

The sale of the mortgages by Unicaja has been called Project Biznaga and forms part of a larger asset divestment process being undertaken by the entity, worth around €1 billion. The sale is generating a lot of interest amongst international investors and is going ahead in parallel to the bank’s merger negotiations with Liberbank, which are in their final stages.

Unicaja has one of the lowest exposures to problem assets in the Spanish financial sector and the highest levels of coverage. According to the latest official figures, as at December 2018, it had €3.6 billion of foreclosed and doubtful assets and a coverage ratio of 57%.

Original story: El Confidencial (by Jorge Zuloaga)

Translation/Summary: Carmel Drake

Bankia Entrusts the Sale of 3 NPL Portfolios Worth c. €1bn to KPMG

3 March 2019 – El Confidencial

Bankia is on course to fulfil one of the objectives of its strategic plan a year early. Two years ago, the entity set itself the target of divesting almost €9 billion from its balance sheet between 2018 and 2020, and last year alone, it sold problem assets worth €6 billion. With the sales forecast for this year, it is set to achieve its goal a year ahead of schedule.

In this context, the entity is launching the sale of three portfolios, worth around €1 billion, with the aim of selling them in the middle of this year.

The largest portfolio, worth around €500 million, comprises doubtful property developer loans; the next, worth around €200 million, contains unsecured debt; and the final one, worth several hundreds of millions, has yet to be defined. All three have been entrusted to KPMG for their sale.

Despite its huge efforts last year, Bankia still has around €8 billion in doubtful loans and €3 billion in foreclosed assets on its balance sheet.

Original story: El Confidencial (by Jorge Zuloaga)

Summary/Translation: Carmel Drake

Following Blackstone, Cerberus, Lone Star and Bain Plan to Launch Socimis

7 February 2019

Major investment funds have taken over billions of euros of real estate from the banking sector in recent years and are now planning their exit strategies. Some funds, such as Cerberus, Bain Capital and Lone Star intend to follow in Blackstone’s footsteps, considering the creation of socimis with a portion of their assets, various sources in the sector told the Economista.

The sources stated that some funds’ plans are further advanced than others, already at the point where they are analysing the size of the portfolios which they may transfer to the market through this type of listed vehicle. They held out the possibility that one or more of the new socimis may premiere before the end of the year.

Under this formula, the funds would increase their investments’ liquidity, taking over from other more core investors, with a longer-term profile and more moderate levels of profitability.

The three funds’ future socimis would focus on the residential rental housing market with a model based on largely dispersed units since the apartments they acquired from the banks generally fit such a profile.

Major operations

Cerberus earned its place on the podium as one of the most significant real estate investors in Spain, just behind Blackstone. The fund, based in New York, was one of the first to arrive in Spain during the real estate crisis, between 2010 and 2012, and since then it has been taking positions in almost every sector of the property market through Haya Real Estate , the developer Inmoglaciar, the real estate agency Housell and Gescobro.

In November 2017, it bought 80% of BBVA’s real estate business, which had a gross value of some 13 billion euros. The transaction was the second largest portfolio operation ever concluded in the history of Spain, behind Blackstone’s acquisition of Banco Popular’s toxic assets from Banco Santander. Cerberus has also been increasing its portfolio of NPLs and REOs with other smaller operations such as CaixaBank’s Agora project, Sabadell’s Challenger and Coliseum portfolios and BBVA’s Jaipur Project, among others.

On the other hand, Cerberus is in the race to acquire Solvia Desarrollos Inmobiliarios, a developer that owns a portfolio of land valued at about €1 billion.

Lone Star is also analysing the possibility of launching a socimi with a portion of the properties it acquired during its flagship operation in Spain when it bought CaixaBank’s real estate business, which had a gross value of 12.8 billion euros. The fund also acquired the bank’s servicer, Servihabitat.

For its part, Bain Capital, which owns the developer Habitat, has also been one of the most active investors in debt portfolios. One of its more recent operations, known as the Shell Project, involved the acquisition of some €700 million in NPLs to developers from Kutxabank.

Original Story: Eleconomista.es – Alba Brualla

Photo: Getty

Translation: Richard Turner