Tag: Project Galerna

Cerberus Fights Off Blackstone to Acquire €9.1bn in Toxic Assets from Sabadell

19 July 2018 – El Confidencial

Banco Sabadell has chosen who is going to take over its toxic assets. In the end, after an express process that has seen the bank receive several binding offers, Cerberus has fought off competition from the other interested parties, including Blackstone, Lone Star and Oaktree. According to a relevant fact filed by the entity with Spain’s National Securities and Market Commission (CNMV), “the real estate assets involved in the operation have a combined gross book value of approximately €9.1 billion and a net book value of approximately €3.9 billion”.

They correspond to two of the four foreclosed property portfolios that Sabadell had put up for sale, “Challenger” and “Coliseum”, which will be transferred to one or more newly constituted companies in which Cerberus will own a direct or indirect stake with 80% of the capital and Banco Sabadell will retain the remaining 20% share.

As for Solvia Servicios Inmobiliarios, it will continue to be wholly owned by the Catalan entity and will also continue to provide integral management services for the real estate assets of both portfolios included in the operation “on an exclusive basis”, according to the statement.

Once the operation, which is subject to the corresponding authorisations, has been closed, control over the real estate assets will be transferred and, therefore, those assets will be deconsolidated from the bank’s balance sheet. In this way, according to explanations from Sabadell, the sale “contributes positively to improving the group’s profitability, although it will require the recognition of additional provisions with a net impact of approximately €92 million”, which will improve the Catalan entity’s Tier 1 capital ratio by around 13 basis points.

The operation forms part of a restructuring plan designed by the entity at the end of 2017, through which it is seeking to remove €12 billion in toxic assets from its balance sheet. Sabadell closed last year with gross foreclosed assets amounting to €8.023 billion and non-performing loans amounting to €5.695 billion, according to real estate exposure data filed with the CNMV.

The other two portfolios that the entity wanted to divest are known as Project Galerna, containing €900 million in non-performing loans, which was acquired by the Norwegian firm Axactor, and Project Makalu, with €2.5 billion from the former CAM. With their sale, the entity will complete its real estate clean-up, just like Santander and BBVA have already done.

Original story: El Confidencial (by María Igartua)

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

Project Galerna: Sabadell Sells €900M in NPLs to Axactor

29 June 2018 – Voz Pópuli

Sabadell has already completed the first phase of its investment plan. The bank chaired by Josep Oliú has agreed to sell a portfolio of non-performing loans amounting to €900 million to the Norwegian fund Axactor, according to sources at the funds involved in the process consulted by Vozpópuli.

The portfolio known as Project Galerna comprises mainly mortgage tails proceeding from CAM, which form part of the entity’s Asset Protection Scheme (EPA), and so the completion of the operation is conditional upon approval from the Deposit Guarantee Fund (FGD).

Loans that remain after the foreclosure of real estate credits are known as the mortgage tails. According to the sources consulted, the purchase of these types of assets – which tend to be fully provisioned (100%) by the entities, and so typically generate gains – tend to have discounts of between 95% and 97%, and so the offer from the Norwegian fund to acquire this portfolio could amount to between €25 million and €47 million.

In the bid to be awarded this unsecured portfolio, Axactor has fought off competition from other interested parties such as Lindorff and Kurk. The Norwegian fund arrived in Spain in 2015 and, at the end of 2017, purchased a portfolio of non-performing loans amounting to €436 million from Bankinter.

Sabadell’s macro-sale

The award of Project Galerna to Axactor, a process that KPMG is advising, represents the first step in Sabadell’s divestment plan, through which it is seeking to get rid of around €10.9 billion in non-performing assets before the summer.

As this newspaper already revealed, in addition to Galerna, the bank also has projects Challenger and Coliseum up for sale, operations that Alantra is advising, and which together contain €7.5 billion in foreclosed assets. Similarly, Project Makalu, which KPMG is advising, contains €2.5 billion in loans to property developers and SMEs.

Challenger is the only one of the four portfolios that is not subject to approval from the FGD. The other three are linked to CAM’s EPA and so their block sale would generate million-euro losses for the FGD, which will end up increasing its deficit.

Negotiations with the FGD

To avoid that, Sabadell – as well as BBVA – is negotiating with the FGD to transfer the portfolios to new companies created by the entity and the funds that they are awarded to. In this way, the losses would not be assumed until the new companies sell the assets in the market.

In order to offset these losses, Sabadell, as well as BBVA with respect to Unnim’s EPA, has offered the Deposit Guarantee Fund the option of assuming more than 20% of the losses of the EPAs.

Original story: Voz Pópuli (by Pepe Bravo)

Translation: Carmel Drake

Sabadell Engages Alantra to Sell 2 Portfolios Containing €8bn in Foreclosed Assets

11 April 2018 – El Confidencial

Banco Sabadell is in the running to try to complete its real estate clean-up this year, and to this end, has engaged Alantra to sound out the market to sell two portfolios known as Project Coliseum and Project Challenger, comprising €8 billion in foreclosed assets, which the entity has already started to show to potentially interested parties (…)

This move forms part of the plan designed by the financial institution at the end of last year to remove almost €12 billion in toxic assets from its balance sheet through the sale of a number of portfolios. The first two are already on the market and amount to €3.4 billion, but the main courses are about to be served.

In order to speed up the process, the entity chaired by Josep Oliu has opted to create a portfolio containing mainly Sabadell risk and another, subject to examination by the Deposit Guarantee Fund (FGD), containing properties proceeding from the former CAM, which are protected by the Asset Protection Scheme (EPA).

The first, according to financial sources, is going to comprise a gross volume of more than €5 billion, whilst the second will amount to around half that figure, at just over €2.5 billion, and it will need the approval of the FGD, given that it will have to cover 80% of the losses.

Sabadell closed last year with €8.0 billion in foreclosed assets and €5.7 billion in non-performing loans, according to the real estate exposure data submitted to the CNMV – Spain’s National Securities and Exchange Commission – and its average coverage ratio currently amounts to 55%.

The large buyers that Alantra is currently sounding out include the major funds that typically participate in these types of operations, such as Apollo, Lone Star, Blackstone and Cerberus, according to the same sources.

This potential divestment joins the two portfolios that Sabadell already has on the market: Project Galerna, which comprises €900 million in non-performing loans; and Project Makalu, comprising €2.5 billion in assets from the former CAM, according to Voz Pópuli. In both cases, KPMG is advising the sales process.

Moreover, as El Confidencial revealed, Solvia, the servicer arm of Sabadell, has decided to join the housing boom and create its own property developer, Solvia Desarrollos Inmobilarios, containing €600 million in land and unfinished developments.

The entity wants to grow this new property developer by signing agreements with different companies, funds and family offices interested in delegating the management and development of its land and developments.

If it manages to bring all of these plans to fruition, Sabadell will follow in the footsteps of Santander and BBVA, which last year completed their real estate clean-ups with the sale to Blackstone and Cerberus, respectively, of the bulk of their toxic properties. That would leave CaixaBank as the last major bank that still needs to make a significant move to comply with the guidelines set by Europe: to remove a decade of crisis from its balance sheet.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake