Sareb Sells €625M in NPLs to Deutsche Bank & Oaktree

20 December 2017 – El Independiente

Sareb (…) is closing 2017 by completing two of its largest operations of the year, with the sale of two non-performing loan portfolios to two large international funds.

The German bank Deutsche Bank has been awarded one portfolio comprising €375 million in non-performing loans, whilst the US fund Oaktree is on the verge of acquiring another portfolio, containing around €250 million in NPLs. Both portfolios, known as Project Inés and Project Tambó, respectively, stand out as two of the largest transactions undertaken by the so-called bad bank this year, confirmed sources familiar with the deals to El Independiente.

Project Inés, which was initially put up for sale with a nominal value of €500 million and which has been closed with a smaller perimeter (€375 million), as tends to be the case, primarily comprises mortgage loans secured by collateral. Meanwhile, Project Tambó was placed on the market with a nominal value of €300 million and now seems to be closing at around the €250 million mark.

Sareb was constituted in 2012 with the mission of selling 200,000 real estate assets, proceeding from the banks, worth just over €50 billion.

Moreover, in July, it launched its channel for the sale of non-performing loans worth €400 million aimed at investors and professionals to boost the divestment of a proportion of its portfolio of financial assets. Its commitment is to proceed with the liquidation of the properties and loans that it has acquired, before November 2027.

To accelerate the process, Sareb plans to debut its Socimi Témpore Properties on the stock market at the beginning of 2018. The Socimi owns a selection of Sareb’s best rental homes, almost 1,400 properties in total, in the metropolitan areas of Spain’s large capitals and other areas with high demand for rental.

The Socimi’s debut will happen during the first quarter of next year, since, although Sareb has everything in place to start to trade and its original plan was to list the company by the end of 2017, its negotiations with the MAB, the alternative market where the Socimi will trade, are still on-going (…).

During the 9 months to September, Sareb sold a total of 13,796 properties, which represents an increase of 55% with respect to the same period in 2016. Of those, 7,855 related to owned properties and 5,941 were linked to loans (…).

Revenues

Sareb’s total revenues as at September rose by 3.6% with respect to the first nine months of 2016, to €2.394 billion.

The company highlights that, given the composition of Sareb’s asset portfolio – 68% of which relates to loans linked to the real estate sector – the weight of revenues resulting from the management of loans is still more significant than those generated from the sale of properties.

Meanwhile, revenues from the management of loans decreased by 6.8% during the first nine months of the year, to reach €1.599 billion, primarily due to the lower interest charged and the reduction in loan repayments and cancelations as the portfolio is smaller than it was last year.

Original story: El Independiente (by Ana Antón)

Translation: Carmel Drake

Sareb Puts Spain’s Largest Ever NPL Portfolio Up For Sale

7 November 2017 – Voz Pópuli

Sareb wants to star in the largest sale to date of non-performing loans in Spain. The company chaired by Jaime Echegoyen has put a portfolio of unpaid loans worth €2,600 million up for sale, according to financial sources consulted by Vozpópuli. It hopes to sell the portfolio before the end of the year and since it contains NPLs that are recognised off-balance sheet, all of the consideration paid will correspond to profits.

This operation has been baptised as Project Dune and is being advised by KPMG. Until now, the largest sale of an unsecured non-performing loan portfolio was completed by BBVA in 2014, when it sold a portfolio worth €1,700 million to Deutsche Bank.

Non-performing loans are credits that have been written off by the banks, which remove them from their balance sheets after recognising 100% provisions against them. In the case of Sareb, they are what is known in the market as mortgage tails: essentially, they are loans that remained uncollected following the execution of a real estate loan. These loans are purchased by opportunistic funds at significant discounts, of between 95% and 97%, which try to recover the maximum amount by taking the debtors to court. Since they are fully provisioned, the entire amount that Sareb receives from this sale will be recognised as profits.

Project Dune actually comprises two sub-portfolios: Pilat, containing 2,261 unsecured non-performing loans to 1,500 small- and medium-sized property developers, worth €2,442 million; and Kirbus, containing 115 loans secured by real estate, with a combined nominal value of €176 million.

In this way, the second sub-portfolio has almost 1,000 properties as collateral, of which around half are apartments, located primarily in Barcelona, A Corñua and Madrid. Half of the Dune portfolio is located in Cataluña, the Community of Valencia and Aragón.

On the basis of the prices that tend to be paid in this market, Sareb could end up generating revenues/gross profits of between €125 million and €175 million from this sale, depending on the degree of interest that the portfolio sparks amongst the funds and the level of competition between them.

Project Dune is not the only deal that Sareb has underway since it also has other portfolios worth more than €1,000 million on the market. The largest process currently in progress is known as Project Inés, containing €400 million, whose purchase is being finalised by Deutsche Bank. The bad bank typically uses these types of operations towards the end of the year to balance its budget and generate higher revenues to allow it to pay off some of its debt.

This sale is being coordinated by the prestigious portfolio team at KPMG, led by Carlos Rubí. Most of the team came from PwC and joined the firm in 2014.

Original story: Voz Pópuli (by Jorge Zuloaga)

Translation: Carmel Drake

Project Inés: Deutsche Finalises Purchase Of Sareb’s €400M Portfolio

17 October 2017 – Voz Pópuli

Sareb is at a critical point in one of its most important transactions of the year. The bad bank is negotiating with Deutsche Bank regarding the sale of the largest portfolio it has brought onto the market in the last 12 months. The portfolio in question is Project Inés and it was initially worth €500 million, but its final perimeter will amount to €400 million, according to financial sources consulted by Voz Pópuli. Oaktree and Bank of America also participated in the bid until the final round, but their offers were lower than Deutsche Bank’s bid. Sources at Sareb declined to comment.

Those three international investors were the final candidates after dozens of other funds interested in the operation fell by the wayside. One of the last candidates to be ruled out was KKR.

The portfolio comprises unpaid loans secured by residential assets in Madrid, Cataluña, Andalucía and Zaragoza. The inclusion of assets in Cataluña, despite everything that is currently happening in that autonomous region, caused many of the funds to hesitate and deduct value from their bids, according to the financial sources consulted by this newspaper.

These types of operations are key for Sareb to accelerate the rate of asset sales, given that it has been given the mandate of divesting €50,000 million of problem assets within 15 years; that period started at the end of 2012. The latest figures show that the cumulative divestment to the end of 2016 amounted to almost €10,000 million, leaving a balance of €40,134 million on the books.

Other operations

Project Inés is not the only operation that Sareb has underway. It has also put a portfolio worth €400 million on the market through an online platform for funds. On the portal, investors can bid for loans on an individual basis (Project Dubai), like they did with Haya Real Estate last year.

Moreover, it has just put another portfolio, known as Project Tambo, on the market through CBRE. That portfolio contains non-performing loans to property developers, worth €300 million.

Sareb normally accumulates lots of operations of this kind at the end of the year. In 2016, it sold seven portfolios after the summer, for a total combined value of almost €1,300 million. The largest portfolio was Project Eloise, which was awarded to Goldman Sachs.

Deutsche Bank and Bank of America are two regulars in these types of operations. In fact, the German bank already acquired two small portfolios from Sareb at the end of last year, known as Project Sevilla and Project Marina, for a combined total of €160 million.

Original story: Voz Pópuli (by Jorge Zuloaga)

Translation: Carmel Drake

Sareb Creates A Portal To Sell €3,000M In Loans

29 September 2017 – Expansión

Sareb, the company in charge of liquidating the real estate portfolio of the nine savings banks rescued by the State, is seeking to streamline this process through an online channel aimed at institutional players only. The objective is to market more than €3,000 million in delinquent loans through the channel in 2018 alone, as the entity revealed yesterday at a conference with investors organised by SmithNovack in London.

With this portal, Sareb is seeking to not only enhance the transparency of these types of operations but also open up a new channel for smaller investors to be able to access the market. Ignacio Meylán, Director of Institutional Sales at Sareb, said that this initiative forms part of the innovation efforts being undertaken by the company, which is owned 45% by the State and 55% by private investors.

Milestones

During a preliminary pilot phase, the company invited around thirty investors to access a selection of loans, worth around €400 million, in such a way that they are able to submit bids on a loan-by-loan basis.

Meylán explained yesterday that the investors who have registered on the platform will have the opportunity to study the documentation and information relating to each loan, and then formulate their bids in limited and differentiated time periods.

Sareb is expecting to receive bids during the first half of October. The ultimate objective is to expand the core group of investors interested in these assets and, further down the line, take these types of products to local investors interested in acquiring the properties, both residential and other, that secure these loans.

Next year, the bad bank plans to launch six sales processes through this online channel. Each one will include loans worth at least €500 million, and so, it will end up putting a minimum of €3,000 million in toxic assets on the market in a single year.

Portfolios

In addition to this initiative, Sareb has just placed Portfolio Inés on the radars of the opportunistic funds. The portfolio comprises delinquent loans with a nominal value of €500 million. The entity hopes to close the transaction in October. The bad bank is also working on the launch of another portfolio, called Tambo, whose volume amounts to between €250 million and €300 million. The final quarter of the year is typically the most active for divestments of this kind.

The European authorities calculate that Europe’s financial entities hold almost €1 billion (€1,000,000,000,000) in doubtful loans on their balance sheets and that they are making their viability difficult in many cases.

A new record will be set in this market this year, since the start of the crisis, due to the Popular operation, the largest in the history of Spain, which was awarded to Blackstone.

Original story: Expansión

Translation: Carmel Drake