Tag: perimeter

Cerberus Receives 3 “Low” Offers For its Stake in Haya Real Estate

24 May 2019 – El Confidencial

Cerberus may be forced to revise down its price expectations for the sale of its real estate platform Haya Real Estate. The US fund had been hoping to receive more than €1 billion for the servicer, which is one of the largest in Spain, but so far the offers it has received amount to just €700 million.

There are currently three candidates in the running, namely, the Italian firm doBank, the US fund Centerbridge and the Asian fund Centricus, according to financial sources – all are familiar faces in the Spanish market and are willing to buy the servicer, but not for the asking price.

The reason is that considerable uncertainty exists over the renewal of Haya’s contract with Sareb, despite Cerberus’s efforts to diversify and grow the servicer’s portfolio with purchases such as the Apple Portfolio from Santander last year, and the agreement to purchase and manage almost all of BBVA’s property. Haya also administers assets for Bankia, Cajamar and Liberbank.

Nevertheless, Haya’s main client is still Sareb, for which it manages €21 million in debt and properties, which account for around half of the platform’s assets. That figure will fall to around a third following the agreement with Divarian, formerly Anida (BBVA), but Sareb wants to significantly reduce both the perimeter of management and the fees that it pays Haya, which would hit the servicer’s revenues hard.

As such, the funds in the running to purchase Haya are requesting protection clauses to cover themselves in the event of the various outcomes from the negotiations with Sareb, which are expected to conclude in September. Whether Cerberus will manage to sell its servicer before then remains to be seen.

Original story: El Confidencial (by Jorge Zuloaga & Ruth Ugalde)

Translation/Summary: Carmel Drake

El Corte Inglés Doubles its Assets for Sale to €3bn & Invites Preliminary Offers by End of March

11 March 2019 – El Confidencial

El Corte Inglés has set a deadline of the end of March for interested parties to submit their preliminary bids for its real estate assets. Moreover, it has increased the perimeter of the portfolio from the initial value of between €1.5 billion and €2 billion to €3 billion.

ECI engaged PwC at the end of 2018 to help it define the perimeter, which comprises non-strategic assets, primarily land, offices, logistics platforms and stores.

The portfolio can be divided into three batches, based on on the liquidity of the assets: assets in good locations and with the possibility of being sold quickly (liquid) account for around one third of the perimeter; intermediate assets represent around 15% of the total; and just over half of the portfolio comprises assets that are not very liquid or that are located in complicated areas.

The aim of the sale is to use the funds raised to reduce the distribution group’s debt, which amounted to €3.8 billion at the end of 2017, equivalent to around four times its EBITDA of c. €1 billion.

Original story: El Confidencial (by Jorge Zuloaga & Ruth Ugalde)

Translation/Summary: Carmel Drake

Project Newton: Bankia Puts €450M Toxic Asset Portfolio Up for Sale

21 September 2018 – Voz Pópuli

The insatiable appetite of the opportunistic funds for Spanish property is never ending and the banks are taking advantage to reduce their exposure to real estate assets and whereby clean up their balance sheets. The latest to come to the market is Bankia, which has put a €450 million portfolio up for sale comprising primarily property developer loans, although Project Newton, as the operation has been baptised, also includes a small proportion of foreclosed assets, according to financial sources consulted by Vozpópuli.

Newton’s sale is expected to be completed this year and will be followed by two other asset portfolios that the bank plans to sell soon, according to reports from Bloomberg. The operations disclosed by the US agency include a €1,500M portfolio comprising unpaid mortgages and a €2,000M portfolio comprising foreclosed assets.

At the end of the first half of the year, the entity chaired by José Ignacio Goirigolzarri held €15.2 billion in toxic assets, after reducing its balance by €1.7 billion between the months of January and June.

Strategic plan

With the sale of the three aforementioned portfolios before the end of the year, the bank would more than exceed its annual objective in terms of asset sales, which amounts to €2.9 billion per year for the next three years. In fact, if Bankia divests all three portfolios, its real estate exposure would decrease to €11.25 billion, and so it would follow in the footsteps of the other entities that have accelerated the sale of these types of assets in the last year.

The most recent example is Santander, which on Wednesday closed the sale to Cerberus of a portfolio of properties worth around €2.79 billion with a 45% discount. The initial perimeter of the operation was €5.1 billion, but in the end, the commercial premises and land that had been included in Project Apple were left out of the final portfolio.

The entity already transferred Popular’s property last year to a joint venture with Blackstone, and so its real estate exposure will decrease to around €7.3 billion once the Apple sale is completed.

Meanwhile, BBVA, which also sold €13 billion in foreclosed assets to Cerberus, has entrusted the sale of €2.5 billion in problem loans to Alantra. That operation will reduce the real estate exposure of the bank chaired by Francisco González to almost zero.

Moreover, Sabadell and CaixaBank have also completed significant operations in recent months. The former sold €9.1 billion in foreclosed assets to Cerberus, whilst the latter divested almost all of its real estate business: €12.8 billion in real estate assets, which were acquired by Lone Star.

In this way, the banks are complying with the guidelines set out by the European Central Bank (ECB) and are generating returns from their businesses in Spain, which have been weighing them down since the economic crisis.

Original story: Voz Pópuli (by Pepe Bravo)

Translation: Carmel Drake

Barceló Offers €2.48bn For NH & Sets 3-Month Negotiation Period

21 November 2017 – Expansión

To create a hotel colossus with more than 600 hotels and 109,000 rooms in Europe, Latin America and the USA, and one of the largest tourism companies in Spain. With this objective in mind, the Barceló group has initiated contact with the NH Hotel Group to propose one of the largest hotel mega-operations in recent years in Spain.

Barceló is offering a swap equation that involves valuing each NH share at €7.08. In other words, it is willing to pay €2.48 billion for the company in total. That valuation represents a premium of 27% over the group’s average share price during the three months leading up to 30 October, of €5.56. Moreover, that premium rises to 41% if we consider the company’s closing price last Friday of €5.

Yesterday at 12:30, Spain’s National Securities and Exchanges Commission (CNMV) lifted the suspension on trading that had been weighing down on NH’s shares, but the avalanche of purchase orders meant that it took another 45 minutes for the shares to actually start trading again. By the close of business, NH’s list price had soared by 11.8%, to €5.59. In this way, its market capitalisation rose from €1,751 million on Friday to exceed €1,950 million. So far this year, the hotel company has seen its share price rise by more than 46%, however, it is still well below the €14.70 per share that it reached in 2007, at the height of its stock market boom.

Barceló submitted to the CNMV a letter sent by Simón Pedro Barceló, Co-President of Group Barceló, to the Chairman of the Board of Directors of NH, Alfredo Fernández Agras, in which he proposes considering the merger of the two companies. According to the initial proposal, the Mallorca-based firm would end up owning 60% of the merged group. Barceló explains that his interest in this merger stems from “the great strategic sense and the exceptional potential for the creation of value for the shareholders of both companies”.

The letter also opens the door for the merged group’s corporate headquarters to be located in Madrid and it proposes that the maximum governing body of the merged company, in which Grupo Barceló would hold a majority stake, would have sufficient members to ensure that the existing shareholders of NH are represented.

Barceló proposes a merger, in other words, “the integration of Grupo Barceló and NH through the delivery of new shares issued by NH to Grupo Barceló, keeping the company listed”. “Our intention is to integrate all of the assets and liabilities of Grupo Barceló, including our Hotel and Travel divisions, which we believe could contribute value to the combined group. Nevertheless, we are willing to consider different alternatives regarding the perimeter of the assets and liabilities in order to facilitate the success of the transaction”, said Barceló.

Three months to reach an agreement

The offer, which is non-binding and conditional upon a due diligence (detailed analysis) provides for a period of “up to 3 months for the completion of this work, to reach an agreement between the two parties and submit a transaction to our respective governing bodies for definitive approval”. In fact, Barceló said that he is willing to consider alternatives with respect to the perimeter of the operation to facilitate it.

If the proposal ends up going ahead, it would result in the creation of the largest Spanish hotel group, ahead of Meliá, which at the end of 2016, had 375 hotels and 96,369 rooms. It would become one of the largest players in the sector in Europe, behind only the British firm InterContintental and the French company Accor.

Barceló has engaged Santander as financial advisor for the operation and has not hired any legal advisor.

NH views the offer with suspicion

From the get-go, the offer has been viewed with suspicion by NH, which indicated to the CNMV that it had received “an unsolicited, preliminary and non-binding expression of interest” from Barceló for the merger of the two businesses.

According to this offer, Barceló would have “a majority on the administrative board”. Moreover, NH reminded the regulator that its Board of Directors recently approved a 3-year strategic plan “involving an independent project for significant growth, which is still valid today”.

NH’s largest shareholder is the Chinese giant HNA, which holds a 29.5% stake, but it is not represented on the Board of Directors following its expulsion last year due to a conflict of interest. After HNA is the British fund Oceanwood, with a 12% stake; and Hesperia, the chain chaired by José Antonio Castro, with a 9% stake.

Analysts think the merger makes “strategic sense” 

Analysts at Renta 4 and Bankinter agree with Barceló that the operation makes “strategic sense”.

Original story: Expansión (by Rebeca Arroyo and M. L. Verbo)

Translation: Carmel Drake

Liberbank & Bain Negotiate Finishing Touches To Portfolio Sale

19 October 2017 – Expansión

Liberbank is hoping to complete the sale of its portfolio of foreclosed assets to the fund Bain Capital within the next few days. The two entities are continuing their exclusive negotiations to put the finishing touches to the operation, which is due to be signed before the bank begins its €500 million capital increase.

Financial sources explain that the parties are finalising the terms relating to the perimeter of the portfolio. The CEO of Liberbank, Manuel Menéndez, speaking a few days ago, said that the entity will sell a maximum of €600 million in foreclosed assets to the fund.

These operations with funds tend to require significant discounts. The same sources indicate that the entity will have to recognise losses amounting to more than €100 million as a result of the sale of this portfolio, which means that the discount will exceed 55% if the perimeter is not expanded above €600 million.

Other sources familiar with the deal are not ruling out the possibility that Liberbank will start negotiating with other funds again if the conversations with Bain do not end up proving fruitful.

Original story: Expansión

Translation: Carmel Drake

Sareb Recognises €2,044M Provision For Clean Up Losses

1 April 2016 – El Día

Sareb has recognised a provision amounting to €2,044 million after applying the Bank of Spain’s new accounting circular, which has resulted in losses amounting to €3,012 million on its loan portfolio.

According to sources at the so-called ‘bad bank’, the company will finance this initiative by converting €2,171 million of its own subordinated debt (into equity), which means that it will not require any additional capital. The company already made provisions amounting to €968 million in 2013 and 2014.

As a result of the tax impact of the clean up, Sareb closed the financial year 2015 with a net profit of €330,000.

The new accounting framework, which has forced the company to value all of its assets on an individual and frequent basis, also establishes the requirement to apply the impact of the clean up retrospectively and to reformulate its accounts for the previous year.

In this way, almost 90% of the provisions have fallen during the first two years of the company’s life, i.e. in 2013 and 2014.

During its three years of operation, Sareb has reduced the perimeter of its portfolio by around 15%, has generated total revenues of €12,801 million and has repaid €7,300 million of the debt that it issued to acquire the assets in the first place, which amounted to €50,781 million initially. In 2015 alone, Sareb repaid €2,051 million, said the entity in a statement.

At the commercial level, in 2015, the entity put 35,250 properties on the market and managed almost 28,000 proposals with property developers who hold debt with the company and are mostly SMEs.

The business in 2015

The financial year 2015 was defined, from an operational point of view, by the entry into operation of the four servicers to which Sareb entrusted the management of its assets at the end of 2014: Altamira Asset Management, Haya Real Estate, Servihabitat and Solvia.

During the year, a complex technological migration process was completed between the former originating entities and the four new partners, which resulted in the transfer of 4 million documents and more than 350,000 keys, linked to 105,000 properties, 80,000 loans and 375,000 guarantees.

As expected, the gradual migration process led to a temporary slow down in the rate of property sales compared with the previous year. As such, the company’s total turnover decreased by 26% to €3,886 million. (…).

For the Chairman of Sareb, Jaime Echegoyen, “in 2015, the company had to deal with the combined effect of the change in the accounting framework and the complex and laborious asset migration process. Both circumstances impacted our income statement and forced us to refocus our strategy for approaching the market over the next few years. The new regulations demand greater efforts in terms of capital management, margins and provisions relating to divestments”.

Original story: El Día

Translation: Carmel Drake

Sareb Continues To Review Its Asset Transfer Prices

12 March 2015 – Expansión

‘Sareb got married in a rush, without preparing a gift list, and after the ceremony it began to realise what the gift boxes it had come home with actually contained’. Shortly after the creation of the bad bank, one of its senior executives used this metaphor to explain the need to review the assets that the entity had received from the former savings banks.

In order to meet the deadlines set by Brussels for the financial bailout, Bankia, Novagalicia, Catalunya Banc, Banco de Valencia, Banco Gallego, Banco Mare Nostrum, Liberbank, Cajatres and Ceiss transferred a huge volume of properties and developer loans (to Sareb) in a mad rush.

On the basis of valuation reports performed by independent experts, the Bank of Spain set the price that Sareb paid for the assets: €50,781 million in total, in bonds guaranteed by the State. But Sareb reserved the right to review these transfer prices, in an operation known as the “correction of hidden flaws”, to make up for errors in both valuation and scope (perimeter) – assets that did not fall within the perimeter in the end and assets that should not have fallen inside the perimeter – and to make a claim for the difference.

One of the peculiarities of the transfer review mechanism is that the bad bank only allows for corrections in its favour. After reporting the errors detected to the former savings banks and evaluating the claims, Sareb corrects the differences by repaying the bonds it used to pay for them.

To date, the bad bank has already recovered €640 million of the amount it paid to the entities in relation to both valuation and scope (perimeter) errors. The entity most affected to date has been Catalunya Banc, with €318 million (of corrections), followed by Novagalicia (€182 million) and Bankia (€127 million).

But this total amount is expected to rise, because the company chaired by Jaime Echegoyen has reserved its right to review prices for up to 36 months, a period that will expire at the end of 2015 for the entities classified in Group 1 (Bankia, Novagalicia, Catalunya Banc and Banco Valencia) and in February 2016 for the entities in Group 2 (BMN, Liberbank, Ceiss and Cajatres).

Nevertheless, Sareb does not expect to work up until the deadlines in every case. It has already closed an agreement to finalise the review of the price paid for the assets transferred from Novagalicia, Catalunya Banc, Banco de Valencia and Ceiss. Now its investigation will focus on the properties and loans transferred from Bankia, Liberbank, and BMN; it still needs to sign an agreement to finalise the review with Banco Gallego or Cajatres.

Moreover, Sareb reserves the right to review for scope errors until the end of the remaining life of the (corresponding) asset(s), for those assets it paid for but which were never transferred or those that were transferred when they should not have been, such as any consumer loans.

The experts at the asset management company are basing their detailed analysis on the audit that was conducted by a consortium of thirteen companies, coordinated by the law firm Clifford Chance, but they will go into more detail for certain samples.

Original story: Expansión (by Alicia Crespo)

Translation: Carmel Drake