Sareb Sets Itself an Online Sales Challenge: €1.8bn in NPLs

10 July 2018 – El Economista

Sareb has launched a new wave of non-performing loans for sale on its online marketing channel, aimed at investors and professionals, to boost the divestment of €1.8 billion, equivalent to 7.2% of its portfolio of financial assets, according to sources at the company speaking to Europa Press.

Since July 2017, Sareb has had a dedicated loan sales channel for investors and professionals, a pioneering initiative in the European market, which allows it to promote divestment and increase the visibility of these kinds of assets.

The aim of the so-called bad bank is to enhance the transparency of the sales processes of these types of assets, which are now in their fourth wave. At the end of 2017, it had managed to sell loans with a nominal value of €186 million, €35 million through its website and €151 million through its servicers, which also have specific platforms to market these portfolios.

The guarantees associated with these loans mainly constitute mortgages over properties of different kinds: finished residential homes, work in progress buildings and land.

With this channel, Sareb is continuing to push ahead with its divestment process and its commitment to a more dynamic and transparent loan market, according to Expansion.

The channel is aimed at investors and professionals who fulfil a series of minimum eligibility requirements. Sareb’s aim is to expand the number and profile of investors who can participate in its loan sale processes, whereby facilitating divestment in the segment. In this way, the players that may operate on the channel include international and domestic professionals, as well as local operators interested in the loans.

Sareb has a loan volume amounting to more than €25 billion proceeding from almost 14,575 debtors. All of them have a combined debt of €70.4 billion, including associated interest and expenses. In order to recover those amounts, the entity carries out an active management process that allows it to ensure the payment of interest on the loans and, where possible, their repayment or cancellation.

When it was constituted, Sareb received around 200,000 assets worth €50.8 billion, of which 80% were loans and property developer credits and 20% were properties.

After five years of life, Sareb has reduced its portfolio by more than €13.6 billion. Currently, its portfolio of assets comprises 67.3% in loans and 32.6% in properties.

Sareb issued debt backed by the Spanish State to pay the rescued entities for the assets that they transferred to the company. The company is complying with the repayment of that debt, and to date has repaid more than €12.9 billion.

Original story: El Economista 

Translation: Carmel Drake

Sareb Makes an Extraordinary Debt Repayment of €889M

13 April 2018 – Eje Prime

Sareb is continuing to reduce its debt. The Company for the Management of Assets proceeding from the Restructuring of the Banking System is going to make an extraordinary debt repayment amounting to €889 million, according to a statement issued by the company.

Sareb’s Board of Directors has approved the operation, which is going to be carried out using net cash generated by the business. During its first five years of life, the so-called bad bank has repaid debt amounting to €12,906 million.

When the company was constituted in 2012, it issued debt amounting to around €50,800 million, secured by the Treasury, so as to be able to acquire real estate assets from the nine Spanish banks that received public aid.

To date, Sareb’s debt has been reduced by 25% to stand at €37,875 million. The good performance of the company’s business, which has recorded revenues of €20,700 million during its five-year life, has helped to repay this debt. The entity has reduced its portfolio of assets by €13,602 million, which represents a decrease of 27%.

Original story: Eje Prime

Translation: Carmel Drake

Spain’s Residential Sector: A Fleeting Boom Or A Genuine Bubble?

3 October 2017 – El Confidencial

A fleeting real estate boom or another bubble in the making? Although many in the real estate sector – property developers, banks, experts… –, deny that Spain is committing the errors of the past and are instead convinced that we are witnessing the creation of a new real estate boom, the truth is that some indicators have started to trigger the first alarm bells, in particular, those relating to the evolution of house prices. The increases in house prices are not only generalised, in certain markets, they are very striking.

Such is the case of large cities, like Madrid and Barcelona, where the increases – in new build and second-hand prices – are now well into the double digits. According to data from the appraisal company Tinsa, in just twelve months, house prices have risen by 20.6% in Barcelona and by 15.5% in Madrid. This means that during the summer months, there has been a real boom in prices since, during the second quarter of the year, the YoY rise amounted to just 1.8% and 2.7%, respectively.

“A sustainable increase in prices would range between 4% and 5%. The double-digit figures in certain areas, where there is limited supply or a tourist boom, such as Las Palmas and Ibiza, are sustainable over the long term”, explained Jesús Amador, Real Estate Analyst at Bankinter, speaking recently to El Confidencial.

Both cities are still well below their maximums of 2007 (Barcelona is 28.3% below and Madrid is 37.4%), nevertheless, since their minimums, prices have now appreciated by 44.4% and 24.9%, respectively (…).

Prices in Palma de Mallorca have returned to the peaks of 2007

The most notable finding in the second-hand market is the rise in house prices in Palma de Mallorca, which increased by 7.3% over the summer, making it the country’s first capital city to exceed the price levels of 2007, followed by Lleida (5.3%), according to data from Idealista. Increases in Málaga (5.2%), Girona (4.9%) and Pamplona (3.9%) are also noteworthy (…).

Five indicators of the health of the Spanish real estate market 

1.- Average sales period (liquidity)

In Spain, it takes 9.1 months on average to sell a home. The cities of Madrid and Barcelona are the most liquid markets, with average sales periods of 3.2 and 3.4 months, respectively. Of the five largest capital cities, Valencia and Sevilla have the longest periods, where it takes 8.7 and 6.4 months, respectively, to sell a home.

2.- Financial effort

On average, Spaniards spend 16.6% of their gross household income to pay the first year of a mortgage. The autonomous regions where below-average financial effort is required are La Rioja (13.2%), Murcia (13.3%) and Castilla y León (14.2%).

At the opposite end of the spectrum (…), a much higher percentage of the household income is required to buy a home with financing in the Balearic Islands (21.2), Andalucía (17.6%) and Cataluña (16.7%) (…).

3.- Average mortgage and monthly repayment

The average mortgage in Spain amounted to €113,130 during the second quarter of the year (the most recent data available), compared to €148,037 in 2007, according to data from Spain’s National Institute of Statistics (INE). The average monthly mortgage repayment amounted to €528 in Q2, almost 40% lower than ten years ago (…).

4.- Sales and purchases

The provinces of Málaga, Alicante and the Balearic Islands, which all have a clear tourist component, are those with the highest number of house sales in the last four quarters with respect to the size of their respective housing stocks: 33.3 homes for every 1,000 properties in the province of Málaga; 29.4 in Alicante and 28.8 in the Balearic Islands.

By contrast, the least active markets include Ourense, with barely 6.6 house sales for every 1,000 properties; and the provinces of Zamora and Teruel, with 9.4 and 9.5 homes sold, respectively, for every 1,000 properties.

5.- Permits for new builds

In terms of property developer activity, the provinces of Madrid, Navarra and Vizcaya are still the ones where the highest number of new build permits were registered over the last four quarters, in proportion to the size of the housing stock.

In the Community of Madrid, 5.4 permits were granted in the last year for every 1,000 homes already in existence, whereby exceeding the number granted in Navarra (4.4 permits) and Vizcaya (4.3 permits). The least active areas in this regard include the provinces of Tarragona and Lugo (0.7 permits for every thousand homes in both cases), followed by Valencia, Pontevedra and Zamora, where 1 permit was issued for every 1,000 homes.

Original story: El Confidencial (by E. Sanz)

Translation: Carmel Drake

Sareb’s Socimi Will Debut On The MAB Before Year End

18 July 2017 – Expansión

The Listed Real Estate Investment Company (Socimi) being driven by Sareb, to enable it to put some of its stock of rental homes onto the market, will be called Témpore Properties. And, the vehicle is expected to make its debut on the stock market before the end of the year, once it has completed all of the procedures required by the Alternative Investment Market (MAB), according to a statement issued by the so-called bad bank.

Sareb has already completed the first steps by constituting the new company and engaging advisors to accompany it throughout the process, such as Renta 4, which will act as a global advisor, and Clifford Chance, which will render legal and tax advice to the project.

Those experts have been joined recently by the real estate consultancy CBRE, which is working on the valuation of the properties that will be incorporated into this new divestment vehicle, and which form part of the portfolio that Sareb has for rent in the autonomous regions of Madrid, Cataluña, Andalucía and the Comunidad Valenciana.

The valuation of each one of the assets must be performed in accordance with the standards established by the Royal Institution of Chartered Surveyors (RICS), in line with the requirements of institutional investors.

€7 million debt repayment

Sareb has also repaid senior debt amounting to €7.05 million after having proceeded last week to rectify the asset transfer contract signed in 2013 with Banco Mare Nostrum (BMN), an entity that is currently involved in a merger process with Bankia.

The rectification, corresponding to a contract signed with BMN on 25 February 2013, become effective on 11 July 2017, through the early partial repayment of some senior bonds.

Specifically, 69 senior bond titles 2016 and 2017 were repaid, together with €153,596.80 in cash, according to a statement filed by the so-called bad bank with Spain’s National Securities and Markets Commission (CNMV) (…).

Original story: Expansión

Translation: Carmel Drake

Tinsa: Residential Land Prices Rose By 4.1% In Málaga In Q2

17 July 2017 – Diario Sur

The housing sector in Málaga is continuing to grow. The price of residential land in the province rose by 4.1% during the second quarter of this year compared to the same period last year, to reach €1,399/m2, which is €154/m2 higher than the national average, according to data from the appraisal company Tinsa. It represented the highest increase in Andalucía and the sixth highest in Spain as a whole; and it consolidates the upward trend seen over the last two years, a situation that has generated concerns about the possibility that the sector is heading towards a new real estate bubble.

The Director General of the Institute of Business Practice (IPE), José Antonio Pérez, said that, for the time being, the growth is “sustainable”, although he warned that the lack of buildable land on the Costa del Sol to meet the current demand from property developers and investors will limit this trend and may lead to a disproportionate rise in prices in some enclaves. Pérez attributes the lack of supply to “restrictions” imposed by the general urban planning orders in certain municipalities and the slow pace of urban planning procedures. (…).

Tinsa’s report also reveals that the average mortgage granted to Malagan households amounts to €126,815, the seventh most expensive in the country, with a monthly instalment of €592. The percentage of household income spent on paying the first year of a mortgage is 27.6%, almost eight points above the national average (19.9%). The appraisal company highlights that this statistic makes Málaga the province where families spend the highest percentage of their income on mortgage repayments, above the Balearic Islands and Barcelona (21%).

Málaga also leads the list of provinces with the highest number of house sales closed in the last four months, with respect to the size of its housing stock: 32.1 for every 1,000 homes. It was followed by Alicante and the Balearic Islands, which also have “a clear tourist component”, said the report. The appraisal company reminds its readers that the province is home to “a large number of high-end homes” aimed primarily at foreign buyers, which put upward pressure on average house prices.

By contrast, the IPE considers that it is “a mistake” to draw conclusions at the provincial level “because you cannot compare the situation in Villanueva del Trabuco, for example, with that of Marbella”. The institute, which specialises in the real estate sector, highlighted the sea fronts and golden triangle formed by Marbella, Estepona and Benahavís as the areas where demand for residential land is highest, as well as the capital, where Limonar and Valle del Guadalhorce are positioning themselves as the new enclaves for future urban development.

House sales

The Real Estate Pulsometer compiled by IPE confirms that Málaga is seeing one of the strongest recoveries in the sector, together with Madrid, Barcelona and the Balearic Islands. Investors, savers, funds and individuals comprise current demand, which caused house sales to grow by 6% last year; and a similar rise is forecast this year. Currently, half of all purchases are paid for in cash and the other half are financed through mortgages (…).

Original story: Diario Sur (by Alberto Gómez)

Translation: Carmel Drake

Urbas Refinances Its €40M Debt With Sareb

9 March 2017 – El Mundo

Urbas Grupo Financiero has refinanced the €40.13 million debt that it holds with Sareb, to allow it to repay the bad bank over an eight-year period and achieve a discount of up to 32% on the original liability, provided it fulfils certain obligations, according to  a statement issued by the company.

The operation forms part of the company’s strategy to cut costs and reduce debt to boost its business plan, which forecasts that the entity will resume its house building activity this year.

By virtue of the contract reached with Sareb, Urbas and its subsidiaries have agreed to novate the liability and they have set an eight-year schedule to pay back the bad bank.

Urbas and its companies will be entitled to receive discounts and the accrued interest on each annual payment will be cancelled provided that they fulfil a series of obligations. In this way, the total debt could be reduced to €27.16 million, i.e. 32% lower than the original amount.

Original story: El Mundo

Translation: Carmel Drake

Realia Finalises €700M Syndicated Loan To Repay Debt

23 February 2017 – Expansión

Realia is finalising a syndicated loan amounting to around €700 million. And with just the finishing touches left to complete, all indications are that the company controlled by Carlos Slim will reach an agreement with its new creditors within the next few weeks, just in time to cancel the debt held by its subsidiary Patrimonio before it matures, on 27 April.

In addition to CaixaBank, which will lead the new loan syndicate, Santander and Bankia have approved the operation and are negotiating with other banks to include them in the agreement as well.

“Realia Patrimonio is currently negotiating its refinancing with several entities”, explained the company in a document submitted to the CNMV, in which it warned that if, by the aforementioned maturity date, the entity has not reached an agreement with its creditors or it has not been possible to secure new financing sources, then “it will have a liquidity problem”.

In April 2007, Realia Patrimonio undertook a debt restructuring through the subscription of a syndicated loan with Caja Madrid and Banesto, which subsequently transferred part of its exposure to another 14 entities for an initial maximum amount of €1,087 million, which it has been repaying ever since. Currently, its debt balance amounts to around €680 million.

Original story: Expansión (by R. Arroyo)

Translation: Carmel Drake

Santander & Bankia Join CaixaBank In €700M Loan To Realia

6 February 2017 – Expansión

The process to negotiate the refinancing of Realia is still underway. In the latest development, Santander and Bankia have announced that they will join CaixaBank in a new syndicated loan, amounting to around €700 million, which will allow the Spanish real estate company, which is controlled by the Mexican businessman Carlos Slim, to pay off its existing debt.

In this way, in addition to Caixabank, which will lead the new loan for the subsidiary Realia Patrimonio, Santander and Bankia have approved this operation. They are now looking for three more banks to join the agreement, since the idea is that six financial institutions will comprise the new syndicate, according to sources familiar with the process.

To this end, the coordinator has made contact with around thirty banks, including most major banks in Spain, as well as some foreign entities that have headquarters in Spain, such as ING, Crédit Agricole, Société Générale, Deutsche Bank, Aareal Bank and Natixis. Financial sources indicate that the players most interested in joining the process are Abanca, Sabadell, Bankinter and Popular.

The sales document containing the results of the due diligence was published on Thursday and it is hoped that the loan contract will be signed in April, which is when the real estate company’s existing debt, amounting to €680 million, is due to expire. CaixaBank engaged Deloitte in December, on behalf of the other financial institutions, to perform a feasibility analysis of the group’s properties, as well as a comprehensive due diligence; meanwhile, the law firm Uría will be responsible for drafting the new syndicated loan financing contract.

The negotiations to agree the terms of a new syndicated loan form part of the firm’s objective to fulfil its financial viability plan and reduce its level of indebtedness.

In April 2007, Realia Patrimonio carried out a restructuring of its financial debt by subscribing to a syndicated loan with two entities – Caja Madrid and Banesto. They subsequently assigned some of their exposure to 14 others entities, whereby taking the total number of FIs in the lender group to 16, for an initial maximum amount of €1,087 million, and Realia has been paying off the balance ever since. Moreover, these entities have since transferred some of the debt to other companies.

Within the framework of this strategy, at the end of 2015, Realia signed a refinancing agreement with the debt-holding entities of its residential activity – another one of the company’s business lines – whose capital pending repayment amounted to more than €800 million.

Following the restructuring of the residential business debt and after incorporating the debt outstanding on the participation loan that Inversora Carso purchased from Sareb, Realia’s gross financial debt position stood at €941 million at the end of Q3 2016, down by 46% compared to the same period in 2015.

Original story: Expansión (by R.Arroyo)

Translation: Carmel Drake

Duro Felguera Puts Its Non-Core Properties Up For Sale

4 November 2016 – Expansión

Liquidity crisis / The engineering group has two large corporate headquarters in Madrid and Gijón, which it is looking to sell to cover its financial commitments whilst it resolves several legal disputes overseas.

Duro Felguera explained yesterday during the presentation of its results for the 9 months to September 2016 that it has ordered the sale of its “non-productive assets” to avoid the deterioration of its cash balance whilst it resolves legal disputes overseas for unpaid invoices amounting to more than €300 million. According to the sources consulted, the assets under analysis include the company’s two major headquarters in Madrid and Gijón, the proceeds from which could amount to several tens of millions of euros.

For the time being, the company has issued a sales mandate but has not specified which formula it will use for the divestment. In recent years, many of Spain’s large corporations have sold their headquarters through sale and leaseback contracts, whereby the company sells the property but remains as the tenant for a certain number of years. Ferrovial, Acciona, Prisa, Telefónica, Santander, Gas Natural and Endesa, amongst others, have all used this formula in recent years.

Duro Felguera’s office building in Madrid has been on the company’s balance sheet for two years, after it acquired it for €20 million in 2014. The previous owner was the real estate company GMP. The headquarters is located on Vía de los Poblados, in the north of Madrid, alongside the M-40 ring road and the Campo de las Naciones business park.

Duro Felguera’s headquarters in Madrid has a useful surface area of 13,791 m2. It is an eight-storey building – five of the floors are used for offices, two are used for parking and one contains an undercover space for storage and other facilities.

In Gijón, the company chaired by Ángel Antonio del Valle owns of one of the best complexes in the city’s Scientific and Technological Park. That building has a surface area of more than 9,000 m2.

Legal disputes

Duro Felguera will have to use the proceeds from its divestments to cover several urgent obligations. In December, for example, the company is due to repay a loan amounting to €35 million.

In parallel, the group is looking to encompass its financial commitments into the process of recovering its unpaid invoices overseas. Yesterday, the company stated that “it is holding negotiations with various credit institutions (Bankia, Santander, Popular, BBVA, Sabadell and CaixaBank) to adjust the maturity dates of its debt to bring them in line with the expected resolution dates of these conflicts.

In Australia, the group is fighting against one of its client, the Korean firm Samsung C&T, for overruns on the mining project Roy Hill. The court of arbitrage in Singapore calculates that DF may recover almost €140 million (the last invoice amounted to €40 million, plus €90 million in avals). The Australian courts are claiming €46 million, of which €9 million has been already recovered. In Argentina, Duro is claiming another €150 million for overruns at the power plant in Vuelta Obligado. Finally, in Venezuela, the Government led by Nicolás Maduro still owes the Spanish group €101 million.

Original story: Expansión (by C. Morán)

Translation: Carmel Drake

Colonial Completes €600M 8-Year Bond Issue

24 October 2016 – Expansión

The real estate company Colonial has completed a bond issue amounting to €600 million with a maturity of eight years and an annual coupon of 1.45%, according to a statement made by the group to the CNMV.

The company will allocate some of the amount raised from this operation to the repayment of bonds issued in May amounting to €750 million; they have a maturity of four years and an annual coupon of 1.863%.

The subscription and payment of the latest issue will likely take place on 28 October. For this operation, Colonial has engaged Deutsche Bank – London Branch, BNP Paribas, Crédit Agricole, JPMorgan, Mediobanca, Merrill Lynch and Natixis.

The company’s return to the debt market comes just days after it announced the acquisition of a stake in Axiare. Specifically, Colonial purchased 15.1% of the Socimi for €135.6 million.

Original story: Expansión (by R.Arroyo)

Translation: Carmel Drake