BBVA Sells its Last Large Problem Portfolio to CPPIB

17 December 2018 – El Confidencial

The Canadian fund CPPIB has been awarded BBVA’s last major portfolio of problem assets. The investor, which manages the money of the public pensions in the North American country, is negotiating the final details of its purchase of €2.5 billion in unpaid real estate loans from the Spanish entity, according to financial sources consulted by El Confidencial. BBVA declined to comment.

The sale, framed as Project Ánfora, is going to close within the next few days.

CPPIB has won the bid, fighting off competition from two major US investors: Cerberus and Lone Star. The auction has been coordinated by Alantra and, according to average market prices, must have been closed for a price of around €1 billion.

For BBVA, this same represents almost the conclusion of the clean up of its real estate inheritance. Together with Project Ánfora, the entity, which is still chaired by Francisco González, agreed to sell €12-13 billion in property to Cerberus (Project Marina) a year ago. The final details of that operation are still being closed with the Deposit Guarantee Fund (FGD).

Before the sale of Ánfora and Marina, BBVA had a net real estate exposure of €5.5 billion, based on data as at September 2018. The aim is for the real estate inheritance to be reduced to almost zero by the end of the year.

The Ánfora portfolio also contains refinanced loans amounting to €900 million, a new type of asset in this type of process.

For CPPIB, this is the second batch of problem assets that it has purchased from BBVA this year. It already acquired Project Sintra, containing €1 billion in unpaid loans to property developers.

The Canadian fund broke into Spain a few years ago with the acquisition of Altamira, together with Apollo and the ADIA sovereign fund, the main investor vehicle of Abu Dhabi. CPPIB’s interest in Spanish real estate means that it cannot be ruled out that it will end up being the buyer of Altamira following the current sales process. Large vehicles such as the Canadian one use alternative assets such as properties to diversify their portfolios and reduce their dependence on stock market and bonds.

Original story: El Confidencial (by Jorge Zuloaga)

Translation: Carmel Drake

Project Sintra: BBVA Engages PwC to Sell €1bn of Toxic Loans

13 March 2018 – Voz Pópuli

BBVA does not want to waste any more time on the real estate clean-up exercise. In the last few days, the entity chaired by Francisco González has launched a €1 billion portfolio on the market: Project Sintra, according to financial sources consulted by Vozpópuli. It is being advised in the operation by PwC. Neither the bank nor the consultancy firm wanted to comment.

This portfolio is the penultimate step for BBVA in the reduction of its real estate exposure to zero, after the agreement it reached with Cerberus to transfer €13 billion of foreclosed assets, as this newspaper revealed. That sale, Project Marina, is still pending the necessary authorisations and is scheduled to be closed in the middle of this year.

The balance of BBVA’s divestments is as follows: before Project Marina, the entity had a gross exposure (not including provisions) of almost €16 billion, which will end up at just over €3 billion. Of that figure, two-thirds relate to unpaid loans linked to land and completed developments, with a coverage ratio of 54%.

With this new operation, BBVA wants to be crowned as the first major entity to get rid of its inheritance from the crisis. Last year, Santander closed the sale of €30 billion from Popular to Blackstone, but it still has €11.7 billion left to divest.

The same stars

With Project Sintra, BBVA has now awarded the mandate for three consecutive operations to PwC. It did so with Project Jaipur, worth €600 million, which was acquired by Cerberus; and Project Marina, which had the same advisor and buyer.

The latter operation generated unease amongst certain funds, which complained to the bank because it had not opened a competitive process, but instead chose to negotiate one on one with Cerberus. Sources close to that operation defended that a bilateral sale could optimise both the price and an auction, thanks to the threat of opening the process to more rivals.

In this way, BBVA is one of the entities that has decided to accelerate the sale of portfolios during the first quarter, like Sareb, which is finalising the sale of between three and four packages: Nora, Bidasoa, Dune and Slap, with a combined volume of €3.2 billion.

One of the most fashionable assets and one that entities are increasingly including in their portfolios is land. In this way, Sareb is preparing an operation containing land only and Kutxabank is evaluating a similar process.

Original story: Voz Pópuli (by Jorge Zuloaga)

Translation: Carmel Drake