MediaMarkt to Expand its Logistics Hub in Madrid

7 March 2019 – Idealista

The consumer electronics retailer MediaMarkt is going to expand its logistics platform in Pinto (Madrid) as part of its multi-national commitment to an omnichannel retail model.

Specifically, the surface area of the latest generation logistics platform is going to be extended from 30,000 m2 to 60,000 m2 by next summer, with the building work due to start in December.

In this way, from next summer, the logistics platform in Pinto will centralise all of the company’s cross-docking operations and will operate as the distribution centre for its network of 87 stores as well as for its online customers.

Original story: Idealista 

Translation: Carmel Drake

Project Lane: Bankia Negotiates Sale Of €400M Secured Portfolio

13 June 2016 – Expansión

Project Big Bang paralysed the Spanish financial sector in 2015. At the time, Bankia tried to sell all of its foreclosed assets in a single transaction, including: 38,500 homes, 2,600 plots of land and 5,000 commercial premises, worth €4,800 million. A large number of funds were interested in the sale, but only Cerberus and Oaktree expressed their intention to submit binding offers. The prices and conditions did not match with Bankia’s expections and so it decided to suspend the operation at the end of the year. (…).

With all of those roadblocks, Bankia decided that it would maximise the value of its foreclosed assets by keeping them on the balance sheet and selling them off through the retail channel and in smaller portfolios, such as the case of Project Lane, see below. Even so, sources in the sector expect to see fresh attempts to sell large portfolios of foreclosed assets over the next few months and years, something that more than one entity has planned for 2016. To this end, the markets must improve further and provisions should be adjusted even more to the prices being offered by the funds. The Bank of Spain’s new accounting circular, which comes into force in October, is expected to help in this sense and to accelerate the divestment of the banks’ problem assets.

Project Lane

Now, Bankia is negotiating the sale of a portfolio of homes with three international funds, in an operation known as Project Lane. The entity is being advised by KPMG and is looking to transfer around 2,500 homes worth c. €400 million, according to financial sources.

The operation is in a very advanced phase, with binding offers due to be submitted next week. Bankia and its advisor have selected three funds, which according to the same sources, do not include Cerberus.

Initially, the US fund was the favourite buyer for the operation, on the basis that it knows the assets better than anyone else through Haya Real Estate, the former Bankia Habitat, which manages homes and real estate loans from Bankia. In fact, Cerberus was the fund that was closest to acquiring Big Bang, with an offer of around €2,100 million.

The portfolio of assets on sale as part of Project Lane primarily comprises homes, but also includes industrial and commercial assets, to a lesser extent. It is the largest sale of foreclosed assets that any of the banks have put on the market so far in 2016. Only Cajamar has explored this option in recent months, with Project Omeya – around €72 million -, as it waits to see what will happen during the second half of the year. The 2,500 homes on sale represent around 6% of the total haul that Bankia has on its balance sheet. The entity sold 9,200 properties through its branch network and Haya Real Estate last year. The aim is to try and repeat those figures in 2016.

Since the new management team, led by José Ignacio Goirigolzarri (pictured above), took over at Bankia, the nationalised group has been one of the most active in the sale of portfolios. Last year, it sold more than 80 batches of problem assets, which allowed it to decrease its doubtful debt balance from €20,000 million in 2013 to €12,500 million by March 2016. It has managed to do this thanks to higher provisions.

Original story: Expansión (by J. Zuloaga and S. Arancibia)

Translation: Carmel Drake

Sareb’s Sales To Large Investors Were 75% Below Budget In 2015

14 January 2016 – Expansión

Sareb’s sale of assets to large investors slowed during the second half of 2015. The company, which owns the majority of the problem assets that were formerly held by the rescued entities, transferred just €520 million worth of assets to institutional investors in 2015, which represents a quarter of the amount (€2,200 million) it had put on the market in portfolios (prior to the new accounting circular).

The reason for this slow down was the introduction of new accounting requirements, designed by the Bank of Spain, which entered into force last year. These regulations penalise Sareb’s previous business model, which sought to increase revenues during the last few months of each year through the sale of portfolios to large investors. From now on, the company will not transfer large loan packages, but instead will sell its loans one by one in large competitive processes.

Putting the brakes on

This paradigm shift will be felt in the bad bank’s annual results. In 2013, the first full year of activity for the company led by Jaime Echegoyen (pictured above), Sareb generated revenues of €1,166 million through the wholesale channel – €757 million from portfolio sales and €409 million from the sale of individual positions-. One year later, that volume remained stable, with sales of €1,115 million, of which €708 million were closed in December. In 2015, the figure has been reduced to almost half, just over €600 million in total, given that the entity made sales of €90 million during the first half of the year and €520 million during the second half.

This slow down has two effects: one positive and one negative. The good news is that Sareb will preserve its margin on the deals it makes with large investors. That is because it used to obtain lower prices on its portfolio sales than on its sales through the retail channel, and so, in this way, margin was sacrificed at the expense of volume.

The bad news is that annual revenues will be lower than initially expected. Sareb is under pressure to liquidate all of its assets before the end of 2027. At the end of the first half of 2015, it still had €43,381 million assets left on its books, having reduced the initial asset balance transferred to it from Spain’s rescued entities (€50,781 million) by just €7,400 million.

Its inability to sell large portfolios is due to the fact that the accounting circular designed by the regulator obliges Sareb to perform an individual appraisal of all of its assets, within two years. This environment damages portfolios sales, because instead of being able to assign a global price for each portfolio, it will now be forced to set a specific price for each property or loan, reducing its margin.

Sources at some of the international funds indicate that they had expected the volume of sales through the wholesale channel to be lower than the actual figure obtained (€520 million). They point out that Sareb only had a few weeks to adapt its strategy and sell the loans included in five portfolios that it had already put up for sale, amounting to €2,200 million, on a loan by loan basis. All of the sales made through the wholesale channel (€520 million) involved loans and the majority were secured by land or residential assets.

A difficult year

The slowdown in wholesale sales has come at a difficult time for the entity. Its revenues from the retail channel also slowed in 2015, due to the transfer of assets to the new managers –Haya RE, Altamira, Solvia and Servihabitat–. In addition, the company is going to have to recognise significant provisions and the corresponding charges in the 2015 accounts to reflect the new accounting circular. All of this means that the entity will have to consume more of its share capital and some of its subordinated debt.

Thankfully, the company is making savings in terms of its financing costs – its debt is becoming cheaper – which should enable it to partly offset that blow.

Original story: Expansión (by J. Zuloaga)

Translation: Carmel Drake