Tag: restructuring

Blackstone Puts €400M Of Catalunya Banc’s Mortgages Up For Sale

27 March 2017 – Expansión

The banks have put a red circle around 2017 in their calendars, as the year when the doubtful portfolios that have hurt them so hard in the past and that are still denting their balance sheets even now, will show signs of life. Some of the entities may end up generating more profits than they initially expected.

And Blackstone is leading the way. The US giant has created a securitisation fund containing some of the non-performing loans with a nominal value of €6,000 million that it purchased from Catalunya Banc in 2015 for almost €3,600 million. Two years later, and after restructuring many of the credits, the investment group has decided that the time has come to capitalise on its investment.

It will do so with the sale to investors of a portfolio containing €403 million of these formerly delinquent loans. It represents Blackstone’s second foray into this field. Last year, the firm opened fire with the first securitisation of structured loans in Europe, although now it is redoubling its efforts given that the volume up for sale is 52% higher.

The fund comprises 3,307 residential mortgages granted in Spain, with a loan to value (credit over the value of the home) of 60.9%. Almost 80% of these mortgages have been restructured and many of the borrowers are up to date with their repayments. Meanwhile, there has been no change to the rest, according to information that Blackstone has provided to Moody’s to allow the risk ratings agency to make its assessment.

Profits

Blackstone’s aim is to sell this portfolio to investors in order to materialise some of the gains obtained from the management of the non-performing loans. In all likelihood, the securitisation fund will be placed below its nominal value, but at a much higher level than Blackstone paid when it acquired the mortgages from Catalunya Banc, before the State intervened entity was acquired by BBVA.

In exchange, Blackstone will offer different coupons to investors, depending on the type of mortgages that they take on.

The fund has been divided into five tranches, depending on the risk. The first has a very high level of solvency and so will pay annual interest of 3-month Euribor plus a spread of 0.90%.

The second and third tranches, which still have high or intermediate solvency ratings, will pay premiums over Euribor of 1.9% and 2.5%, respectively. The fourth tranche is ranked below investment grade and will pay a return of 2.6%.

The objective of Blackstone and the three banks that it has engaged for the securitisation (Credit Suisse, Bank of America Merrill Lynch and Deutsche Bank) is that the operation will be completed next week.

A new market

This second securitisation by Blackstone is clear confirmation that a new market has opened up for buyers of delinquent portfolios from the banks. In fact, sources from several investment banks are confident that there will be a significant volume of secondary operations of this kind this year, where the new owners of the bank’s non-performing loans will sell their positions to other funds and to the market alike, through securitisations. (…).

Original story: Expansión (by Inés Abril)

Translation: Carmel Drake

Tax Authorities Seize Assets From Marina D’Or’s Owner

4 January 2017 – Expansión

The Tax Agency (Aeat), one of the largest creditors of the real estate group created around the holiday resort Marina D’Or, has decided to take action. The Ministry of Finance has approved the precautionary seizure of assets from several companies owned by the founder and owner of the Castellón complex, Jesús Ger (pictured above), amounting to €49 million.

The measure is based on the fact that the Tax Agency considers that the Castellón group performed an “asset emptying” operation of its largest company in 2010, to stop the possible collection of debt that it held by carving out its activity into several companies.

The debt originally corresponded to the company Comercializadora Mediterránea de Viviendas (Comervi), the property developer and construction company that suspended its payments in 2014 and which appears on the tax authority’s list of largest debtors. Months before the insolvency, it changed what had been its historical name, Marina D’Or-Loger, under which it had promoted and constructed the popular holiday resort.

In 2010, Ger restructured the group’s parent company and divided its activity into four companies to prevent the real estate crisis from dragging down its hotels and the tourist business at the complex next to the beach in Oropesa del Mar (Castellón).

Controversial carve-out

That operation is what has caused the Central Taxpayers Office to claim the amount owed by Comervia (€57.48 million) from two other companies owned by Ger: Gestión Cartera Castellón – which was the owner of the shares in Marina D’Or-Loger until the segregation and which assumed ownership of the hotels and other businesses – and Golf Playas Castellón – owner of the macro-urban Marina D’Or Golf project, which Wanda expressed an interest in -.

In June 2016, the Administration approved an agreement whereby Gestión Cartera and Golf Playas assumed “joint and several liability” for the debt, taking responsibility for €47.9 million and €1 million, respectively.

A few months earlier, in March, the Ministry of Finance had already notified both entities that it had seized their shares in the companies “in a provisional and precautionary way” and “100% of the full ownership and usufruct of the real estate assets, homes, apartments, parking spaces and land” registered in Castellón, Benidorm and Oropesa.

Failed appeals

The two companies and the businessman himself then filed special appeals with the Superior Court of Justice (TSJ) of Madrid. In the three appeals, the plaintiffs contended that their fundamental rights had been violated as they were not guaranteed any right of defence or access to a hearing. The three cases were dismissed by the court.

According to the list of events included in the rulings, Aeat considers that as a result of the carve-outs and company operations of the former Marina D’Or-Loger, €327 million of net assets were removed from the company. That meant that it was left with negative equity of €140 million at the end of 2010, which was one of the factors that led to its subsequent bankruptcy. Moreover, the most recent appraisal reports from the Ministry of Finance value the properties that Comervi used to guarantee its tax debts to delay and split the payment at just €19.47 million, which is “well below the total tax debt of almost €58 million”. The properties were initially assigned a value of €96 million.

Sources at Marina D’Or indicated yesterday that they had achieved an agreement with the Tax Authorities “whereby their precautionary seizures will be rendered ineffective” and that they have not been carried out “and so they would not have any affect on the activity” of its companies.

Original story: Expansión (by A.C.A)

Translation: Carmel Drake

Procisa Group Undergoes A Corporate & Financial Makeover

30 December 2016 – Expansión

Procisa, the group owned by the Cereceda family, which in turn owns La Finca, the business and luxury residential complex, in Pozuelo de Alarcón (Madrid) has embarked upon a profound corporate and financial restructuring process involving: a capital injection amounting to €395 million; the entry of the US fund Värde; and the strengthening of its corporate governance.

In terms of the corporate changes, from now on, the company will be organised around the Grupo La Finca holding company, which will in turn own three separate companies: La Finca Global Assets, dedicated to the real estate business and to the operation of the high-end office market; La Finca Casablanca, which will construct the largest luxury residential development containing more than 500 homes; and La Finca Real Estate, upon which the group’s future development will hinge.

Under the framework of this operation, the US fund Värde, owner of Dospuntos (the former real estate division of Sanjose) and owner of a stake in Aliseda, Banco Popular’s real estate asset manager, has acquired 39% of La Finca Global Assets. The US private equity firm, which manages more than $40,000 million in assets around the world, has been one of the most active investors in Spain since the outbreak of the crisis.

Portfolio

By virtue of the agreement signed yesterday, Värde, which must have paid around €130 million for its stake, will become a shareholder of the current office buildings in the portfolio and of the new projects in this area of the business. In addition to the La Finca business park, La Finca Global Assets’s properties include a property located on Calle Marcelo Spínola – a business centre comprising seven seven-storey buildings – and another property on Calle Martínez Villergas, comprising three seven-storey buildings.

Meanwhile, the La Finca business park, covering 220,000 m2 of premium rental space, comprises 20 buildings, 16 of which are used as offices plus the remaining four, located in the centre of the complex, which are used to provide the necessary services to the users of these offices. The complex’s current tenants include technological companies such as Orange and Microsoft.

In terms of the injection of funds, the company has signed a financing agreement with a syndicate led by Société Générale, CaixaBank and Santander amounting to €395 million, which it will use to pay off existing debt and tackle new projects. According to the latest available balance sheet, Procisa’s debt amounts to €525 million.

Specifically, the subsidiary La Finca Casablanca is planning to construct a development containing 515 luxury and exclusive homes, a shopping and leisure centre, as well as sports facilities and a golf course, in the south of Pozuelo de Alarcón.

New directors

Meanwhile, the group owned by the Cereceda family has strengthened its corporate governance by hiring some new directors. Susana García-Cereceda, the current Chairman of Procisa and one of the heiresses of the family empire created by the businessman Luis García Cereceda, who died in 2010, will lead the holding company and each of its subsidiaries, as the CEO.

In addition, Grupo La Finca will hire Jorge Morán as the Vice President of the holding company. (…). Moreover, Värde will join the Board of La Finca Global Assets with the appointment of three board members. (…).

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Hotel Miguel Ángel’s Socimi Will Debut On The MAB In 2017

5 October 2016 – Expansión

This iconic asset will form part of the Socimi created as a result of the alliance between the hotel group BlueBay and Le Royal Hotels & Resorts, which is due to debut on the Alternative Investment Market (MAB) during the first quarter of 2017.

In addition to Hotel Miguel Ángel, the Socimi will initially comprise other hotels located in Mallorca and a commercial development project on the Costa del Sol. In the absence of the opinion of an independent expert, first estimates indicate that the Socimi will be worth around €500 million.

The company has already engaged Armabex to prepare the informative document for joining the market. That firm will act as the global coordinator, alongside PwC, throughout the process.

The contribution of the hotel, which is owned by the Iraqi born British investor Nadhmi Auchi, who owns Le Royal Hotels & Resorts, has been carried out through a company restructuring process performed, primarily, using local companies and entities in Luxembourg.

New assets

“Although during the first phase, assets such as Hotel Miguel Ángel by BlueBay, some hotels in Mallorca and a commercial development on the Costa del Sol, including a hotel, will be included, the group will subsequently incorporate more properties, as a result of the asset restructuring process in commercial, fiscal and corporate terms, as well as due to the purchase of new assets”, explained the Chairman of BlueBay Hotels, Jamal Satli Iglesias in an interview. “The Socimi will be managed from Dubai, where I live, which will enable us to service different investors from the Middle East and London, for the other international investors”, said the Syrian-born Spanish businessman.

For the executive, the constitution of this Socimi forms part of a corporate strategy through which, in line with the actions of other international hotel chains, he wants to separate out the asset ownership and the operational sides of the business. “With this, we are looking for growth and consolidation”.

Amongst the benefits of this Socimi, Satli Iglesias highlights its significant diversification, both in terms of properties as well as lease contracts, which allows it to expect “very attractive returns, which will continue to increase over the next few years, driven by growth in the real estate sector and by the forecast growth in the tourism sector”.

Satli Iglesias said that this operation seeks to obtain “transparency and returns”. “During this first phase, we are more open to the entry of institutional investors and other hotel chains or hotel property owners who may want to join our project”.

BlueBay – the fifteenth largest hotel company in Spain – currently has 42 hotels in its portfolio, of which it owns 50%. “We are committed to a hotel management regime, backed by property ownership, and our future strategy is to increase the number of hotels that we manage under this structure”, he explained.

“Our strategic plan for 2017-2020, which we have just presented, involves increasing our current hotel supply by almost 50% to exceed 60 hotels by the end of the period. In terms of the number of beds, we expect the figure to double from its current level (23,000 beds) to more than 50,000 beds by 2020”, said the executive.

Satli Iglesias explained that in order to undertake these expansion plans, the group plans to allocate around 80% of the company’s profits to growth.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Deutsche Bank Buys Diagonal Mar For €495M

2 August 2016 – Expansión

Yesterday, Deutsche Bank completed the purchase of the Diagonal Mar shopping centre from Northwood for around €495 million, making it the largest shopping centre transaction in the history of the Spanish market.

In this way, although the final price has been adjusted downwards with respect to the non-binding offer presented by the entity (which valued the asset at €505 million), it still exceeds the €451 million that Intu Properties paid for Puerto Venecia (Zaragoza) and the €375 million that Klépierre spent on the acquisition of Plenilunio (Madrid).

The operation also generates significant capital gains for Northwood, which acquired the property from the Irish bad bank Nama for €150 million in 2015. CBRE has advised this operation on the sell-side, whilst Deloitte advised the buy-side.

Background

The shopping centre, located in district 22@ in Barcelona, has passed through many hands since the real estate company Hines was awarded the mixed use project at the end of the 1990s. The project included a residential area, offices, hotels and a large shopping centre, with a constructed surface area of 100,500 sqm and a gross leasable area (GLA) of 87,000 sqm, as well as 5,000 parking spaces.

In 2002, the German investment fund Deka paid around €240 million for the property, which, was subsequently sold, in 2006, to the Irish investment group Quinlan for €300 million, in its first operation in Spain. Nevertheless, following the burst of the Irish bubble, the asset was taken over by the banks.

Three years after that operation and in a very different economic environment, the property has generated a lot of interest. Specifically, 18 candidates submitted non-binding offers for the property, including Axa, Invesco, Hines, Unibail, the Singapore sovereign fund GIC, Blackstone and the Socimi Merlin, which was the only Spanish company that submitted an offer, for less than €450 million. Only four candidates participated in the final phase: CBRE Global Investment, ECE, Henderson TH and Deutsche Bank.

In order to reposition the asset, Deutsche Bank plans to invest €30 million over four years in a project that includes restructuring the top floor of the shopping centre to create more space for high-end fashion brands (€15 million), refurbishing the other floors with a budget of around €8 million and renovating the centre’s exterior façade for almost €7 million.

With this renovation, the purchaser expects to strengthen Diagonal Mar’s competitive position and increase its gross operating profit (EBITDA) over five years from €20 million in 2015 to more than €26 million.

Impact

The shopping centre, opened in November 2001, was designed by Jean-Louis Solal and the architect Robert A.M. Stern. Diagonal Mar is located in a prime spot, approximately five kilometres north east of the city centre. With more than 200 outlets dedicated to fashion, restaurants, leisure, a bowling alley and other services, the centre has 4,800 parking spaces and an outdoor space: La Terrassa del Mar. Diagonal Mar received 16.7 million visitors last year, up by 2.3% and generated net sales – excluding Alcampo (which falls outside of the transaction perimeter) – of €210 million, up by 8.5%. (…).

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Metrovacesa Refinances All Of Its Debt Ahead Of Its IPO

18 May 2016 – El Confidencial

Metrovacesa, the real estate company controlled by Santander, BBVA and Banco Popular, has managed to definitively emerge from the abyss into which it fell in 2009, when the then owner, the Sanahuja family, saw how the creditor banks enforced their guarantees for the €4,000 million that they were owed.

The company now chaired by Rodrigo Echenique, one of the strong men from the entity led by Ana Botín, has managed to reach an agreement with the creditor banks to refinance all of Metrovacesa’s financial commitments through bond issues and debt restructuring.

This week, the company will release €700 million in 6-year bonds onto the market with interest of 240 basis points. Once that test has been passed, Metrovacesa will restructure its remaining €1,100 million in financial commitments, an operation that may include another bond issue, now that it has received the ok from its creditor banks, with a similar term and margin.

With all of this homework done, the real estate company is completing an ambitious clean-up plan, which has led it to undertake: two capital increases in less than a year, for a total amount of €1,650 million; the carve out of its entire property development business into the recently created MVC Suelo; the sale of its logistics business; and a significant reorganisation of its shareholders, with Santander’s purchase of Bankia and Sabadell’s stakes, which allowed the Cantabrian entity to take over 70.27% of the group’s shares. (…).

Now, according to sources familiar with the company’s plans, once all of its debt has been restructured, Metrovacesa plans to return to the stock market, probably as a Socimi. Although no date has yet been set, they are working with a two year timeframe (…).

Proof of the good work done so far came in the form of the credit rating that the company obtained from the ratings agency S&P, which granted it a preliminary rating of BBB- and a stable long-term outlook, and Moody’s, which assigned it a Baa3 rating, also with a stable outlook. (…).

The resurgence of a giant

Following the carve out of its property development business, Metrovacesa has a portfolio of assets worth €4,300 million, primarily comprising office buildings for rent, although it also owns a sizeable package of shopping centres, a dozen hotels and more than 3,000 homes with a gross leasable area of more than 1.5 million sqm.

Those figures make it one of the giants of the reborn real estate business, alongside the Socimi Merlin, which led the return of property companies to the Ibex 35 following its acquisition of Testa, and Colonial, a mirror into which the company chaired by Echenique is looking to recover its past splendour and the only one of the large companies in the sector that has not converted itself into a Socimi, because the tax credits that it has eclipse the tax advantages of the new company structure.

Metrovacesa was excluded from the stock market in May 2013, after 72 years as a listed company and after seeing the creditor entities take control. Currently, Santander owns a 70.27% stake, BBVA a 20.52% stake and Popular a 9.14% stake. (…).

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

Banks Still Own Problem Assets Amounting To €213,000M

5 May 2016 – Cinco Días

Spain’s banks still have a heavy burden weighing down on them following the burst of the real estate bubble: they now own foreclosed assets worth €84,000 million, taken on since the start of the crisis.

According to the Bank of Spain in its financial stability report, published on Wednesday, that figure “has remained stable since December 2012, always ranging between €75,000 million and €84,000 million”.

Of that amount, 37.6% relates to land, 25% to finished buildings, 22.3% are foreclosed assets resulting from the acquisition of homes, and 5% are buildings under construction.

In the last year, land has decreased by 0.5 points, finished buildings have dropped by 0.43 points, homes have increased by 1.8 points and buildings under construction have remained stable.

But beyond these properties, the banks’ exposure to non-performing assets and problem loans amount to almost €213,000 million in Spain’s financial sector as a holw.

The banks have lots of “non-performing assets on their balance sheets, which do not generate any revenues for the income statement, but which do require financing”, said the financial supervisor, which has published data relating to 2015 year-end.

“A hindrance to solvency”

The Bank of Spain also warns that “although these two indicators have decreased, by 14.5% as a whole, over the last year, they still represent a significant percentage of the total assets of the banks in their business in Spain and they place negative pressure on the income statements of the entities, reducing their profit generation capability and therefore, representing a hindrance to increasing the solvency of the institutions”.

In terms of total loans that have been refinanced or restructured, that balance amounted to €205,000 million at the end of last year, which represents a YoY decrease of 6.4% compared with the end of 2014.

Of the total amount of loans whose initial terms have been adjusted, “51.5% relate to non-financial companies and 46.2% to households”, said the Bank of Spain.

Original story: Cinco Días (by Juande Portillo)

Translation: Carmel Drake

Banks Still Hold Doubtful & Foreclosed Assets Worth €224,000M

5 November 2015 – Cinco Días

Spanish financial institutions held doubtful and foreclosed assets amounting to €224,000 million on their balance sheets as at June 2015, according to data published by the Bank of Spain in its latest Financial Stability Report.

In its report, the body led by Luis María Linde (pictured above) warns that these unproductive assets are placing “negative” pressure on entities’ income statements, reducing their ability to generate profits, since they do not generate any revenues. These two types of assets represent 8.7% of the total assets of the banks in Spain.

Nevertheless, the volume of assets foreclosed or received in lieu of debt payments from businesses in Spain, held on the financial institutions’ balance sheets decreased by 0.9% in the last year to amount to €81,000 million. (…).

Meanwhile, at the consolidated level, the total amount of refinanced or restructured credit increased to €211,000 million as at June 2015, of which 52.1% related to non-financial companies and 45.2% corresponded to households.

Less refinanced credit for the private sector

2.4% of the total related to loans to Public Administrations, whilst the remaining 0.3% corresponded to financial companies other than credit institutions. The total volume of loans to the private sector that had been refinanced or restructured amounted to €163,800 million in June 2015, i.e. 15.8% less than in the same month a year earlier.

The Bank of Spain said that this variation represents an acceleration in the decrease seen over the life of the index, which began in March 2014. The decrease in the volume of refinancings and restructurings over the last year has been centred around non-financial companies (17.5%) and households (13.5%).

Meanwhile, the weight of refinancings and restructurings over the total credit balance has also decreased in recent quarters to account for 13% in June 2015, compared with 14.2% in the same month a year earlier.

Doubtful loans accounted for almost half of the refinanced and restructured loan balance (with a slight decrease of one percentage point with respect to last year), whilst those classified as sub-standard loans represented 18% of the total and those regarded as up-to-date (performing) loans accounted for 33% of the total.

In terms of the distribution of refinanced operations by sector, 64% corresponded to loans granted to companies, whilst the remaining 36% related to household debt.

Half of the refinanced operations relating to companies corresponded to loans granted to companies operating in the construction and real estate sector.

Finally, 26.2% of the restructured operations relating to households corresponded to loans granted to finance house purchases.

Original story: Cinco Días

Translation: Carmel Drake

The Major Players In The New RE Sector

11 June 2015 – Expansión

Since Colonial’s exit from the Ibex 35 in March 2008, none of the major players in the Spanish real estate sector have been listed on the stock exchange. However, in parallel to the return of large international investors, some real estate companies are starting to emerge, and are knocking on the door of the selective Madrid index. They are the new giants in a sector, which is gaining strength and becoming fashionable again.

These companies include several newcomers, such as Merlin Properties. The Socimi, which went public on 30 June, has managed to create a portfolio of properties worth €2,322 million and has just purchased Testa, the real estate subsidiary of Sacyr, for almost €1,800 million. The operation will create a group with assets worth €5,500 million and a market capitalisation of €4,000 million. Another example of a new company success is Hispania.

The real estate company, which has a Socimi subsidiary, has a market capitalisation of €1,120 million. After purchasing assets worth €422 million and creating a hotel Socimi with the hotel chain Barceló containing 16 properties, it has launched a takeover bid over another listed company in the sector, Realia.

Lar España and Axiare are the other two large Socimis, with portfolios worth around €500 million each.

Traditional giants

Some of the traditional real estate companies are looking to regain the status they lost when the real estate bubble burst. The survivors include only companies whose main activity is the rental of buildings and not property development. This is the case of Testa (which will soon be integrated into Merlin), Realia, Colonial and Metrovacesa.

In the case of the latter, its main shareholders (Santander, Sabadell, BBVA and Popular) excluded it from the stock exchange in May 2013 in order to clean up the (balance sheet of the) company, which had debt of almost €6,000 million. At the end of 2014, Metrovacesa had reduced its net financial debt to €3,285 million and cut its losses by half.

Realia should undertake a similar exercise when the takeover war between Hispania and Carlos Slim for control over the entity has been resolved. The Mexican businessman is already a shareholder in the real estate company, after he purchased the 24.5% stake that Bankia held and he is also a major shareholder in FCC, which owns another 36.9% stake in Realia. In both purchase proposals, the objective is to get rid of the housing and residential land stock held by Realia to focus on the management of office buildings and shopping centres.

In the case of Colonial, the restructuring is much more on track, after the Villar Mar Group became its major shareholder. The real estate company owns office buildings across Madrid and Barcelona worth more than €1,290 million, and also holds a majority stake in the French real estate company SFL.

Original story: Expansión

Translation: Carmel Drake

The AEB Thinks That The Mortgage War Is “Very Positive”

6 January 2015 – Expansión

AEB/ The Chairman of the bankers’ assocation says that the current battle for mortgages indicates that the financial sector is still competitive, despite the concentration of entities.

The on-going battle between banking institutions to offer new mortgages is a clear sign that the system is performing well following the restructuring of the last few years, according to the Spanish Banking Association (Asociación Española de Banca o AEB). Its Chairman, José María Roldán, said yesterday that it demonstates “that we have a competitive financial system. We are seeing a very strong degree of competition, to the extent that opportunities and confidence have allowed, and I believe that this is very encouraging. The most important thing is that the choice of loan is appropriate in terms of risk. All of this indicates that, despite the process of concentration that has taken place, healthy competition is still very much alive”.

Re-activation

Roldán was speaking at the Conference on the Spanish banking sector, organised by the Valencian Institute of Economic Research (el Instituto Valenciano de Investigaciones Económicas or IVIE). In his speech, he said that the most important thing right now is that demand for credit in Spain is returning. “Excessive leveraging has been corrected, in some cases loans have been written off and in other cases they have been refinanced, and so we now have sectors with less debt, which the uncertainties would not allow to commit to any investment projects”, he explained.

Now “we are in a situation in which the banks are fully prepared to finance the process of economy recovery, financing rates are very low and demand for credit is beginning to return. At present, there is strong competition between banks to grant loans. Although that does not mean that everyone asking for a loan will be granted one”.

Growth

Nevertheless, he considers that it is “difficult to predict when bank credit (on an aggregate basis) will begin to grow, since it depends on two processes. One, in which economic agents with good financial standing are able to demand and obtain credit, and the other, whereby the agents that are still heavily indebted are continuing to service their debts”.

But he reiterated that “that is not the most important thing. What is important is that demand for credit is increasing and that financial institutions are prepared to meet it”.

Original story: Expansión (by J. Brines)

Translation: Carmel Drake