Unicaja Sells Problem Assets to Cerberus & AnaCap for €120M

23 January 2019 – Eje Prime

Unicaja is divesting its toxic assets. The Málaga-based entity sold two portfolios of problem assets amounting to €330 million to Cerberus and AnaCap at the end of 2018. In this way, it managed to clean up its balance sheet and improve its accounts for last year, ahead of the merger with Liberbank, reports El Confidencial.

The problem assets consisted of one portfolio of mortgages amounting to €230 million, which were sold to Cerberus and another portfolio containing property developer loans amounting to €100 million, which was acquired by AnaCap.

According to the latest published accounts, Unicaja held €3.9 billion in problem assets (flats, land and unpaid loans) as at September 2018, and so the two portfolios sold account for more than 8% of the total. In the market, it is estimated at the Málaga-based bank obtained proceeds of around €120 million in exchange for the sale of the two portfolios.

Original story: Eje Prime

Translation: Carmel Drake

Sabadell Finalises Sale of €5bn in Real Estate Assets to Cerberus

12 July 2018 – Voz Pópuli

Banco Sabadell is finalising the largest real estate divestment in its history. The entity chaired by Josep Oliu (pictured below) is negotiating with Cerberus to close the sale of Project Challenger, a package of real estate assets worth around €5 billion, according to financial sources consulted by Voz Pópuli. Sources at Sabadell declined to comment.

Cerberus is thought to be negotiating a payment of around €2 billion, according to the same sources. The agreement could be signed within the next few days. The bank has been holding exclusive negotiations for several days with the fund chaired by John Snow and led in Spain by Manuel González Cid, although it has not ruled out the possibility of other candidates also presenting offers, including Lone Star and Bain Capital.

Project Challenger comprises properties – homes, developments and land – that Sabadell foreclosed during the crisis. The assets are not covered by the Deposit Guarantee Fund (FGD), and so their sale is relatively simple, provided the negotiations do not run aground in the coming days.

Goodbye to real estate

In addition to Project Challenger, Sabadell has launched three other operations in the last few months to free up its balance sheet of toxic assets. It has already closed one of those deals: Project Galerna, which the bank sold to Axactor, as revealed by this newspaper.

In addition to Galerna, Sabadell has Project Makalu underway, with €2.4 billion in problem loans; and Project Coliseum, with €2.5 billion in foreclosed assets. These three portfolios are covered by the Asset Protection Scheme (EPA), which the bank received in exchange for taking over CAM. For this reason, their sales depend on the negotiations currently underway with FGD.

Sabadell is expected to make a decision regarding the future of its real estate over the coming weeks to reveal a radically different image of the bank at the presentation of its half-year results, which will take place at the end of this month.

For Cerberus, this agreement would see it consolidate its position as one of the largest funds with real estate assets in Spain, alongside Blackstone – which took over the property of Popular and Catalunya Banc – and Lone Star, which signed a billion euro agreement recently with CaixaBank.

Meanwhile, in Spain, Cerberus controls the platform Haya Real Estate, which it has tried to list on the stock market, albeit unsuccessfully; and it is close to signing the acquisition of Anida and BBVA’s property, pending approval from the FGD.

Original story: Voz Pópuli (by Jorge Zuloaga)

Translation: Carmel Drake

Sabadell Considers Selling €1.8 bn Portfolio Whilst it Negotiates with FGD

1 February 2018 – Voz Pópuli

Banco Sabadell is preparing an artillery of divestments over the coming months. The entity chaired by Josep Oliu (pictured above) has been sounding out the market for several weeks now regarding the launch of what would be its largest sale of problem assets to date, worth €1.8 billion, according to financial sources consulted by Vozpópuli.

This operation, which still needs to be approved by the bank’s Board of Directors, would be the precursor to a mega-operation amounting to €12 billion that the entity is considering launching over the next few months, according to Expansión. Sabadell has three mandates granted to launch these divestments in 2018 with Deloitte, KPMG and Alantra.

Nevertheless, these sales have been held up by the Management Committee of the Deposit Guarantee Fund (FGD). The €12 billion that Sabadell wants to sell are precisely those covered by the Asset Protection Scheme (EPA) granted by the semi-public fund during the sale of CAM.

The Management Committee, whose members include bankers from some of Sabadell’s competitor firms, is questioning the sale of the €12 billion because of the hole it would cause in its own accounts. The FGD held equity funds of €1.6 billion at the end of 2016. The same thing is happening with BBVA. In that case, the FGD is considering whether to approve the accelerated sale of assets proceeding from Unnim’s EPA.

Two positions

This story is about two very different positions. On the one hand, Sabadell and BBVA want to bulk sell all of the problem assets that they inherited from the purchases of CAM and Unnim, respectively, in one go. In terms of the danger posed by the end of the EPA, they know that, like happened to Liberbank, when the guarantees end, the unsold assets will affect their capital ratios, by raising the denominator (APRs).

Meanwhile, the FGD is studying the impact that these operations may have and whether the contracts signed at the time allow such accelerated divestments.

Sabadell was one of the most active entities in the sale of problem portfolios last year, with the sale of Project Normandy to Oaktree and Project Voyager to the largest pension fund in Canada.

Original story: Voz Pópuli (by Jorge Zuloaga)

Translation: Carmel Drake

Cajamar Sells 2 Problem Loan Portfolios

23 December 2017 – La Voz de Almería

Grupo Cooperativo Cajamar is continuing with the gradual reduction of its non-performing asset balance thanks to its strong performance in terms of the commercial management of its foreclosed assets and a reduction in its default rate.

In recent weeks, the entity has completed the sale of two portfolios, one containing foreclosed assets and the other containing non-performing loans, bringing the volume of problem assets sold so far this year to €791 million.

In this way, with the ordinary management of recoveries, boosted by the sale of these portfolios, Grupo Cooperativo Cajamar expects to close 2017 with a non-performing loan balance of less than €3.4 billion and a default rate of less than 11%.

Asset sales

Based on data as at 15 December, the rural Almería savings bank has sold more than 4,100 real estate assets for more than €600 million in terms of their gross book value, which represents an increase in sales of 55%.

Meanwhile, its non-performing loan balance, which amounted to €4.211 billion at the end of last year, had decreased to €3.964 billion as at September.

Interest in the market

The operations that have accumulated the largest volumes have been the sale of the Escullos portfolio, containing 1,456 loans worth around €176 million, sold to CarVal Investors and the combined organisation of Lindorff and Intrum Justitia; and the Tango portfolio, comprising around 400 assets, worth more than €57 million, which was sold to the US fund Waterfall.

Both operations were carried out through competitive processes and sparked a great deal of interest in the market. They received financial advice from Alantra.

The first portfolio of non-performing loans to companies and SMEs, most of which were secured, was mainly concentrated in the Community of Valencia (48.9%) and Andalucía (25.8%), although it also contained assets in Murcia, the Canary Islands, Cataluña, Castilla (La Mancha) and Madrid. The second comprised residential properties, although it also contained commercial and industrial assets, most of which were located in Andalucía, Murcia and Valencia.

Cajamar will close a positive year in terms of divestment, with a YoY variation in terms of the number of assets sold of more than 62%. The final numbers will also reflect the results of the current promotional campaign “Now or never”, with a selection of 4,500 properties with discounts of up to 40% (…)

Original story: La Voz de Almería

Translation: Carmel Drake

Mount Street Takes Over the Management of WestLB’s NPLs in Spain

12 December 2017 – Expansión

The British firm also wants to negotiate agreements to manage the portfolios of Spanish banks and Sareb.

A new operator has arrived in the Spanish market for the management of debt in default or with a high risk of non-payment. Mount Street London Solutions has taken over a platform that manages the “toxic” portfolio of the former German entity WestLB and has whereby acquired an office in Madrid. Through this deal, the firm aspires to obtain new clients in Spain, including financial institutions and investment funds operating in the sector.

Mount Street was owned by the fund Greenfield Partners until February when its directors purchased the firm with support from the German bank Aareal Bank, which took over 20% of the share capital. In October, the loan manager took a leap in its business with the purchase of EAA Portfolio Advisors, an entity created in Germany to administer WestLB’s non-performing assets after the bank was rescued by the German Government in 2008. Its function is to try to recover those loans, restructure them, sell them on or foreclose the assets that secure them.

Of the €200 billion in problem loans that WestLB held, €22 billion remains, under the management of EAA. The portfolio includes loans, primarily to firms in the renewable energy sector, which WestLB granted in Spain before the crisis. By acquiring EAA, Mount Street has purchased its office in Madrid along with the 6 employees that manage its portfolio.

The objective of Mount Street is to use this foothold in Spain as a platform to grow towards new business areas, especially in the real estate debt segment. “The team that we have incorporated in Spain has been working for years to restructure debt in the infrastructure sector, in particular, in the solar energy segment, and we are now able to contribute our specialisation in the real estate area that we offer in the rest of Europe”, said Ravi Joseph (pictured above), Founding Partner of Mount Street, in an interview with Expansión.

The firm, which is headquartered in London, sees several opportunities for accessing the Spanish property market. On the one hand, he hopes to negotiate agreements with financial entities and/or with Sareb (…) to manage some of their portfolios of problem loans. Another option is to help those property developers struggling to make their repayments to allow them to “repurchase” their loans from the investment banks that acquired their debt from the banks back in the day. The final option is to collaborate with small investors that are still arriving in Spain interested in acquiring non-performing loans (…).

In Joseph’s opinion, the appetite of international investors to enter Spain is still very high despite the political crisis in Cataluña. “The major international investors are still very interested in Spain. Much more so than in Italy. Spain has entered a virtuous circle (…). The uncertainty in Cataluña may affect growth somewhat, but the overall trend will continue to be upward”.

After acquiring EAA, Mount Street now manages debt amounting to €48 billion in total.

Original story: Expansión (by Robert Casado)

Translation: Carmel Drake

Blackstone Sells c. €300M Of Catalunya Banc’s Mortgages

8 May 2017 – Expansión

The banks’ non-performing assets are finally starting to generate returns for some of the entities that backed them during the worst moments of the crisis. Four and a half years after Catalunya Banc fell victim to the excesses of the real estate sector and was intervened by the State, and two years after Blackstone finalised its purchase of a portfolio of doubtful mortgages from the Catalan entity, which is now owned by BBVA, the US firm has shown that what were once toxic assets, are toxic no more.

And it has done so through the sale of some of the mortgages that it bought from Catalunya Banc. In fact, Blackstone has created a securitisation fund, with a nominal portfolio of €400 million in loans, and has placed it amongst investors at a price that represents selling almost €300 million of the total without a discount, according to official documentation submitted by the company.

Given that Blackstone purchased mortgages from Catalunya Banc worth almost €6,400 million nominal and that it paid €3,600 million for them, the fact that it has now sold the majority of the securitisation fund at its nominal value implies that investors no longer consider them to be problem loans and that they are willing to buy them without demanding an additional return for any higher risk.

Of course, there are several factors that have contributed to this. “Blackstone has included the best loans from the portfolio in the securitisation fund”, say sources in the market, who insist that the US firm still owns the majority of the loans it purchased two years ago.

In addition, the management of the loans plays a role, given that 82.75% of them have been restructured, according to figures from Fitch, which means that they have been granted grace periods or parallel financing since Blackstone took over the portfolio.

Different tranches

The result of these two factors is that Tranches A and B of the securitisation fund have been sold to investors without any discount on their nominal values. They will pay annual interest of 0.9% and 1.9%, respectively, until 2022 (from April of that year, the yield will rise to 1.6% and 3.3%).

The two tranches amount to €288 million, i.e. they represent 72% of the total fund. Meanwhile, Tranches C and D, which contain the worst mortgages and which have the lowest solvency rating, have been sold for 98% and 93% of their nominal values and will pay interest of 2.5% and 2.6%, respectively, for the first five years. Tranche E, the most risky, has been subscribed in its entirety by Blackstone, at a significant discount. (…).

Original story: Expansión (by Inés Abril)

Translation: Carmel Drake

EU Agrees To Create National Bad Banks To Assume Doubtful Debt

11 April 2017 – RTVE

On Friday (7 April),at a meeting in La Valeta, Malta, the Economic and Finance Ministers of the European Union agreed to back the creation of national bad banks, which will take on doubtful debt from the banks and whereby try to solve the problem of the “high” level of toxic assets in the European financial sector.

These non-performing loans, whose value amounts to almost €1 billion (equivalent to 7% of the EU’s GDP), account for 5.4% of the entire European credit portfolio, on average (in Spain, they account for 5.9%). Of particular concern is the high proportion in Italy (16.4%).

The Vice-President of the European Commission for the Euro and Social Dialogue, Valdis Dombroviskis, said that there had been “widespread support for the development of a project regarding how to design a national asset management company” and he encouraged ministers “to make use of the experience regarding asset management companies already in operation in some member states”.

In this sense, he explained that the EU Executive will work on a document that will serve as a guide for the creation of bad banks at the national level, which will take on these toxic products. When asked about the possibility of launching such an entity at the European level, the Latvian remarked that “most of the instruments are already in the hands of the member States” and that “loans are issued in accordance with national legislation”.

The ECB used the bad bank in Spain by way of example

Meanwhile, the Vice-President of the European Central Bank (ECB), Vitor Constancio, highlighted that the preparation of this plan by Brussels was a “very important” conclusion to emerge from the meeting. He gave the example of the good results in cases such as Spain, through the ‘Company for the Management of Assets Proceeding from the Bank Restructuring’ (‘Sociedad de Gestión de Activos Procedentes de la Reestructuración Bancaria’ or Sareb). (…).

Dombrovskis added that Brussels is also exploring initiatives to facilitate the development of secondary markets for doubtful loans and in this sense, stated that “comparable and high-quality” data are “invaluable” because investors “have to know what they are buying”.

De Guindos defended the Spanish model

The Spanish Minister for the Economy, Luis de Guindos, defended the creation of a bad bank for the non-peforming loans of Europe’s banks as a solution that would eliminate “the root” of this problem, based on the model that Spain has put into practice for its real estate assets with Sareb. (…).

De Guindos underlined that it is also “very important” to value these assets properly and ensure that the provisions to cover them “are at the correct level”. Also, there must be a “fast-track legal system (in the EU) so that lenders are able to foreclose loans”.

The option of creating a bad bank was proposed by the European Banking Authority (EBA), which presented Spain’s Sareb by way of example of the benefits of these types of structure. Sareb was created to provide an exit for toxic real estate assets, but it is not supported by all parties.

Original story: RTVE

Translation: Carmel Drake

Lone Star Sells c.1,000 NPLs & 600 Foreclosed Homes To Cabot

3 April 2017 – Idealista

The loan management firm Cabot has purchased Project McLaren from the US fund Lone Star. The portfolio contains more than 1,000 non-performing mortgages worth €102 million and more than 600 homes with a combined appraisal value of €51 million, according to financial sources consulted by Idealista. The properties that secure the mortgages and the homes are primarily located in Madrid, Andalucía, Cataluña and the Community of Valencia.

Cabot, together with Link Finanzas, were the two firms that initially expressed interest in this portfolio, but in the end, the former has acquired the project for an amount that has not been disclosed.

On the basis of their appraisal values, the properties that secure the mortgages are located primarily in Andalucía (21%), Cataluña (21%), Madrid (15%), the Community of Valencia (12%) and the Canary Islands (10%). In terms of the portfolio of homes, they are primarily located in Andalucía (26%), Cataluña (21%), Madrid (12%) and the Community of Valencia (11%).

Lone Star has become one of the most active funds in the Spanish real estate market. Following its purchase of the real estate company Neinor from Kutxabank for €930 million, the fund now wants to become the largest property developer in the country. Neinor Homes debuted on the stock market last month.

Another important operation was Cabot’s purchase, together with JP Morgan, of a package of real estate loans from Commerzbank worth €4,400 million. That portfolio contained loans secured by high-quality assets such as the Zielo Shopping Centre in Pozuelo de Alarcón (Madrid) and the MN4 Shopping Centre in Valencia, as well as the Ritz and Gran Meliá Fénix hotels.

Meanwhile, Cabot Credit Management is the largest manager of unpaid debt in the United Kingdom and Ireland. In 2015, together with the fund Elliot Asesores, it acquired the platform Paratus, which specialises in the management of problem assets. Since last year, it has also owned Gesif, another platform specialising in debt management and investments in portfolios of problem loans in Spain. (…).

Original story: Idealista (by P. Martínez-Almeida)

Translation: Carmel Drake

Blackstone & Goldmans Compete For Sareb’s €1,000M Portfolio

16 November 2016 – Voz Populí

Sareb is witnessing a battle between the two largest investors in the world: the fund Blackstone and the investment bank Goldman Sachs. The two US giants are the only two finalists in the largest asset sale launched to date by the Spanish bad bank.

Project Eloise contains 200 unpaid loans to property developers worth €1,000 million. This is the largest sales process launched to date by the company chaired by Jaime Echegoyen (pictured above). After a year without any operations of this kind, Sareb has reactivated the sale of portfolios in an attempt to boost its accounts for the year, following the downturn in revenues during H1 2016. According to several experts consulted, Sareb may obtain obtain between €300 million and €400 million from this sale.

For Blackstone, it would not be the first agreement with the Spanish bad bank. In recent years, the US fund has acquired several portfolios from Sareb, as well as from several Spanish entities. Blackstone manages its Spanish real estate assets through Anticipa Real Estate, the former CatalunyaCaixa Inmobiliaria, which it purchased from the Catalan savings banks before their sale to BBVA.

The CEO of Anticipa, Eduard Mendiluce, said recently in an interview with Efe that Project Eloise was going to be analysed in detail given its significant appeal. This platform already manages around €10,000 million in problem loans and has a stock of 5,000 homes, many of which are structured in Socimis.

Meanwhile, the strategy pursued by Goldman Sachs is more opportunistic. It participates in occasional portfolio sales and often works in partnership with another fund. In the past, the US investment bank has teamed up with the giant TPG, owner of 51% of Servihabitat, the real estate arm of CaixaBank. Nevertheless, in July, it joined forces with another fund, D.E. Shaw, in an operation to purchase assets from the Catalan entity.

Given its scale, Project Eloise was always going to be reserved for large investors only, such as Blackstone and Goldmans. Even so, eyebrows have been raised in the sector over the fact that none of the other (very active) investors in Spain, such as Oaktree, Bain Capital, Bank of America, Apollo and Cerberus, have made it through to the final round.

Key period

Sareb is putting everything on the line with this operation. This company needs to boost its revenues during the last quarter of the year in order to fulfil its commitment of continuing to repay its debt guaranteed by the State. (…).

The company’s sales decreased by 14% during the first half of the year, from €1,628 million during the first half of 2015 to almost €1,400 million between January and June this year. Sareb still owns assets worth €42,487 million and has debt (with the entities that transferred their assets to it) amounting to more than €43,000 million.

The aim of the company is to move both figures close to €40,000 million by the end of the year. To this end, in addition to Project Eloise, it has also put other portfolios up for sale, including Project Antares, containing debt with eight creditors.

Original story: Voz Populí (by Jorge Zuloaga)

Translation: Carmel Drake

Moody’s: Spain’s Banks May Securitise €105,000M Of Problem Assets

5 October 2016 – Expansión

Moody’s Forecast / The US giant Blackstone has opened an alternative route for Spanish entities to accelerate the clean up of their balance sheets, through the placement of securitisation funds containing restructured credits.

This week will see the placement of the first securitised fund of problem mortgages on the market in Europe by Blackstone, in a move that is set to pave the way for Spain’s banks to replicate the model. Blackstone’s plans involve the sale of some of the assets (€265 million) that it bought from Catalunya Banc in 2015, for a nominal value of more than €6,000 million.

The ratings agency Moody’s estimates that Spain’s banks have €105,000 million in refinanced or restructured problem loans in total, primarily mortgages, which may be put on the market through securitised funds. “The banks are under pressure from the ECB to reduce this load as quickly as possible, to clean up their balance sheets and improve their returns”, said Moody’s in a recent report. According to PwC, half of the problem loans in Europe are held by borrowers in Italy, Spain and Ireland.

Assets susceptible to being securitised are those that have been modified to help the borrower pay, although they do not necessarily need to have been in arrears in the past. The original loan may have been refinanced (offering a new loan to repay the existing one) and/or restructured (changing the terms and conditions). This figure is lower than the total volume of overdue loans owing to Spain’s banks, which amount to €138,000 million and foreclosed properties (€113,000 million).

For example, in its securitised fund, Blackstone has included only those loans that have been performing (being repaid) for more than 37 months in a row, therefore, they are considered to be “high quality” problem assets. In exchange, they offer an attractive yield, more than 100 basis points above Euribor, with a discount of just 10% for those funds prepared to bear the most risk.

In order to open up this market, players have worked hard to obtain support for these types of securitisations from the regulators. Both the ECB, as well as the Bank of England and the European Banking Authority have been working to create specific pan-European regulations to facilitate more simple, transparent and standard securitisations, pending approval from the European Parliament. According to Moody’s, securitisations of refinanced and restructured credits would fall within this definition, which should facilitate their placement amongst investors.

Investors

The most active buyers of these types of problem asset portfolios in Europe may now also participate as investors in this market. According to data from Deloitte, Oaktree, Lone Star and HSH are the most active purchasers, with more than €5,000 million, followed by others such as Bain Capital, AnaCap and Apollo.

Until now, many of the portfolios sold by the banks to these funds have been transacted through bilateral operations. Nevertheless, the economic recovery means that the volume of refinanced loans that are now performing (being repaid) is increasing, which means that the sector could generate higher returns from these kinds of securitisations.

Original story: Expansión (by Daniel Badía)

Translation: Carmel Drake