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

BBVA Puts another €2.5bn Property Portfolio up for Sale

12 September 2018 – Voz Pópuli

BBVA’s exposure to the real estate sector will have been reduced to almost zero by the end of the year. Following the sale of almost all of its property to Cerberus, the entity chaired by Francisco González has decided to accelerate the divestment of its remaining delinquent loans. To this end, it has entrusted the sale of €2.5 billion in problem loans to Alantra, according to financial sources consulted by Vozpópuli.

The operation has not been put on the market yet but it is expected to be communicated to opportunistic funds within a matter of days, maybe even this week. The name of the operation is Project Ánfora.

The operation is expected to be completed during the last quarter of the year. In that case, the year-end accounts for 2018, the final set that González will present, will reflect the fact that BBVA will have become the first large Spanish entity to clean up all of its real estate inheritance, with the exception of Bankinter, which barely had any to start with.

The latest official figures, as at June 2018, show that BBVA had real estate exposure amounting to €14.9 billion: €2.5 billion in loans to property developers and €11.5 billion in foreclosed assets, whose transfer to Cerberus will be closed soon.

Sudden push

Another entity that has also accelerated its clean-up process in recent months is Santander, with Project Apple, amounting to €5 billion, whose sale is currently being finalised, also to Cerberus. Afterwards, it will be left with another €5 billion to divest. The exposures of CaixaBank, Sabadell and Bankia are still above that level.

With this sudden push, the banks are seeking to fulfil the mandate established by the ECB and make their businesses in Spain profitable, which have been weighed down over the last decade by the digestion of property.

The sources consulted explain that Project Ánfora includes relatively small loans, such as mortgages and SME credits, which received financing linked to properties.

In addition to Ánfora and Marina – the sale of foreclosed assets to Cerberus – this year, BBVA has also closed the transfer of the Sintra portfolio to the largest Canadian fund, Canada Pension Plan Investment Board (CPPIB), containing €1 billion in loans to property developers.

Original story: Voz Pópuli (by Jorge Zuloaga)

Translation: Carmel Drake

Santander Considers €3bn Offer from Cerberus for its Toxic Property

6 September 2018 – Voz Pópuli

Banco Santander is on the verge of closing the sale of half of the property that it still has left over from the crisis. The Spanish entity is holding advanced negotiations to transfer €5.1 billion in foreclosed assets to Cerberus, for around €3 billion, according to financial sources consulted by Vozpópuli.

The fund chaired by John Snow has fought off competition from three other major international investors: Apollo, Lone Star and Blackstone. It is currently the favourite in the running even though it has not submitted the highest bid. According to Debtwire, Cerberus put an offer of €2.7 billion on the table; Apollo offered €2.9 billion but with a less attractive payment plan; and Lone Star and Blackstone bid themselves out of contention.

The offers were presented at the end of August and Santander is expected to close the sale over the next two weeks. Small changes in the perimeter of the operation have not been ruled out.

Resetting the clock

The sale of these assets – known as Project Apple – represents the largest divestment currently underway in the financial sector. It follows other sales completed this year, such as CaixaBank’s sale of €12.8 billion to Lone Star; and Sabadell’s sale of €9.1 billion to Cerberus.

With Project Apple, in which Santander is being advised by Credit Suisse, the bank hopes to reduce its exposure to property in Spain to almost nil.

Following the purchase of Popular last year, Santander ended up with €45 billion on its balance sheet. Last year, it transferred 51% of the €30 billion from Popular to Blackstone – Project Quasar. And, according to figures reported at its results presentation in July, Santander now has €10.1 billion of real estate exposure in Spain. Following the possible sale to Cerberus, it would be left with less than €5 billion, equivalent to just 11% of the balance it held a year ago.

With this operation, Cerberus would consolidate its position as the fund that has purchased the most assets from the banks during the crisis. In the last year alone, it has acquired property from Sabadell and BBVA.

Original story: Voz Pópuli (by Jorge Zuloaga)

Translation: Carmel Drake

Project Apple: Apollo Bids Hard for Santander’s Last Real Estate Portfolio

30 July 2018 – El Confidencial

Project Apple, the name chosen for the €5 billion real estate portfolio that Banco Santander has put up for sale, is entering the home stretch. The entity chaired by Ana Botín has asked the interested funds to submit their definitive offers this week, according to sources close to the operation.

As this newspaper revealed, the firms that have expressed their interest in the operation include the giants Lone Star, Cerberus, Blackstone and Apollo, although, the latter two are regarded as the favourites, given that they have significant recent history with the Cantabrian bank’s property.

Just one year ago, Blackstone was awarded project Quasar, the €30 billion portfolio of gross toxic assets that Santander sold (following its acquisition of Banco Popular). Meanwhile, Apollo owns 85% of Altamira, the real estate asset manager that the financial entity created and which is currently administering the €5 billion portfolio up for sale.

Having been left out of all of the major real estate processes involving the banks, Apollo has decided to bid hard for Apple, according to the same sources, a move that has been launched in parallel to the possible sale of  (its stake in) Altamira, the manager that would lose some of its appeal if another fund were to manage to acquire this portfolio.

In addition, the firm led in Spain by Andrés Rubio has just reached an agreement with Santander to modify Altamira’s management contract and to refinance the servicer’s debt, in a deal that has allowed the fund to distribute a dividend of €200 million.

For Santander, the sale of Project Apple will mean completing the divestment of all of its real estate exposure, a move that took a giant leap forward last year with the transfer of the Quasar portfolio to Blackstone.

Nevertheless, and precisely because it has already cleaned up the bulk of its balance sheet, the entity does not have any need to sell and, therefore, if the bids come in below its expectations, it may decide not to transfer the portfolio after all, at least not through this process.

After the Cantabrian bank, BBVA reached an agreement with Cerberus to sell it 80% of its toxic property, whose gross value amounts to €13 billion, in an operation that is expected to be completed later this year.

More recently, CaixaBank reached an agreement with Lone Star to sell it 100% of Servihabitat and the majority of a portfolio of properties worth €6.7 billion; and Banco Sabadell made a deal to transfer €12.3 billion in toxic assets to Cerberus (€9.1 billion), Deutsche Bank (€2.3 billion) and Axactor (€900 million).

Original story: El Confidencial (by R. Ugalde)

Translation: Carmel Drake