Tag: real estate assets

CaixaBank & Bankia Lead Race To Exit RE

6 October 2015 – Expansión

For the banks, the race is on to reduce the weight of property on their balance sheets. In the last year alone, the major institutions have managed to reduce their overall exposure to the real estate sector (in terms of both properties and loans) by €45,150 million, or 23.6%, to €146,253 million. Of this balance, €98,870 million relates to property and the remainder to loans. These figures represent the gross book value, in other words, they exclude the provisions that the banks have been accumulating to protect themselves against the deterioration of the corresponding assets. After discounting these provisions, the real risk that these entities face amounts to around €40,000 million in each category.

Although the general trend to reduce real estate exposure is clear, the institutions have varying strategies and results when it comes to implementation. The numbers in the half year reports reveal that CaixaBank and Bankia are the entities that have made the most progress towards the target.

CaixaBank has managed to reduce its gross real estate stock by almost €1,000 million in the last year and has amortised another €5,116 million of its loans to property developers. The Catalan bank says that the recovery in the real estate market is enabling it to not only increase its sales of foreclosed assets, but also to reduce the corresponding losses, because it is selling a very similar prices to the net book values of the assets (gross book value less provision). During the period under review, CaixaBank has sold/leased properties worth €2,346 million, between its sales and rental activity.

In the case of Bankia, its total exposure to real estate has decreased by 17%. The properties on its balance sheet have decreased to €4,343 million and its loan balance has fallen to €1,493 million. It is worth noting that Bankia’s figures are much lower than those of its competitors because the entity transferred the majority of its toxic real estate assets to Sareb, just like the other institutions that received public aid.

Santander is the third entity in the ranking, recording a 13% reduction in its real estate exposure over the past year. The bank’s real estate stock decreased by €477 million YoY to €10,381 million, whilst its loans amount to €8,653 million, having fallen by more than 21%. The default rate on its loans is the second highest of the banks considered in the study, with a ratio of 66.3%, exceeded only by BBVA (with 67.8%). During the first half of 2015, Santander sold around 5,200 properties, which represented a reduction in the rate it had acheived in 2014. Nevertheless, the bank says that the discounts on its sales are now lower and in some cases, it is even managing to generate small profits.

Meanwhile, Popular, which is sixth in the ranking, is proceeding much more slowly. The entity reduced its RE exposure by 2.8%, however it still has the highest figure in terms of properties (€16,126 million) and property developer debt (€16,643 million). (…).

Bankinter’s situation is different, its exposure to property is significantly lower, less than €1,300 million, and the default rate on its loans to the sector is “only” 25%, i.e. less than half the sector average (54.6%). (…).

From the banks analysed, only two, Sabadell and BBVA, have increased their exposure to real estate over the last year. Sabadell’s stock increased to €9,227 million, meanwhile BBVA’s exposure to foreclosed assets rose by €2,200 million. (…).

Original story: Expansión (by Michela Romani)

Translation: Carmel Drake

Miquel Alimentació Will Sell Business But Retain RE Assets

6 July 2015 – Expansión

On Friday, Miquel Alimentació announced that it is in advanced negotiations to sell its business to the Chinese state-owned group, Bright Food. The Asian food sector giant will acquire all of the business lines of the Spanish distribution company, which owns 63 GM Cash stores and more than five hundred supermarkets, operated under the Suma and Spar brand franchises.

The Miquel family, which currently owns 100% of the share capital, will nevertheless retain ownership of all of the group’s real estate assets. In this sense, it will continue to be linked to the business as it will lease all of the wholesale distribution company’s  logistics platforms and cash & carry stores to Bright Food.

According to Miquel Alminenació, Bright Food “has expressed its interest” in retaining the strategic lines identified by the existing management team and in preserving the organisational structure and the jobs at the Girona group. The objective of the company chaired by Ramon Miquel is to generate turnover of €1,024 million this year.

With headquarters in Shanghai and publicly owned share capital, Bright Food is an industrial conglomerate comprising 22 food and distribution companies, with turnover of €18,000 million. The purchase of Miquel Alimentació will be its first in the distribution sector in Europe, and it will open the door to the Asian market for the sale of the more than 17,000 product reference lines and 2,000 own-branded products that the Miquel group currently distributes.

The operation has been brokered by GBS Finanzas. KPMG has advised the vendor and the law firm Baker & Mckenzie has advised the buyer. The purchase now depends on the relevant authorisations from the European competition court and also the administrative procedures in China.

Original story: Expansión (by S. Saborit)

Translation: Carmel Drake

BBVA Gauges Investor Appetite For Two Big Portfolios

29 June 2015 – WSJ

Banco Bilbao Vizcaya Argentaria SA is sounding out investor appetite for two large portfolios of non-performing debt and real estate assets, according to sources briefed on the potential deals, as Spain’s economic recovery helps banks shed more of their bad loans.

BBVA, Spain’s No. 2 bank by market value, has spoken with investors in recent weeks to gauge their interest in the purchase of a portfolio that could contain around €1 billion worth of non-performing real estate loans and repossessed property assets and another portfolio that could contain between €500 million to €1 billion worth of nonperforming consumer, business and real estate loans.

BBVA has not sent investors “teasers”—documents that lay out details of an operation—because the parameters of the potential deals are still being designed, and the portfolios may not materialize, some of the sources said.

One source said that BBVA could formalize the sale of the two portfolios in September, and that the large size of the potential deals indicates that the portfolios could be partitioned and sold to various investors.

A spokesman for BBVA declined to comment.

Amid strong demand for Spanish real-estate assets, BBVA has hired KPMG LLP to oversee the sale of its loan-recovery unit. (…). A spokesman for KPMG also declined to comment.

Background

The potential sale by BBVA follows efforts by other Spanish lenders to sell real estate assets. They are encouraged by an economic growth rate—forecast by the Bank of Spain to reach 3.1% this year—that is outpacing that of other major eurozone countries.

Bankia SA has recently received non binding offers for €4.8 billion of property, including 38,545 residential units, 4,938 commercial units and 2,589 plots of land throughout Spain, according to a deal document sent to investors by Credit Suisse Group AG in April. Spain spent €22.4 billion in European Union funds to bail out Bankia in 2012. (…)

Spanish lender Banco de Sabadell SA sold its unpaid debt management and collection unit last July to Norwegian debt collection company Lindorff Group.

Major investors, such as Apollo Global Management LLC and TPG Capital Management, have stepped up their presence in Spain’s property market, as the economic recovery has helped to buoy real estate prices in some cities. (…).

Blackstone Group also bought the real estate servicer of bailed-out lender Catalunya Banc SA, and paid €3.6 billion to buy €6.4 billion of home loans issued by the bank.

Apollo, TPG, Cerberus Capital Management LP and Sabadell were selected in December by Spain’s “bad bank” to market and sell billions of property assets on its behalf, a contract that brings commissions and insight into the real-estate market.

Investors and analysts expect the real-estate servicers to consolidate in coming years as investment funds continue to seek high returns while they whittle down the amount of foreclosures and bad loans they oversee.

Original story: WSJ (by Jeannette Neumann)

Edited by: Carmel Drake

Servihabitat Makes Profit Of €82M In First Year With TPG

19 May 2015 – Expansión

Manages assets worth €60,000 million / The platform owned by TPG and CaixaBank is starting to selling homes from Sareb (which the bad bank inherited from Abanca) and wants to be an active player in M&A activity in the sector.

Servihabitat has closed its first year as an independent entity of CaixaBank with a positive balance and the aim of leading the M&A activity in the real estate platform sector in Spain. The property management firm – which is jointly owned by TPG (51%) and the Catalan group (49%) generated revenues of €212 million in 2014 and an EBITDA of €82 million.

The CEO, Julián Cabanillas, explained that these figures are “considerably higher” – by 25% in the case of revenues – than last year but are not comparable, since Servihabitat was incorporated as a radically new company in 2014. It went from being the owner and manager of real estate assets – foreclosed assets and loans from CaixaBank – to being only the manager of the assets.

Cabanillas highlights that the entry of TPG into the platform’s share capital “opened us up to the market and allowed us to have multiple clients”. In fact, during the last year, Servihabitat has reduced its dependency on its second shareholder to 60% of its assets under management, primarily thanks to the contract awarded by Sareb.

The platform was one of four that won portfolios – together with Haya Real Estate, Altamira and Solvia – for the management of assets from Sareb. This year, Servihabitat has been responsible for managing properties and loans from Abanca – formerly NCG -, Liberbank and Banco de Valencia.

It already administered Banco de Valencia’s assets following the acquisition of the former subsidiary of Bankia. The platform is in the process of migrating the rest of the properties and loans, and in fact, it started to sell homes from the former NCG two weeks ago. The remainder of the real estate loans from the Galician savings banks will be in its system by the summer, and the homes and loans that Liberbank transferred to Sareb, by the end of the year. According to Cabanillas, the transfer of the assets from Sareb is happening in an “ideal” way. “We have a lot of experience in this kind of process” adds the CEO.

Including these assets under transfer, Servihabitat now manages almost 200,000 homes and real estate loans, whose gross book value amounts to almost €60,000 million.

Together with the assets from CaixaBank and Sareb, Servihabitat has also started to administer homes and loans from funds, such as Elliott and from family offices.

Lines of business

To continue growing as an independent platform, Cabanillas is evaluating new lines of business, such as asset management (the construction of large buildings, commercial and hotel developments). Currently, Servihabitat is active in the following areas: the management of homes and loans; advising investors; rental; and the development and management of land.

Another one of the axis of the platform’s strategic plan is the possibility of forming part of the consolidation that the sector is expected to undergo over the next few months, which companies such as Altamira, Haya Real Estate, Aktua and Anticipa, amongst others, will participate in. Cabanillas does not rule out making any purchases to gain “efficiency” but he doesn’t expect that any transactions will be closed until 2016.

Original story: Expansión (by J. Zuloaga)

Translation: Carmel Drake

Bankia Puts Property Worth €4,800M Up For Sale

6 May 2015 – Expansión

Project Big Bang / The financial entity has put a batch of homes, land and commercial buildings up for sale, with the objective of disposing of all of the foreclosed assets left on its balance sheet.

Bankia has decided to accelerate the process to divest its real estate assets with a ‘macro-transaction’ involving a large block sale. The financial institution has launched so-called Project Big Bang, which includes a portfolio of residential and commercial assets (including offices and shops), as well as land, worth €4,800 million.

The transaction is still in its very early stages, involving initial meetings with investors, but it will represent the largest asset sale process seen to date (excluding transfers of debt with real estate collateral).

The properties up for sale include assets that Bankia did not transfer to Sareb following its nationalisation, as well as foreclosed assets resulting from subsequent defaulted payments. Most of the portfolio corresponds to residential assets. Thus, of the €4,800 million assets that Bankia has included in the batch, €3,300 million related to residential properties at 31 March 2015. In total, the bank will transfer 38,545 residential units (flats, chalets, parking spaces and storage rooms), with a total constructed surface area of 3.6 million square metres.

Along with the €3,300 million of residential assets, Bankia is selling 4,938 commercial units worth €1,100 million.

Land at zero cost

The portfolio also includes 2,589 plots of land with a total surface area of 4.6 million square metres. This land has a value of zero, according to Bankia, having been fully provisioned.

The sale is being coordinated by Credit Suisse and KPMG. The transaction may be closed as a single deal or through the sale of several blocks. The sale value may also decrease from €4,800 million to a smaller amount, say sources close to the process.

Many of the large funds, including Blackstone, Lone Star and Apollo, have already expressed their interest in the portfolio. These investors will have to compete with Cerberus, which has a preferential right to examine Bankia’s real estate portfolio. This “preferential” arrangement forms part of the negotiations that the US fund has held with the Spanish entity in recent years. In 2014, Bankia transferred its Bankia Habitat business unit to Cerberus for a consideration of between €40 million and €90 million, together with the 400 professionals who work for the platform.

Last September, Cerberus joined forces with the Norwegian fund Lindorff to acquire some of the doubtful and substandard loans, plus those that had doubtful or substandard outlooks, worth €900 million, which the entity chaired by José Ignacio Goirigolzarri (pictured above) was selling, as part of the Somo transaction. In February, Bankia launched a campaign to accelerate the sale of its remaining properties.

The clean up

Project Big Bang represents the largest divestment initiated by Bankia to date in the foreclosed asset and doubtful debt segment. The entity chaired by José Ignacio Goirigolzarri has been one of the most active in this market, having transferred almost 80 portfolios containing problematic loans since 2013, with a nominal value of €10,000 million.

Initially, Bankia undertook these types of transactions due to necessity, since the restructuring plan agreed with Brussels compelled it to divest non-strategic assets amounting to €50,000 million.

Although it has now almost completed this plan, the entity has decided to ‘step on the divestment accelerator’ in 2015 in order to reduce its default rate and focus its resources on new productive assets that improve its financial results. As well as the foreclosed assets, Bankia is also currently negotiating the sale of problematic mortgages, property developer loans and hotel debt.

If it closes all of these transactions, the nationalised group would become the first entity to withdraw from the segments considered by the market as a burden to the sector.

Original story: Expansión (by R. Ruiz and J. Zuloaga)

Translation: Carmel Drake

CBRE To Invest €600M In The Spanish Market In 2015

16 March 2015 – Expansión

Real estate assets / The former subsidiary of ING is looking to improve its portfolio through refurbishments and asset purchases.

After more than two decades in the market, the fund manager CBRE Global Investors has become a major player in the Spanish real estate sector thanks to its intense asset rotation policy.

The company, which manages property in this market (primarily shopping centres) worth €2,000 million, closed the sale of various assets last year: Urbil, in Guipúzcoa, which it sold to Axa Reim for €60 million; Alcalá Magna, in Madrid, which it sold to Incus Capital for €85 million; Gran Vía de Vigo, which it sold to the US fund Oaktree for €100 million and Modoo, in Asturias, which it sold for €45 million.

In 2013, CBRE Global Investors was involved in the first major sale of a shopping centre following the outbreak of the crisis, when it sold Parque Principado in Asturias for €141.5 million to the British real estate company Intu Properties. “Between 2008 and 2014, we rotated the portfolio we had created during the previous two decades. Thus, we sold Parque Principado, which was a mature asset, but we purchased other assets. In total, we bought and sold assets worth €1,000 million last year”, explains José Antonio Martin-Borregón, CEO at CBRE Global Investors in Spain and Portugal.

The (property) management company made its first investments in Spain between 1992 and 1993 and three years later, it opened its first offices. Through its five funds, it currently manages 19 shopping centres, including Bilbondo in Bilbao; Vallereal in Maliaño (Cantabria) and Parc Central, in Tarragona. “We started out as the investment vehicle for National Nederlanden, which wanted to invest in properties outside of Holland that were not for its own use. We have maintained this philosophy for 20 years. Our traditional clients are institutional investors”. The latest addition to the portfolio was La Zenia in Alicante, which was acquired using money from the Alaska pension fund.

Advantages

The goal of the Head of CBRE Global Investors is to repeat the transaction volume (recorded last year) during 2015 but with a greater focus on purchases. “We would like to close transactions amounting to €1,000 million this year with a 60:40 split in terms of purchases and sales”, he says. “We have a portfolio of mature assets and therefore we are interested in buying properties that we can add value to”.

In total, the (property) manager expects to invest €930 million in Spain and Portugal. “Demand exceeds supply, which means that prices have increased and new rules are in play. It is not going to be as easy (as it once was) to target successful investments”.

Nevertheless, the Head of CBRE GI does not fear competition from the multitude of investors and institutional funds that have arrived in the Spanish market attracted by the decrease in real estate prices and the expected economic recovery. “As a (property) manager, we try to maximise the opportunities that the market offers, leveraging on our competitive advantage, which is our local knowledge”, says Martín-Borregón. “As a (property) manager, we have more access to capital, which allows us to move (more) quickly to close transactions”, he adds.

The (property) manager is also considering investments in premises (shops/stores) on the street and in strengthening its logistics platforms (it already owns 15). “We will buy logistics assets in new areas and we will sell old warehouses”, he explains.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

CaixaBank Considers Selling 1,000 Homes To Overseas Funds

11 March 2015 – Expansión

‘Project Eurostars’ / The Catalan group is sounding out investors to assess their interest in the portfolio, which mainly comprises homes on Spanish coast.

The Spanish bank wants to widen the ‘drain’ through which it is offloading property from its balance sheet. As well as leveraging on the intense activity in their sales networks, financial institutions are looking to take advantage of the interest shown by overseas funds by packaging up batches of homes. One of the first groups to join this trend is CaixaBank, which has been sounding out the market in recent weeks regarding the sale of a portfolio of 1,000 homes known as Project Eurostars; Expansión has had access to the corresponding sales prospectus.

The group chaired by Isidro Fainé (pictured above) has handed over the management of this transaction, whose information was first distributed to funds at the end of February, to the real estate consultant JLL. According to the timeline proposed initially, investors should have submitted their non-binding offers yesterday and the process should close by the end of the month.

The Eurostars portfolio comprises 1,091 real estate assets, with an estimated combined value of €103 million. The majority of the portfolio is made up of 807 homes, primarily located on the Mediterranean coast, with an average value of €122,000. The portfolio also includes 250 parking spaces, 26 store-rooms and 5 shops.

The homes are concentrated in Barcelona, Tarragona, Valencia, Alicante, Granada, Cádiz, Navarra and Tenerife.

In the information that has been distributed, the advisor JLL highlights two key features that it hopes will appeal to foreign investors: the improvement in the real estate market, with an 18% increase in (the volume of) house sales between 2013 and 2014; together with “the positive economic outlook and increasing volume of investment”, with investors allocating €23,000 million to Spanish property in 2014.

The homes to be sold are currently held on the balance sheet of the Building Centre, a subsidiary of CaixaBank, after being foreclosed.

The group sold 13,794 properties in 2014, i.e. 27% more than in 2013 and the volume of foreclosed assets increased by 12%, to reach almost €15,000 million in gross terms.

Original story: Expansión (by Jorge Zuloaga)

Translation: Carmel Drake

The Five Largest Banks Sold 19% More Properties In 2014

10 February 2015 – Cinco Días

Banks are stepping on the gas in the race to reduce the weight of properties on their balance sheets. Last year, Santander, BBVA, CaixaBank, Sabadell and Popular sold 86,726 properties in total, an increase of 18.7% on the 73,000 units sold during the previous year. However, this boost in the rate of sales has not been reflected on the revenue side.

In fact, revenue from this activity grew by only 6.4% from €10,699 million in 2013 to €13,619 million last year, due, in large part, to the reductions in the sales prices being applied by these entities. The pressure being placed on real estate assets by the significant provisions imposed by the Government in 2012 has allowed these five large companies to sell off 230,000 properties in just three years.

CaixaBank holds the record for the number of transactions – in 2014, it sold 23,400 of its own properties or 35,870 if we include those owned by developers that it supports. Some of this success was based on its commitment to the rental market, which accounted for €1,132 million of the €2,512 million generated from its foreclosed assets (or €5,432 million if we include sales conducted by third parties), whereas it takes an average of four years to sell foreclosed assets.

Overall, Caixabank generated losses from this activity amounting to €1,148 million, an impact that the bank hopes to mitigate between 2015 and 2016. This drive should be helped by the Texan fund TPG, which now controls the entity’s real estate company Servihabitat.

Another one of the entities that recorded the best results in this field in 2014 was BBVA, which opted to retain control of Anida, its real estate platform, contrary to the general trend towards outsourcing. BBVA sold off 23,069 properties in total, including both its own properties and those owned by the developers it finances and whose homes it sold; in total, it recorded income of €1,932 million.

As a result, BBVA generated 18% more cash in 2014 than in the previous year. The company says that it has noted “more buoyant demand” in “an environment in which prices are slowly stabilising”. The entity, chaired by Francisco González, celebrates the fact that its losses in this area decreased to €876 million in 2014 from €1,252 million in 2013. And explains that this improvement is based on a lower volume of outstanding properties that need to be cleaned up and the “the launch onto the market of foreclosed assets with a smaller adverse effect”.

Banco Sabadell follows next in the ranking; it has also decided to retain control of its real estate company, Solvia, and is considering a potential IPO, as it observes a gradual improvement in the market. The entity sold 16,172 properties in 2014, both owned and third party properties, for which it generated turnvoer of €2,744 million; in both cases these figures represented a decrease of 12% on the significant number of sales it recorded in 2013.

Banco Santander, which recorded strong sales during the early years, reduced its clearance rate to 11,615 properties last year, however the higher value of the remaining assets allowed it to still generate revenues above the €2,000 million it achieved in 2013.

Finally, Banco Popular is one of the entities that seems to have benefitted most from the outsourcing of its real estate platform, Aliseda, which is now controlled by a consortium of funds comprising Kennedy Wilson and Värde Partners. The entity, chaired by Ángel Ron, increased its sales from 3,900 properties in 2013 to 8,600 units last year, and doubled the corresponding turnover, from €732 million in 2013 to €1,503 million in 2014.

“We would not be able to increase sales at this rate if the provisions were not sufficient”, reflected the bank’s CEO, Francisco Gómez at the most recent results presentation, where he stated that these provisions have enabled the entity to account for “the properties at market prices”. As a result, the number two at Popular hopes to “increase the value generated from real estate sales over the next few quarters”.

Original story: Cinco Días (by Juande Portillo)

Translation: Carmel Drake

Lone Star Acquires Neinor And Real Estate Assets From Kutxabank

15 December 2014 – The Corner

The purchase of large swathes of Spanish land by US hedge fund Lone Star is further compelling evidence that the Spanish property market is staging a recovery. This investment signifies that the improvement in the market will soon be seen in the residential sector, having previously been confined to the retail and commercial markets.

Earlier this month, Lone Star bought the property management arm Neinor from the Spanish lender Kutxabank, as well as around half of the bank’s real estate assets for €930 million.

Original story: The Corner

Edited by: Carmel Drake