Tag: Oaktree

Project Big Bang: Bankia Selects Contenders For Final Phase

26 June 2015 – Expansión

Bankia has launched the final phase of the sale of its remaining assets, worth €4,800 million. The process is expected to be completed in July. Blackstone, Apollo, Cerberus, Deutsche and Oaktree are amongst the investors that have been selected to proceed to the final round.

Bankia’s Project Big Bang is entering the final phase. In the last few days, the entity chaired by José Ignacio Goirigolzarri has announced the names of the investors that have passed the first round of non-binding offers. Around five funds have overcome the hurdle, including: Blackstone, Deutsche Bank, Apollo, Cerberus and Oaktree.

At stake is the largest sale of real estate assets – excluding debt operations – since the economic crisis hit: foreclosed residential assets, commercial premises and land worth €4,800 million.

From next week, the selected funds will deploy their real estate teams, and those of their consultants, to undertake a more accurate valuation of the reality. This is a highly complex project because Project Big Bang comprises 46,000 real estate assets scattered all over Spain. The funds and their advisors will select the broadest samples possible to try to obtain the most accurate valuation.

The investors are going to have to work against the clock, since the next date marked in the calendar is 31 July, when theoretically, they should submit their binding offers. According to financial sources, Bankia wants to settle the transaction as soon as possible so that it is not hampered by the political uncertainty that will only increase as the general election moves closer.

Dividing up the portfolio

Even so, the competitive auction is not expected to be finalised until after the summer, since following the receipt of the final offers, Bankia and its advisors – Credit Suisse and KPMG – will have to analyse them and prepare the documentation necessary to complete the sale.

According to various funds, all indications suggest that the Big Bang portfolio will end up being divided up, since Bankia and its advisors believe that they will maximise its value that way.

The foreclosed assets amounting to €4,800 million…are recorded on Bankia’s balance sheet at around €2,900 million. That would be the base price that Bankia would expect to receive, since a lower price would mean it would have to recognise new provisions.

The portfolio for sale mainly comprises residential assets (apartments, houses and garages) – 38,500 assets in total, covering 3.6 million square metres. Around 65% of the homes are located in Valencia, Cataluña and Madrid, and 5% of them are currently rented out. The residential portion of the portfolio is worth €3,300 million.

In addition, Bankia is selling 5,000 commercial assets (offices, shops, hotels, warehouses and industrial buildings) worth €1,100 million; and 2,600 plots of land – of which 65% may be developed – worth €400 million.

Of the candidates, it seems that Cerberus is the best positioned – it purchased Bankia Habitat – now Haya Real Estate – in 2013 and therefore, knows the portfolio first hand, according to financial sources.

Apollo is also expected to bid hard for the portfolio, through Altamira. After acquiring 85% of Santander’s real estate arm, Apollo has not yet acquired any significant asset portfolios to generate returns from its platform, although it was one of the asset managers chosen by Sareb to handle some of its portfolio.

Original story: Expansión (by Jorge Zuloaga)

Translation: Carmel Drake

Cerberus, Apollo & TPG To Bid For Bankia’s Remaining RE

17 June 2015 – El Confidencial

Bankia will receive non-binding offers for its final real estate portfolio this week. (…)

Cerberus, Apollo, Texas Pacific Group (TPG) and Oaktree are four of around ten candidates that have asked for information to submit their proposals for this portfolio, however, they are expected to demand a discount of close to 35%.

According to sources close to the transaction, Credit Suisse, the bank advising the deal, expect to receive the first non-binding offers for the final part of the property portfolio that still sits on Bankia’s balance sheet. Initial assessments indicate that the cheques will amount to around €2,500 million, which would represent a discount of 40% with respect to the €4,213 million gross valuation of the portfolio, reported in Bankia’s results for Q1.

However, the bank led by José Ignacio Goirigolzarri already recognised provisions, amounting to €1,308 million, against the initial figure at which the finished properties, assets under construction and land were valued when they were put on the market several years ago, and so the net value of the portfolio on the balance sheet is currently €2,905 million. The majority of that amount (€2,161 million) relates to funding to buy homes, i.e. from flats and homes foreclosed due to non-payment.

But, despite this recognition of losses by Bankia’s management team, the potential buyers consider that the value of this portfolio may be lower. According to their calculations, the portfolio is worth around €2,500 million, which would represent a discount of 40% on the original amount and an additional 14% below the price at which the public bank has the assets recorded on its balance sheet.

As such, if that were to be the final sale price, Bankia would have to recognise additional provisions amounting to €400 million. Nevertheless, sources close to the bank point out that these initial valuations are only an approximation, a reference for investors who are going to bid to purchase the portfolio, and in fact, bidders may have to offer a premium in order to win the auction.

Furthermore, the same sources indicate that Goirigolzarri is not going to accept any offers below the valuation performed by an independent advisor (€2,905 million net), since in his opinion, that valuation already reflects the drop in homes and property prices since the burst of the real estate bubble.

The situation may be read in two different ways. The first is that the portfolio comprises what is considered to be “absolute rubbish”, in which case the assets would be worth much less. The second is that, given the great interest from institutional funds to invest in property, one of them may approach the €3,000 million asking price that Bankia has set.

Sources close to the transaction say that the current owners of the portfolios sold by Santander – Apollo -, Bankia – Cerberus – , CaixaBank – TPG, plus other funds, such as Oaktree, Starwood, Goldman Sachs and Blackstone will submit bids this week. Loan Star, which recently purchased Kutxabank’s real estate arm for €1,900 million, has also requested the documentation, but sources say that it will not bid in the end.

Nevertheless, if the bids do not meet the figure expected by Bankia, the portfolio may be divided up to obtain the highest possible revenue from it. (…)

Original story: El Confidencial (by Augstín Marco)

Translation: Carmel Drake

Project Formentera: Santander To Sell €170M Hotel Debt Portfolio

18 May 2015 – El Confidencial

A new portfolio of hotel debt has just come onto the market. At a time when investors’ interest in these transactions is at an all time high, Santander has put loans worth €170 million relating to 17 hotels up for sale.

A new portfolio of hotel debt has just come onto the market. At a time when investors’ interest in these transactions is at an all time high, Santander, the largest Spanish bank, has decided to pique the insatiable interest of international funds in this type of transaction through the launch of an operation known as: Project Formentera.

It involves a portfolio of loans worth €170 million, linked to 17 hotels. The majority are located in the Community of Valencia and the Canary Islands, which encourages operations with investors interested, primarily, in the holiday segment and in the (Canarian) archipelago.

The portfolio that Santander has just launched joins those being promoted by two of its main rivals, BBVA and Bankia, which have also decided to take advantage of the window of opportunity that has opened to try to offload some of their debts, which include loans that the financial entities are very keen to divest.

According to sources in the market, unlike what may happen in the residential market – a business the banks know very well, since historically they have had the best prepared teams to manage such assets when they fail – the hotel business is a very specialised segment, whose incident rate (casuística) is more difficult for financial entities to manage.

This means that their priority, in general terms, is to try and sell debt, rather than foreclose it and take ownership of assets that they are much less familiar with than residential. If we add the insatiable appetite of the large international investors for the hotel sector, fuelled by the perfect combination of low prices and a strong recovery in the tourism sector, now is the perfect time to carry out these kinds of transactions.

A string of transactions

In fact, at the end of last year, Bankia closed the sale of a batch of hotel loans to Starwood and Sankaty for €400 million (Project Amazona) and is now finalising the second part of that transaction, known as Castle, whose finalists are Apollo, Oaktree and Bank of America. BBVA has also just opened the bidding for 14 hotels it inherited from unpaid loans, a process known as Project Otelo; meanwhile Sareb has just engaged N+1 to manage the sale of a portfolio with a nominal value of €500 million, which is linked to the property developer Polaris World, in an operation known as Project Birdie.

And so the list goes on. A few weeks ago, the German bad bank FMS Wertmanagement sold the portfolio known as Gaudí to Oaktree for close to €500 million – a batch of problem loans linked to, amongst others, the iconic luxury hotel Arts de Barcelona, as well as another high-end property in Cascais (Portugal), five shopping centres, including Plaza Éboli and Heron City, several storage buildings, and residential and industrial assets.

Moreover, the large financial entities that signed the €152 million syndicated loan with the Basque property developer Urvasco, which, in turn, owns the hotel chain Silken, have spent the last few months selling their stakes both in this debt, as well as in those linked to certain establishments, including the Puerta de America hotel in Madrid; Bank of America is taking advantage of this window to enter through the ‘front door’ of what is considered to be the last great Spanish hotel chain up for sale.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

German Bad Bank Finalises Sale Of Spanish Assets To Oaktree

8 May 2015 – Cinco Días

Over the next few weeks the German bad bank is expected to sell the assets that it owns in Spain. FMS Wertmanagement expects to sell the so-called Gaudí portfolio, which contains properties in Spain and Portugal, in a single transaction to Oaktree.

“Now is the time to sell the whole portfolio”, said José Holgado yesterday, Commercial Director of FMW Wetmanagement, at the Spanish real estate market’s second investment forum, which was held yesterday as part of SIMA (Salón Inmobiliario Internacional de Madrid or Madrid International Real Estate Fair). Holgado estimated that the value of the portfolio amounts to almost €900 million, although that is the nominal value, which will be reduced during the final negotiations.

The German entity, created in 2010 with assets from the nationalised Hypo Real Estate bank, operates in the same way as Sareb, the Spanish bad bank. Although the nominal value (of the portfolio) is almost €900 million, it is understood that these non-performing loans and assets have lost value since the start of the housing crisis, therefore they will be sold at below market prices, in the same way as (the assets sold by) the Spanish Sareb. Moreover, since (the portfolio is being) sold on a wholesale basis, the cost will also decrease.

Although several funds have valued FMS Wertmanagement’s portfolio, in the end it will be the Californian fund Oaktree, owner of Panrico, which takes over the Gaudí portfolio, subject to the negotiation of the final details. One of the most significant assets in the portfolio is the luxury Hotel Arts de Barcelona, a five star property managed by Ritz-Carlton. This complex was acquired by several buyers in 2006, including one company that was linked to the Singapore fund GIC. The German bank Hypo Real Estate was one of the entities that granted loans (to it). Once HRE was nationalised, part of the unpaid, syndicated debt was transferred to FMW Wertmanagement.

Other funds

According to the specialist publication CoStar, in addition to Oaktree, the portfolio also sparked interest from other funds including Cerberus Capital Management, Orion Capital Managers and Colony Capital. That publication estimates that the final price of the transaction will amount to approximately €500 million.

The sale of the Gaudí portfolio, which is being managed by Cushman & Wakefield, comprises 16 loans in Spain and two in Portugal. According to sources close to the transaction, Oaktree would immediately acquire another five star hotel in Cascais (Portugal), five shopping centres, four office blocks, 17 industrial storerooms, as well as several other residential and industrial assets.

The shopping centres include the MegaPark in Barakaldo (Vizcaya), Heron City de Las Rozas and Plaza Éboli, both in Madrid.

According to Holgado, FMW Wertmanagement commenced operation holding debt from assets worth €175,000 million, of which €100,000 million have now been sold. The director of the German bad bank said that now is the right time to sell given the significant liquidity in the market.

Original story: Cinco Días (by Alfonso Simón Ruiz)

Translation: Carmel Drake

Who Are The New Property Owners?

20 April 2015 – Expansión

Plans / International funds and Socimis are the main players in the sector

Apollo, Blackstone, Cerberus, HIG, Hispania, Intu, Lone Star, Merlin and Oaktree have gone from being virtually unknown names to being the key players in the Spanish property market (in a matter of months).

Over the last year and a half, large international funds have been investing hundreds of millions of euros in the purchase of property in Spain, both directly as well as through listed real estate investment companies (Socimis).

Värde, Apollo and Lone Star all burst into the market by purchasing real estate platforms from financial institutions. The latter has said that it wants to become the largest land developer in Spain and to that end, it is considering purchasing not only portfolios of land but also small and medium-sized (land) developers. Lone Star has already purchased the real estate arm Neinor from Kutxabank for €930 million, as well as Eurohypo’s loans in Spain for a further €3,500 million.

HIG and Castlelake are looking to buy land in Spain too.

Another investor that is backing Spain with more strength than ever is Blackstone. The largest fund manager in the world has purchased 1,860 homes for rent, as well as a group of office buildings, located in Madrid and Barcelona. One of the players that is most interested in the office market is the Spanish fund Meridia Capital, led by the former Sareb (director) Juan Barba; it has purchased a portfolio of office buildings from General Electric. It is competing against IBA Capital – the French manager has created a Socimi, which has not yet been listed, with headquarters and commercial buildings.

Along with these offices, the other assets that are sparking the most interest amongst investors are shopping centres. Green Oak has already invested €160 million together with Baupost on the acquisition of 6 properties from Vastned. The British group Intu wants to become the leading player in this segment in Spain and to that end, it paid €451 million for Puerto Venecia. Oaktree spent €100 million on Gran Vía de Vigo.

Other important players in this new era for the real estate sector are Socimis. Axia RE, Hispania, Lar España and Merlin have invested almost €3,000 million in assets, which include hotels, offices, logistics centres and warehouses. This last type of asset is attracting considerable interest. The fund Colony has just formed a partnership with the Spanish company Neinver to purchase 16 logistics warehouses.

Finally, in the hotel segment, Cerberus and Orion have purchased Sotogrande, the real estate subsidiary of NH for €225 million.

Original story: Expansión (by R. Ruiz)

Translation: Carmel Drake

CBRE To Invest €600M In The Spanish Market In 2015

16 March 2015 – Expansión

Real estate assets / The former subsidiary of ING is looking to improve its portfolio through refurbishments and asset purchases.

After more than two decades in the market, the fund manager CBRE Global Investors has become a major player in the Spanish real estate sector thanks to its intense asset rotation policy.

The company, which manages property in this market (primarily shopping centres) worth €2,000 million, closed the sale of various assets last year: Urbil, in Guipúzcoa, which it sold to Axa Reim for €60 million; Alcalá Magna, in Madrid, which it sold to Incus Capital for €85 million; Gran Vía de Vigo, which it sold to the US fund Oaktree for €100 million and Modoo, in Asturias, which it sold for €45 million.

In 2013, CBRE Global Investors was involved in the first major sale of a shopping centre following the outbreak of the crisis, when it sold Parque Principado in Asturias for €141.5 million to the British real estate company Intu Properties. “Between 2008 and 2014, we rotated the portfolio we had created during the previous two decades. Thus, we sold Parque Principado, which was a mature asset, but we purchased other assets. In total, we bought and sold assets worth €1,000 million last year”, explains José Antonio Martin-Borregón, CEO at CBRE Global Investors in Spain and Portugal.

The (property) management company made its first investments in Spain between 1992 and 1993 and three years later, it opened its first offices. Through its five funds, it currently manages 19 shopping centres, including Bilbondo in Bilbao; Vallereal in Maliaño (Cantabria) and Parc Central, in Tarragona. “We started out as the investment vehicle for National Nederlanden, which wanted to invest in properties outside of Holland that were not for its own use. We have maintained this philosophy for 20 years. Our traditional clients are institutional investors”. The latest addition to the portfolio was La Zenia in Alicante, which was acquired using money from the Alaska pension fund.

Advantages

The goal of the Head of CBRE Global Investors is to repeat the transaction volume (recorded last year) during 2015 but with a greater focus on purchases. “We would like to close transactions amounting to €1,000 million this year with a 60:40 split in terms of purchases and sales”, he says. “We have a portfolio of mature assets and therefore we are interested in buying properties that we can add value to”.

In total, the (property) manager expects to invest €930 million in Spain and Portugal. “Demand exceeds supply, which means that prices have increased and new rules are in play. It is not going to be as easy (as it once was) to target successful investments”.

Nevertheless, the Head of CBRE GI does not fear competition from the multitude of investors and institutional funds that have arrived in the Spanish market attracted by the decrease in real estate prices and the expected economic recovery. “As a (property) manager, we try to maximise the opportunities that the market offers, leveraging on our competitive advantage, which is our local knowledge”, says Martín-Borregón. “As a (property) manager, we have more access to capital, which allows us to move (more) quickly to close transactions”, he adds.

The (property) manager is also considering investments in premises (shops/stores) on the street and in strengthening its logistics platforms (it already owns 15). “We will buy logistics assets in new areas and we will sell old warehouses”, he explains.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

Wyndham Pays €50m For Dolce Hotels And Resorts

12 February 2015 – Cinco Días

The hotel chain strengthens its business tourism division as a result of the acquisition.

The hotel chain Wyndham revealed yesterday that it has purchased Dolce Hotels and Resorts for $57 million or around €50.4 million, to consolidate its position in the hotel segment dedicated to corporate and business tourism.

The US firm, a subsidiary of Wyndham Worldwide, which is listed on the NYSE, thereby takes on the management of 24 new hotels with more than 5,500 rooms. The establishments are located in the United States, Canada, France, Spain, Portugal, Germany and Belgium.

(….)

The US Group has confirmed that it will maintain and expand the Dolce brand alongside the other brands that it operates, including Wyndham, Tryp, Ramada, Baymont Inn and Travelodge. The group has 7,600 hotels in 71 countries and a total of 655,000 rooms.

(…)

In Spain, Dolce operates the Dolce Stiges, a hotel with 263 rooms, which Oaktree took ownership off at the end of last year, after it took on the €46 million debt that the previous owner, Ichindoney Parnership, held with one of its creditors, Allied Banking Corporation.

(…)

Original story: Cinco Días (by Laura Salces)

Translation: Carmel Drake

Cerberus, Oaktree, Orion Strike Barcelona’s Hotel Arts’s Debt

9/01/2015 – El Economista

Funds Cerberus, Oaktree and Orion represent three out of four bidding finalists who are one step closer to lucrative Project Gaudi. This €740 million portfolio includes 18 loans with tempting collateral properties, among which the Hotel Arts, situated on Barcelona’s coast, immediately catches eyes of investors.

The credit package was up for sale in October by German bad bank FMS Wertmanagement.

The best bids oscillate around €450 million, meaning that the bidders assume a risk of default which suggests a 40% discount on the loans’ face value.

Apart from the Hotel Arts (pictured on the left), the deal includes such gems as the high-end Penha Longa Hotel & Resort in Cascais (Portugal), owned by a fund of Deutsche Bank.

Moreover, the portfolio consists of five shopping and leisure centers and four business parks in Madrid and Barcelona. Likewise, debt of Bluespace’s 17 storage spaces in Madrid, Barcelona and Valencia is at stake. In 2007, the German entity approved €125 milion in loans for their development.

Of the 18 credits making the Project Gaudi, there are 6 performing, 6 sub-performing and 6 totally non-performing loans.

This is not the first time a German entity decided to shed Spain-related real estate exposure. Last year, Commerzbank transferred huge Project Octopus worth €4.5 billion granted by its Spanish branch to U.S. fund Lone Star allied with JPMorgan.

In turn, Sareb has also sealed several NPL portfolio sales, like Project Pamela (€200 million worth) or Agatha (€260 million).

“Altogether, receivable and defaulting loan transactions amounted to €16 billion in 2014”, assured Patricio Palomar, Alternative Investment head at CBRE.

The Volume to Boost More

“We expect that this year will bring greater figures as many debt refinancing operations and sales are scheduled throughout”, Mr Palomar said.

“Such types of packages will be poached by foreign funds and insurance companies which are already forging vehicles to invest in assets through debt or by financing property developent and rehabilitation projects”, the executive added. To give a few of examples, such is the strategy of Prudential, Alliance and AXA. The last has established a fund called CRES with over €5 billion to spend on real estate across Europe.

 

Original story: El Economista (by Alba Brualla)

Translation: AURA REE

Credit Suisse, Deka & Oaktree Return to RE Sector of Spain

22/10/2014 – Expansion

Large international mutual funds flock to Spain. From being avoided like the plague since the real estate bubble burst, this Spanish property market returned to investment target maps of investors.

Only several of them attended last year’s property exhibition Barcelona Meeting Point (BMP). But this year, the fair will reunite also those who were missing. Most of big international funds have already confirmed participation in the event to be held from October 29th to November 2nd.

To name few that are going to turn up, Bank of America Merrill Lynch, Credit Suisse, Deka, GE Capital Real Estate, Greenberg Traurig, Grove International Partners, Oaktree Capital Management, Red Storm Capital, Shuman Capital, TPG Capital and Värde Partners.

Those who attended the exhibition in 2013 and will return this year are executives representing: Benson Elliot, Cerberus Iberia Advisors, Europa Capital, GreenOak, Orion Capital Managers, Shaftesbury, Stam Europe and HSBC.

It is predicted that the 2014 total investment volume will level out to the pre-recession levels. According to Aguirre Newman, in the first nine months of the ongoing year, €10.4 billion was spent on the Spanish real estate, juxtaposed with the €9 billion amount invested throughout 2013.

 

Original article: Expansión (by Marisa Anglés)

Translation: AURA REE

Blackstone & Oaktree Vie For the Hercules Portfolio

16/07/2014 – Expansion

The troublesome mortgages of Catalunya Banc will fall into hands of one of the two finalists: the team of Blackstone or the one led by Oaktree. The two consortia submitted their binding offers on Monday and the Catalonian entity will pick the winner any day now. They have proposed the highest, €3.5 billion bids which is considered a very good price for Catalunya Banc and the Fund for Orderly Banking Restructuring (aka Frob).

The alliance of Oaktree, Pimco, Deutsche Bank, Marathon and Finsolutia offered the most equity, however Frob prefers the bid of Blackstone and TPG as the two funds dispose of hundreds of loan management experts in Spain, thanks to the acquisitions of  Catalunya Caixa Inmobiliaria and Servihabitat (from CaixaBank), respectively.

The Key Movement

“Hercules Project“, as the sale of the toxic assets was denominated, is the key in the sale of Catalunya Banc itself. Two previous attempts to sell the nationalized entity fizzled out as that-time bidders demanded the Asset Protection Scheme which Frob repelled. The agreement with Oaktree and Blackstone will allow the Fund to cut in the public assistance significantly and will boost the possibility of successful sale of the Catalonian bank.

Frob will cover the loss of €1.5 billion by entering the sale of NPLs as a co-investor who will take the worst quality part of the portfolio. It consists of three sub-portfolios including performing, sub-performing and competely non-perfoming loans. Around 38.000 of them are backed by houses.

 

Original article: Expansión (by Jorge Zuloaga)

Translation: AURA REE