Tag: Project Sena

BBVA Awaits FGD’s Approval To Sell €14,000M RE Portfolio To Cerberus

13 November 2017 – Voz Pópuli

The largest operation of the home stretch of 2017 is pushing ahead. BBVA and Cerberus are close to reaching an agreement regarding the sale of a large proportion of the bank’s real estate assets to the US fund. Financial sources consulted by Vozpópuli indicate that a deal may be signed within the next few weeks, between late November and early December.

One of the points still being discussed is the perimeter (of the transaction). The sources consulted indicate that what is on the table is the option of selling a stake in a new company with assets and loans worth €14,000 million.

The same sources add that an agreement could have already been reached if it hadn’t been for the crisis in Cataluña and the need for the Deposit Guarantee Fund (‘Fondo de Garantía de Depósitos’ or FGD) to give its approval. BBVA received an asset protection scheme (‘Esquema de protección de activos’ or EPA) for which the FGD committed to cover “80% of the losses resulting from a portfolio of assets worth €7,359.7 million”.

BBVA has real estate exposure on its balance sheet amounting to €17,774 million in total, according to the most recent figures. Of that figure, foreclosed assets (€11,937 million) and doubtful loans (€3,357 million) account for €15,300 million. Those loans and properties have a coverage ratio of more than 61%. For this reason, BBVA could sell them for 39% of their appraisal value without having to recognise any losses. Even so, the FGD would still need to approve any deal.

The need for consent from the FGD could delay any asset sale for several months. That is what has happened, on more than one occasion, to Banco Sabadell, such as with Project Normandy. It is worth remembering that the FGD’s Management Committee comprises not only regulators and Government members but also bankers, who do not want to spend even one more euro of their resources (…).

Although BBVA’s sale (known as Project Marina and Sena) is on track, the sources consulted indicate that it could all be thrown up in the air at any moment. “It would not be the first time that an operation that has almost been finalised dies off because of one of BBVA’s management committees or Board of Director meetings”, they say. The same thing is happening with Cerberus, one of the most inflexible funds when it comes to price: “Once the price has been fixed, it is very difficult to move it or play with counter-offers”, they add.

This operation has generated a lot of commotion amongst other opportunistic funds, many of whom were not invited to participate, and who have even indicated their displeasure to BBVA’s leaders. The negotiations between Cerberus and the bank arose after the fund’s President, John W. Snow (former US Treasury Secretary) cracked the whip over his own management team in Spain. He did so after Cerberus missed out on the sale of Popular’s real estate, which was awarded to Blackstone.

Snow himself decided to come to Madrid in person to meet with the President of BBVA, Francisco González (pictured above) and propose an operation similar in size to Project Quasar (Popular). Indeed, Cerberus purchased a €600 million portfolio from the bank in June, Project Jaipur, which gave rise to the current negotiations.

Although the operation still hangs in the balance, BBVA has never been as close to sealing an agreement like this one. There is a lot of optimism amongst the advisors to the operation, PwC and Linklaters. But, for the time being, anything can happen.

Original story: Voz Pópuli (by Jorge Zuloaga)

Translation: Carmel Drake

Cerberus In Exclusive Negotiations With BBVA To Acquire €2,000M Portfolio

22 September 2017 – El Confidencial

The operation in question is called Project Sena and it is the most important portfolio that BBVA has put on the market to date. With a volume of toxic real estate assets worth €2,000 million, primarily comprising NPLs backed by residential collateral, the entity chaired by Francisco González is holding exclusive conversations with Cerberus, according to several sources in the know. Both the bank and the fund have declined to comment.

Nevertheless, the US fund’s appetite goes much further and extends to include the real estate company Anida, which could end up forming part of the transaction as well. That would result in the second largest real estate divestment to be undertaken by a Spanish entity this year, following the sale of €30,000 million in toxic assets agreed between the new Santander-Popular and Blackstone.

The negotiations between Cerberus and BBVA date back to last summer and are currently at a critical point, in terms of tilting the balance one way or the other. Options on the table include Cerberus acquiring Sena on its own, adding Anida into the mix, or acquiring the former and entering the process to compete for the latter, a decision that could be taken at the next meeting between the entity’s Board of Directors.

As El Confidencial revealed, the idea has been floated at La Vela (BBVA’s headquarters in Madrid) of selling Anida to accelerate the real estate unblocking that the Bank of Spain itself is encouraging all the entities to undertake. In fact, BBVA has engaged PwC to advise it on the operation, and it is open to receiving different offers.

In its favour, Cerberus has the advantage of being in pole position to acquire Sena, a card that it wants to play in its favour to also bid for Anida. Nevertheless, other investment giants, such as Lone Star and Apollo, may also be interested in acquiring the real estate firm, a giant with gross assets of more than €5,000 million and the heir, along with others, of the former fund BBVA Propiedad, which the bank practically rescued at the end of 2008, when the first signs of the crisis emerged.

The net real estate exposure on BBVA’s balance sheet amounts to €8,750 million, according to the bank’s most recent half-yearly accounts, thanks to high coverage levels, which amount to 57% on average, one of the most conservative figures in the sector.

With a strategy clearly aimed at divesting real estate, in the last year, BBVA has undertaken several major operations, such as the sale of its Boston and Buffalo portfolios, the transfer of 1,500 homes to Testa, whose gross value amounts to €485 million and the transfer of land worth €431 million to Metrovacesa. Moreover, alongside Santander, BBVA is a shareholder of Merlin Properties, the largest Socimi in Spain.

After all these movements, the largest pawn currently in play is Anida, which also includes a property developer division, Anida Desarrollos Inmobiliarios, and several subsidiaries that the bank has been gathering up under the same umbrella, such as Anida Operaciones Singulares and subsidiaries in Mexico and Portugal.

In theory, the overseas units would be left outside of the real estate company sales process that is currently on the table, an operation whose final outcome is regarded in the market with as much expectation as concern, given that in the past, the entity has received several expressions of interest for Anida that have never ended up materialising.

But now the panorama has changed, given that the operation between Santander and Blackstone has put pressure on the rest of the sector to make similar moves, and the entities are increasingly more inclined to accelerate the divestment of their real estate.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake