By February, Banco Popular Shoots Up by 165% & Gains €131 Million For Property

2/04/2014 – El Economista

CEO of Banco Popular, Francisco Gómez, confirmed that the bank earned €131 million from real estate stock sales in only two months of this year. During his speech at the 21st Financial Sector Meeting organized by Deloitte and ABC, Gómez told that the amount is by 165% greater than €46 million gained in the same period a year before.

What is more, in January and February, the bank´s deliquency rate improved sigificantly for the first time since the recession had begun. ´March also shows promise´, he adds.

Gómez seems convinced that the maximum unpayment rate reached its cap. It climbed from 8,98% in 2012 to 14.27% in 2013. (…).

´The crisis withdraws and Spanish economy revives, however banks´margins are still uncertain´, he complains. (…). ´Popular is ready to face any regulatory obligation´.

 

 

Original article: El Economista

Translation: AURA REE

 

Popular & Novagalicia Execute Debt & Seize San Jose´s RE Property

21/03/2014 – El Confidencial

Grupo San José has come to an agreement with principal lenders that granted a €2 billion loan to the construction firm in 2009. By virtue of assignment of payment, the banks received real estate assets. (…).

According to sources with knowledge of the negotiations, the operation will involve splitting San José into two divisions. The first one, inclusive of housing and land development assets, has been bringing losses to the company for the last six years. The other consists of construction assets that are much healthier in terms of toxicity.

The first step determined in the agreement between Jacinto Rey and the banks´ steering committee is the transfer of housing development activity to the lenders that could swap €1.6 billion for the branch´s shares. On the other side, the businessman would receive the construction company (…).

Among the lenders there are large banks like Banco Popular to which the firm owes €475 million, Novagalicia (€330 million), Santander (€260 million), Barclays (€186 million) and BBVA (€130 million). The entities that granted to San José loans of less than €100 million are: CaixaBank, Banco Sabadell, Catalunya Banc, Caixa Geral, Unicaja, Eurohypo, Ceiss, Caja3 and Kutxa.

Moreover, Sareb awaits return of its €186 million lent to the construction company by another entity but inherited by the bad bank. (…).

San José gained €427 million throughout 2013, that is by 14% less than a year before. (…) Its ebitda declined by 63% to €11 million, while the gross profit fell by mere €2.8 million (88.3% less). What is more, the real estate company had a turnover of €85 million (depreciation by 6.4%) and lost €209 million ( by 24% more). (…).

 

Original article: El Confidencial (Agustín Marco)

Translation: AURA REE

San José Enters Default & Requests Aid to Avoid Liquidation

18/03/2014 – El Cofidencial

Current talk of the town is a difficult situation of Grupo San José chaired by Jacinto Rey, facing maturity of a €2.400 million debt for last few weeks. After not having met requirements, the businessman negotiates with lenders (…) to waiver a syndicated loan granted to him in 2009. (…).

The company has not paid interest commission of €6.4 million before January 21st this year. The deadline was set by 85% of the lenders. (…).

Moreover, apart from the €81.9 million original payment amount, San José will have to add the not-fulfilled obligations from 2013 that amass the debt up to €139.14 million, deadlined in April. (…).

The Group came to an agreement with Banco Popular that had delayed payment of €77 million last year. The next and the last step will be to redeem €1.181,4 million that becomes mature in 2015, up to €1.320 million in syndicated loan. The debt expands to €2.400 million if several marketing and financial discount lines (€244 million), confirming process cost (€105 million), construction guarantee (€510 million) and other liquidity lines (€222 million) are taken under consideration.

Except for Popular, other lenders of the Group San José are: Sabadell, Novagalicia and Barclays. (…).

The only hope for the company right now is the new insolvency law that allows delay of payment if at least half of the lenders accept the proposal. However, the banks could demand guarantees and seize the majority of the capital (60%), now in hands of Jacinto Rey. (…).

At the end of 2013, San José recorded a €155.2 million loss, by 60% greater than in 2012 and four times bigger than the 2011 figures.

 

 

Original article: El Confidencial (Agustín Marco)

Translation: AURA REE

BBVA, CaixaBank & Popular Inject 6.000 Million Euros into Their Real Estate Companies

The main banks mentioned above destined 5.926 million Euros last year to bailout the companies that manage their property. The real estate sector has been acutely affected by the recession and the firms tied up with financial insititutions have not been an exception. Fortunately, they can count on banks´support (…). Most of the banks sold their branches to international funds, but still hold the assets.

BBVA´s contribution is the greatest one. At the end of 2013, the bank subscribed capital increase of 4.000 million Euros for Anida Grupo Inmobiliario holding and then transferred 4.000 million Euros to Anida Operaciones Singulares, its property managing company. With the money received Anida settles the debt it had at BBVA for the outstanding credits equal to the amount obtained.

The Negative Funds

By the injection BBVA removed the negative capital of Anida reaching 3.100 million Euros at the end of 2013, (…).

The law excludes the real estate companies from the general corporative obligations to cover the gap in its own capital so that they could avoid dessolution. Due to the real estate crisis the exception was being renewed every year to dogde the bankruptcy of practically all of the companies from this sector.

BBVA has not granted the control over its real estate property to any fund.

At the beginning of 2013 CaixaBank fueled its real estate company BuildingCenter with 1.250 millon Euros of capital, extending it to 2.000  millions, according to the  mercantile registry data.

Last year CaixaBank conducted the inverse operation of ServiHabitat, owning all its property and which entered into a merger with Criteria Caixa Holding at the end of 2013. Before the fusion, in May, ServiHabitat reduced its capital by 2.072 millon Euros to 1.381 millions to absorb losses from previous excercises. CaixaBank hired the U.S. fund TGP to manage its property portfolio in ServiHabitat.

Banco Popular also supported its real estate subsidary Aliseda, not with money though. The entity conducted three transactions that aumented the capital by 577 millon Euros (total of 878 millons to cotrast with previous 302 millions) and involved property of other entities from the group (…). Popular bond itself with Värde Partners and Kennedy Wilson that manage its real estate assets.

At the moment Sabadell has not got any property manager. The bank created Solvia Activos in May last year and transferred assets worth 100 million Euros to it.

Santander in turn, associated with Apollo, began the year 2013 with his homework done as it injected 1.070 millon Euros into Altamira at the end of 2012 which deed allowed its capital expand to 1.200 million Euros.

Source: Expansión

BBVA, CaixaBank and Popular Redeem 27.800 Million Euros in Mortgage Agreements

The year 2013 has been much more propitious for the financial institutions due to the return of the investors´trust in the Spanish market.

On the other hand, the deleveraging process going on within the sector reduces in a way the need of financing. As a consequence, the entities depend less and less on the financing from the European Central Bank (BCE). The three banks have decided to redeem their titles used as guarantors at auctions of the monetary financial institution, mainly mortgage agreements.

Since April BBVA, CaixaBank and Popular have redeemed debt of this type for the amount of 27.840 million Euros, according to the data provided by Expansión, made available by CNMV.

Out of the three banks, CaixaBank is the one which has been the most active selling for 12.700 million Euros, compared to BBVA with 9.840 millon and Popular with 5.300 million gains.

Benefits

What is the benefit that the banks derive from sales of the mortgage agreements? The entities get rid of this kind of assets committed to their mortgage portfolios. Increase in such second line of liquidity or the policy to maintain own mortgage agreements in balance in order to enter the auctions of BCE, reduces the margin of issuing the debt among the investors.

The Mortgage Law restricts the issue of the loan agreements substituting for the mortgage portfolio possessed by a bank. (…)

The movement burgeoned when some entities had decided to adjust the value of their portfolios in regard to the postcrisis situation on the real estate market.

So did BBVA, pushing the value of the real estate properties giving coverage to its mortgages  down. (…)

All the changes make sense while the institutions depend less on the financing from the BCE. In Spain, the long term debt has been reduced and concentrated in 2 auctions in 3 years, also known as Ltro, between  320.567 and 209.769 in 12 months, according to the data of the Bank of Spain. (…)

Source: Expansión

Popular forms an alliance with two funds and sells its real estate company for 800 million Euros.

Two U.S. funds will manage from now on the real estate assets from Banco Popular. The institution presided over by Angel Ron closed last week the transfer of its bad bank, Aliseda, for  800  million  Euros.  This  price  values  the  management  of  the  properties  and  the developers credit of the group, but it is still necessary to determine how much Popular will receive for the operation, as the bank will still hold a participation in the new company. Although they are still negotiating, it seems that both funds, Värde Partners and Kennedy Wilson, will get 52% of the company that will receive the business from Aliseda, and Popular will get 49%. Should this be the case, the U.S. investors would pay 400 million Euros for Aliseda.

The price of the operation, advised by KPMG, boosted last week due to the reception of counteroffers from interested funds. The price that was being mentioned in the first stage of non-binding  offers  reached  650  million  Euros.  Centerbridge  and  Cerberus  were  the investors that were the closest to get Aliseda, although WL Ross, Lone Star and Fortress also took part in the negotiations.

Värde Partners and Kennedy Wilson will control the company to which both funds and the bank will transfer part of  their team. Popular could send the 300 employees that are currently working in the real estate company to this new company. On the other side, the funds  have  nearly 200  professionals in  Spain  from  the  acquisition of  CatalunyaCaixa Inmobiliaria, although it seems that there are no intentions of integrating both platforms.

The new location also needs to be decided. For the moment Aliseda is located in the center of Madrid, in the former headquarters of Banco Pastor.

What seems to be sure is that the operation will include the management of 9350 million Euros in credits for building and developments and the management and sale of awarded assets for a net value of 6500 million Euros. All assets will continue in Popular´s balance sheet.

Popular has not yet quantified the earnings it will receive for the sale. The institution intends to close 2013 with earnings for 600 million Euros, receiving already 370 million Euros in the first half of the year. (…)

 

Source: Expansión

Popular hires KPMG to handle the sale of its real estate managing company.

Banco Popular has hired the consulting company KPMG to lead the sale process of the management of the real estate assets, properties, plots and credits that it has excluded from its balance sheet and transferred to the bad bank. Popular joins the current started by other institutions that have done the same previously. What has been place on the market is the management, not the ownership of the assets which will continue belonging to the bank.

KPMG has handed out basic information to thirty potentially interested parties, so that those who have decided may analyze in depth the conditions of the sale, so as to be able to present a non-binding offer as a first step.

The handed information refers to the volume of assets whose sale needs to be managed; the different types (apartments, offices, buildings, garages, trade premises, land, credits…) and the means offered by the bank to do so and which refer to the staff in charge of that activity and the offices where the assignment needs to be carried out.

Those who have received this information have between one month and one month and a half to analyze it and decide whether they find it interesting or not. It would be reasonable to end up with around ten firms that present a non-binding offer, so that a second round of contacts may be started with the objective of presenting a final offer. The final result should not be known before the end of December.

The approach of the sale is very open, in view of the increase in the number of companies specializing in this type of activity and the different operations already carried out by other institutions.

(…) Popular seems to be ready to study different offers as it can either get rid of all the management company with offices and staff, or it can accept, if the buyer is one of the funds that have already acquired other management companies, the cession of the company, without the transfer of staff or offices.

In this early stage it is not possible to define the approximate price of the operation and the earnings that Popular may obtain.

The great five Spanish Banks sell 32971 properties until June.

Banks are great real estate companies. The managing subsidiaries of their properties are the Spanish companies which sell more homes, much more than any real estate company. So, Santander, BBVA, Popular, Sabadell and La Caixa, the great non nationalized banks that share most of the banking  business in Spain after the concentration experienced by the sector have been able to sell 32971 properties in the first half of the year.

All institutions are fairly happy with the behavior of their real estate subsidiaries. (…) La Caixa leads the sales of properties with a total of 9189 registered operations; Banco Santander follows closely, with 8300 sales; Sabadell with 7747; BBVA with 6617, and finally Banco Popular, with 1065 transactions.

Nothing at all like the 847 operations processed by RedPiso, for instance, or the 600 sold by Gilmar Grupo Inmobiliario, both located in Madrid and two of the biggest real estate companies nowadays. Both, however, value their year as a good one and improve their figures from the previous year. But banks play with their two secret weapons: an always negotiable price and a cheaper financing for their properties.

When organizing their real estate assets, these five institutions have evolved in a similar way: they have created a “perimeter” in the form of a subsidiary or internal “bad bank”, where they gather all their awarded assets – foreclosures and assignment in payment – and credits to developers. They have also separated the management of these assets in separate subsidiaries, that is, the commercial machinery to sell them, and in some cases, they are even thinking of selling that managing company.

Also they all inform about the units that exit their balance and not about those entering their books. They do not detail how many of these properties are garages, storage rooms, homes, land or trade premises. Nor do they inform about the price or the discount applied.

For banks, the other side of the story is the number of assets that enter their balance – which is growing -, the loss of value that needs to be applied to these assets and the provisions that need to be done. During the first half of the year, all institutions have chosen to increase the awarded assets in their balances and to reduce the exposure to the developing sector, accepting assignments in payment and reductions of value of their portfolio.

At the end of the first half of the year, the net value – subtracting the provisions that have been made – of the portfolios of awarded properties of the five banks reached 22041 million Euros.

According to the institutions, the number of confiscated properties in the hands of BBVA (6081 net million Euros) and La Caixa (6160) were the highest ones, followed by Santander (3618), Sabadell (3320) and Popular (2862).

Popular will also support the sale of properties from Sareb with 1000 million Euros.

Banco Popular joins the list of institutions that will support the sale of properties in the hands of the “bad bank”, Sareb, and will launch a specific mortgage which will have the availability of up to 1000 million Euros.

The bank presided over by Angel Ron becomes  therefore the fourth institution to help Sareb with the financing for the acquisition of homes and trade premises owned by the asset management company, after Santander, CaixaBank and Sabadell. These three institutions had already signed similar agreements to the one signed today between Popular and Sareb, for the same amount and with a deadline on the 31st December 2014, even though there is always a possibility for a renovation.

The next institution to join in could be BBVA which, according to financial sources consulted by Efe, is also thinking of supporting the acquisition of properties from Sareb with a similar agreement. With Popular´s mortgage it will be possible to finance up to 80% of the value of principal residences at a maximum deadline of 30 years and with an interest rate of Euribor plus 3,50 percentage points, although it can be reduced to 2,50 depending on the bonus applied.

When it comes to secondary residences, Popular offers an interest rate of Euribor plus 3,75 percentage points to finance up to 60% of the value of the property in 30 years, although if the buyer does not have its residence in Spain, the maximum deadline is 20 years and the mortgage reaches Euribor plus 4,25%.

The portfolio of properties from Sareb is made of around 55.700 properties and another 30.000 other assets, such as garage spaces and storage rooms. It also owns more than 185.000 square meters of office space, thirty hotels and 150.000 square meters of rental spaces in shopping malls.

Source: Expansión

The real estate companies of Banco Popular and Banco Pastor lost 1564 million Euros.

The main real estate companies of Grupo Popular experienced losses for 1564 million Euros last year.

The red numbers of Aliseda, the most important subsidiary of Banco Popular before integrating Pastor, reached 975 million Euros. These losses surpass 3,7 times those experienced by the institution in 2011 (260 million Euros).

As a consequence of this result, Aliseda presented a negative equity of 1216 million Euros at the end of December 2012, opposite to the 30 million Euros he had on the previous year. According to the annual accounts of Popular in 2012, the assets of Aliseda were 2873 million Euros at the end of 2012, while their value in books reached 357 million Euros.

The losses of the real estate company of the former Banco Pastor, Inversiones Inmobiliarias Canvives, reached 589 million Euros last year, with a negative equity of 671 million Euros.

Both companies are controlled fully by Popular and do not have any shareholding relationship between them. The results of both institutions are, according to the bank, a consequence of the great effort in provisions made last year. Popular carried out a restructuring plan in 2012 which included a capital extension of 2500 million Euros. The institution provisioned 9600 million Euros, causing consolidated losses of 2461 million Euros in 2012, opposite to the profit of 480 million Euros in 2011.

Sources within the bank stress that Popular is now the Spanish financial institution with more coverage in its exposure to the real estate sector. With this restructuring effort, Popular has increased the ratio of global coverage of defaulting debtors up to 65%; while the ratio of coverage of unsuccessful debtors reaches 74%. The bank plans to earn 500 million Euros in 2013.

Popular obtained last year a gain of 122 million Euros with the sale of properties.

The group has started the concentration of its real estate subsidiaries. Aliseda has absorbed nine minor institutions which originated from Pastor and whose contents were awarded assets. Canvives has integrated another company as well.

Source: Expansión