Tag: Project Sun

Banks Have Put €2,000M In RE Assets Up For Sale In 2017

6 February 2017 – Idealista

Real estate assets are still treated like a hot potato in the banking sector. In order to reduce the default rate (which still exceeds 25% in the case of loans to property developers) and avoid more provisions, entities such as Bankia, BBVA and Liberbank are continuing in their efforts to accelerate the sale of portfolios of unpaid secured loans, as well as packages of real estate assets. 2017 has started with almost €2,000 million in properties up for auction. (…). They include homes, premises, offices, industrial warehouses and land.

Most of the operations have been on the market for several months, since no buyers have yet been found. Some are well known, such as BBVA’s Project Vermont, a portfolio of loans to property developers secured primarily by newly built homes and worth almost €100 million. Several funds were interested in acquired this lot: Oak Hill, Fortress and AnaCap.

And it is BBVA that has the most packages on the market, including: Project Buffalo, which contains homes worth €400 million; and Project Boston, which comprises 16 office buildings located in Madrid, Barcelona and Valencia, worth €200 million. (…).

Liberbank has put Project Fox on the market. It is a portfolio of real estate debt worth around €200 million and is the entity’s first (but not its last) portfolio of unpaid mortgages.

Other operations have also made their debuts in 2017. Such is the case of Project Tour, a package being sold by Bankia, one of the most active players in the sale of real estate portfolios. It comprises 1,800 properties (…) and is worth €166 million.

Funds start to divest their purchases

The market has also started to see how some of the international funds that have invested in our country in recent years are starting to sell some of the assets they have purchased. Last year, Lone Star made its debut as a vendor (…) when it put Project McLaren on the market. It comprises two portfolios: one containing more than 1,000 mortgage loans worth €102 million and secured primarily by homes, although there are also some commercial assets in the mix. The other portfolio, comprising more than 600 homes, has a combined appraisal value of €51 million. The firm Cabot, which specialises in managing bank loans, has expressed its interest in that portfolio.

Another fund that wants to divest some of its real estate investments in Spain is the US firm Ares Management, which has put Project Firefox onto the market: real estate debt worth around €160 million.

Bankia, Caixabank and Sareb were the most active at divesting real estate in 2016 (…).

Sareb has been one of the key players in the market (in recent times), having managed to place €1,565 million of real estate debt of all kinds with international investment funds (during its three year life). Its largest non-performing loan portfolio (Project Eloise) had a nominal value of €553.3 million and it was purchased by Goldman Sachs. (…).

In 2016, Bankia had several portfolios up for sale, including Project Ocean, Project Tizona and Project Lane.

Caixabank become one of the most proactive entities in the sale of Spanish property last year. Its most high profile sales included Project Sun, with hotel debt worth around €1,000 million; Project Carlit, with around €750 million of real estate debt; and Project More 2, containing €200 million of owned properties (REOs). (…).

Other players with more limited activity included Abanca (formerly Novagalicia) and Cajamar.

Original story: Idealista (by P. Martínez-Almeida)

Translation: Carmel Drake

Santander & Apollo Call Off Altamira Negotiations

30 December 2016 – Vozpópuli

Santander’s repurchase of Altamira has run into trouble.

After months of to-ing and fro-ing, Banco Santander and Apollo have decided to call off their negotiations regarding the possible sale of the 85% stake that the US fund owns in the real estate company. And the reason is price, given that Ana Botín is not willing to meet the expectations of the asset manager chaired by Leon Black. Apollo will not drop its asking price below €1,000 million, whilst Santander’s informal offer amounts to around €800 million, according to several financial sources.

Unless there is a last minute change of heart, all indications are that Altamira’s share capital structure will continue as it is now: with 85% in the hands of Apollo and 15% controlled by Santander. The Spanish bank sold the controlling stake in the real estate company in 2013 for €664 million.

Santander’s intention was to repurchase its stake to create a world-leading property management firm, to administrate its assets in other countries where the default rate is rising, such as in Brazil. Santander engaged Citi to complete this operation. The possible repurchase has been on the table since Ana Botín (pictured above) took over as President of the bank, given that this sale was one of the things that she liked the least from her father’s inheritance.

Botín sees it as a much more expensive way of raising capital than would have been possible to obtain by other means. But unless she can afford a price that will allow Apollo to close this deal at a profit, it is unlikely to go ahead. This change in strategy comes at a time when Apollo is raising a new fund, amounting to more than €4,000 million, to invest in the south of Europe. Given that it has new ammunition to spend from now on, it will value a platform such as Altamira very highly

New strategy

Following this turnaround in negotiations, Apollo has decided to strengthen the future of Altamira be making acquisitions. Santander’s property management firm is well placed in two current acquisition processes: firstly for Unicaja’s real estate arm, GIA, where it is competing with Haya Real Estate; and secondly, for the first bad bank created by the Portuguese State, Oitante, which manages Banif’s problem assets – other players such as Servihabitat (owned by TPG and CaixaBank), Hipoges and Värde Partners (Banco Popular’s real estate shareholder) are also bidding in that tender.

If the latter operation bears fruit, it would be Altamira’s first international venture, and the ideal way for Apollo to generate value from this investment, and obtain more from its sale when it eventually decides to exit.

The fund chaired by Black (one of the 150 wealthiest people in the USA and owner of the painting The Scream) is putting all of its meat back on the grill in Spain after a couple of less active years. In 2013, it closed its largest two acquisitions in the country: Altamira and Evo Banco. Since then, its activity has been limited to the purchase of a small portfolio of homes from BMN and GE Capital’s mortgage portfolio in Spain. Moreover, Altamira was awarded one of the four management contracts by Sareb.

In recent months, Apollo has purchased one of the largest banking portfolios on the market, Project Sun from CaixaBank, containing hotel debt, and it is expected to soon close the acquisition of one of the aforementioned real estate platforms (Oitante or Unicaja).

Original story: Vozpópuli (by Jorge Zuloaga)

Translation: Carmel Drake

CaixaBank Sells €700M In Debt & Foreclosed Hotels To Apollo

29 December 2016 – El Confidencial

CaixaBank is going to close 2016 with a healthier balance sheet, thanks to the latest divestment operation that it is about to sign. According to financial sources, the banking institution led by Gonzalo Gortázar (pictured above), has reached an agreement with Apollo Global Management to sell €700 million in foreclosed assets linked to the hotel sector. The US fund is hereby going to acquire 20 four- and five-star holiday establishments that the bank has been holding in its portfolio following non-payments by customers.

The transaction, which has been dubbed Project Sun, is just awaiting the finishing touches from CaixaBank and Apollo, the opportunistic fund that purchased 84% of Banco Santander’s real estate company – Altamira – for €664 million and all of Evo Banco, which previously belonged to the former Novacaixagalicia for €80 million, amongst other things. Nevertheless, the agreement between the bank headquartered in Barcelona and the NYC-based firm is limited to two thirds of the portfolio that was initially put up for sale.

The Spanish financial institution, which has been advised by Alantra, had valued Project Sun at around €1,000 million, on the basis that it contained, on the one hand, unpaid loads secured by 112 hotels; and, on the other hand, 32 establishments that the bank had foreclosed due to non-payment. According to the internal documentation from the sales notebook, in total, 11,000 rooms were put up for sale, the largest hotel portfolio of the year. But at the last minute, the entity has decided to get rid of debt amounting to only around €350 million and 20 hotels worth a similar figure, which means that 12 properties have been left out of the agreement with Apollo Global Management.

The reason is that the offers that it received for these other holiday establishments were well below their respective book values, and so they have chosen to not sell them now so as to sell them for a bad price. Most of the hotels and loans are located in Andalucía (37), Cataluña (22) and the Canary Islands (19). Besides Apollo, which has been advised by Arcano and by Gustavo Gabardo, former Director General of NH Hoteles, CaixaBank had also received interest for this portfolio from other so-called vulture funds, such as Starwood, Cerberus, Oaktree and Bank of America, which had already acquired assets from Bankia, Santander, Sareb and Sabadell.

With this transaction, CaixaBank is going to close the year with €2,400 million less in terms of overdue debt, having already completed the sale of other non-performing loan portfolios. On 30 November, it got rid of the portfolio known as “Far”, which it sold for €700 million to Lindorff and D. E. Shaw. In July, it did the same with another package of unpaid credits for €900 million (Project Carlit), which it sold to Goldman Sachs and D. E. Shaw. (…).

This is the eleventh operation of its kind that CaixaBank has completed since it started to try to remove toxic loans from its balance sheet. (…). Over the last two years, it has managed to get rid of non-performing loans amounting to almost €6,000 million, a strategy that has allowed it to reduce its default rate from almost 12% at the height of the financial crisis to just 8.7%.

Original story: El Confidencial (by Agustín Marco)

Translation: Carmel Drake

Project Traveler: Sabadell Puts A €500M RE Portfolio Up For Sale

14 October 2016 – Voz Pópuli

Banco Sabadell has taken the lead in the Spanish banking sector once again with the sale of its toxic assets. Over the last few days, the Catalan entity has distributed a teaser (information brochure for investors) detailing a new real estate operation: Project Traveler. The portfolio contains 30 hotels, 30 work in progress real estate developments and other debts to SMEs, according to financial sources.

The operation involves collateral worth €500 million and it is already generating a lot of interest amongst international funds.

With this latest deal, Sabadell now has €1,500 million up for sale, given that straight after the summer, it put Project Normandy on the market, through which it wants to sell doubtful debt amounting to €1,000 million. Following the receipt of non-binding offers, that operation has recently entered its final phase, which will last for around a month.

The entity chaired by Josep Oliu has been one of the most active in recent years in terms of selling problem assets. Sabadell wants to reduce the real estate portfolio that it mainly inherited from the acquisitions that it made during the crisis in Spain, such as CAM, Caixa Penedès and Banco Guizpuzcoano, as quickly as possible.

According to the most recently published figures, as at June 2016, the bank held €19,900 million in problem assets, having reduced that balance by €6,000 million over the last two years. Along with portfolio sales, one of the key elements of the bank’s strategy is the work being performed by its real estate arm Solvia. That entity sells homes through the bank’s network and agents, and is responsible for managing overdue debt.

Project Traveler has attracted attention in the market because it is the second portfolio containing hotels to come onto the market in 2016, after Project Sun, being sold by CaixaBank, which is in the very final stages of negotiation.

Other operations

After the short break at the end of July due to the impact of Brexit on the market, the sale of portfolios has resumed once again in recent weeks. The first operation involved Abanca, which sold €300 million in unpaid mortgages to KKR; and then came Sareb’s return to the market – it is offering investors portfolios worth more than €1,000 million, after a year without any operations following the introduction of the Bank of Spain’s accounting circular.

For the large opportunistic funds, such as Cerberus, Blackstone, Apollo, Bain Capital – formerly Sankaty – and TPG, and the large investment banks, such as Goldman Sachs and Bank of America, these operations represent one of the best ways of making money in Spain at the moment. (…).

Original story: Voz Pópuli (by Jorge Zuloaga)

Translation: Carmel Drake

Banks Sell €11,000M NPLs To Clean Up Their B/Ss

30 June 2016 – El Confidencial

Property is still the main obstacle facing Spain’s banks. Although the majority of the domestic financial entities will comfortably pass the European Central Bank (ECB)’s upcoming stress test, most are still weighed down by non-performing loans linked to the real estate sector, which are blackening their balance sheets. To this end, CaixaBank, Bankia, Sabadell, Popular and even Deutsche Bank have put portfolios of non-performing loans up for sale amounting to almost €11,000 million, according to data compiled by El Confidencial.

The most active bank is Sabadell, which has engaged KPMG, PwC and N+1 to help get rid of €3,100 million in consumer loans, credit cards and loans granted to property developers. Of that amount, €1,000 million was sold to the funds Lindorff and Grove Capital last month in an operation known as Corus. Now, the entity has another €1,700 million on the market (Project Normandy), containing foreclosed loans from real estate developers and almost €500 million (Pirenee) corresponding to a mixture of assets. The entity is looking to close both transactions before the summer holidays.

After Sabadell, the most active bank in cleaning up its balance sheet is CaixaBank, which has two processes underway and one in the bag. These include the so-called “Project Carlit”, launched in April with the help of PwC to sell off €750 million in loans linked to shopping centres, offices and the industrial sector; and “Project Sun”, a portfolio of loans granted to almost 150 hotels that the entity foreclosed from businessmen in the sector. In total, around €1,000 million in non-performing loans.

The latter is backed by 11,000 tourist rooms, and several opportunistic funds may be interested, including Starwood, Davidson Kempner Capital and Bank of America. Those entities previously acquired similar liabilities from Bankia in 2014 and 2015 for €1,200 million. In Septemeber, the Catalan entity is planning to launch “Project More 2” containing €200 million of real estate loans, again with the help of PwC.

Bankia, which last year failed to find a buyer for its huge real estate portfolio containing €4,800 million of assets has engaged KPMG, Deloitte and PwC to advise it in 3 of its operations: “Project Lane” (€288 million), “Project Oceana” (€396 million) and “Project Tizona” (€1,000 million). The latter comprises residential mortgages and is the second part of the transaction known as “Project Wind”, when the entity sold €1,300 million in similar liabilities to the fund Oaktree.

Alongside these three major players, several other entities also have operations on the market, including Popular, Banca Mare Nostrum, Abanca (which just sold €1,300 million in NPLs to EOS) and Ibercaja…But the entity that has drawn the most attention is Deutsche Bank, because it had not chosen to clean up its accounts in this way until now. The German group, the only foreign bank with a presence in Spain, which has an extensive network of offices, is sounding out institutional investors regarding the sale of €800 million in non-performing mortgages.

Although the German entity was not greatly impacted by the real estate crash, thanks to its prudent strategy vis-à-vis granting property-related loans, the truth is that it was weighed down by packages of unpaid loans from high income clients. Antonio Rodríguez-Pina, Chairman of the bank’s Spanish subsidiary, has decided to get rid of these NPLs in order to improve its balance sheet and reduce the default ratio, a measure that coincides with Deutsche Bank’s decision to continue its operations in Spain, for the time being. (…).

Original story: El Confidencial (by Agustín Marco)

Translation: Carmel Drake

Sabadell & Bankia Finalise RE Portfolio Sales To Sankaty

29 June 2016 – Expansión

Spanish banks and international funds are negotiating against the clock as they seek to close operations worth hundreds of millions of euros within the next few days. Entities have offers on the table for real estate assets worth almost €4,000 million. And some of them are expected to bear fruit today or tomorrow, so that they can be accounted for in the half-year results.

The negotiations are even more frantic than in previous years due to the slowdown caused by the electoral calendar, which caused opportunistic funds to be prudent with their offers. One of the most influential factors was the fear that Podemos would enjoy electoral success.

Now that the uncertainty (surrounding Podemos) has been resolved, Sabadell and Bankia have been particularly agile in reaching agreements.

Yesterday, the Catalan entity sold a portfolio containing €460 million of problem assets linked to property developers, as part of Project Pirene. The buyer is the fund Sankaty Advisors, a subsidiary of the US giant Bain Capital. Sources in the market estimate that the investor paid Sabadell between €150 and €200 million for these assets.

Dominant investors

Sankaty’s interest in Spain has not been limited to that portfolio, given that it is close to securing another deal that has attracted significant interest from other large international investors: Project Lane, sold by Bankia, comprising 2,500 homes worth €400 million. This is the first portfolio to emerge from the carved up Project Big Bang; the entity had wanted to sell all of its foreclosed assets together, but that plan was suspended at the end of last year. Sources expect to know whether this operation will go ahead within the next few days.

The sale of the other two asset portfolios that Bankia has on the market are proceeding more slowly: one contains non-performing mortgages – Project Tizona – worth €520 million; and the other contains non-performing property developer loans – Project Ocean – amounting to €400 million.

Sankaty expects the recovery of the Spanish real estate sector to go beyond Sabadell and Bankia’s portfolios, as indicated by the fact that it is one of the main favourites to acquire Project Baracoa, from Cajamar. That will be the first sale of bankrupt loans by a Spanish bank. In total, the rural savings bank is looking to get rid of €800 million of these types of loans, which account for 70% of all of its bankrupt assets. 85% of them are secured by real estate collateral.

Another operation that is generating significant interest is Project Carlit, launched by CaixaBank, through which the Catalan group wants to transfer €790 million of doubtful loans to property developers. The bid is in its final phase with two key favourites in the running: Cerberus, which according to sources consulted is “putting all of its eggs into one basket”; and the alliance between Goldman Sachs and TPG, two US investors who have joined forces in the past. The US fund D. E. Shaw is also through to the final round, but it has not participated in any operations in Spain for a long time and the market considers that it is less likely to win the portfolio.

CaixaBank has another major operation underway: Project Sun, through which it wants to sell 155 hotel assets worth almost €1,000 million.

Another one of the most active entities is Abanca, which recently sold €1,400 million in non-performing loans to EOS Spain and which will be negotiating the sale of €400 million property developer loans over the next few weeks.

Original story: Expansión (by J. Zuloaga)

Translation: Carmel Drake

CaixaBank Puts 144 Hotels Up For Sale Worth c. €1,000M

20 May 2016 – Expansión

CaixaBank has launched a mega hotel operation. The Catalan entity wants to sell off the majority of the hotel assets that have come into its possession during the course of the crisis, as well as some that it will soon foreclose. To this end, it has brought Project Sun onto the market, advised by N+1, whereby it is looking to sell its exposure in 144 hotels, valued at almost €1,000 million, according to financial sources.

The operation is divided into two portfolios: one with unpaid loans secured by 112 hotels; and the other with 32 hotel assets already foreclosed by the entity. In total, the properties that CaixaBank wants to sell contain almost 11,000 rooms.

This is the largest financial operation involving the divestment of hotels launched to date in the Spanish market. Bankia undertook a similar operation in 2014, with Project Amazonas, containing hotels worth €800 million, which were awarded to the specialist fund Starwood; and another one in 2015 for €400 million – known as Project Castle, which was sold to Davidson Kempner Capital and Bank of America.

Market trend

Santander and Sareb also wanted to join the party. Last year, the entity led by Ana Botín launched Project Formentera, containing 17 hotels worth €170 million. Meanwhile, Sareb, put a portfolio up for sale containing assets inherited from Polaris World, which were worth €500 million before they were transferred to the bad bank. Both operations have been postponed until this year.

The operation launched recently by CaixaBank has been distributed amongst investors. The entity hopes to close the deal during the month of July. Of the 144 hotels, two thirds are located in Andalucía (37), Cataluña (22), the Canary Islands (19) and the Balearic Islands (17), with an average value of almost €7 million. Both Andalucía and the Canary Islands are regions were CaixaBank increased its presence thanks to the acquisition of Banca Cívica. The other assets are distributed all over Spain.

85% of the hotels are four- and five-star properties, and more than half are holiday properties, situated on the coast. The portfolio also includes rural and urban accommodation. This type of portfolio mainly attracts large international opportunistic funds, such as Cerberus, Apollo, Oaktree, Starwood – specialists in hotels – and Blackstone.

Once they have been awarded such portfolios, investors try to make profits from the operation by selling the hotels to large specialist groups or to local property developers; and by restructuring the debt. Project Sun contains 108 loans, of which 35 are up to date and 75 are overdue. (…).

Clean-up

For CaixaBank, this type of operation allows it to reduce its default rate, obtain profits – depending on the price paid – and release provisions. The Catalan entity held €9,500 million of problem assets (net of provisions) linked to the real estate sector at the end of the first quarter 2016. This figure had decreased by 11% in the last year thanks to the sale of portfolios and foreclosed assets through Servihabitat.

In addition to this portfolio, the Catalan entity has another group of assets up for sale, Project Carlit, advised by PwC, through which it hopes to sell of €790 million in doubtful loans to property developers.

Original story: Expansión (by Jorge Zuloaga)

Translation: Carmel Drake