Sareb Gets Tough & Demands €9bn through c.3,800 Creditor Bankruptcies

26 March 2018 – Voz Pópuli

Spain’s bad bank Sareb has run out of patience. After spending more than four years negotiating extrajudicial agreements with debtors and putting into order its presence in thousands of real estate bankruptcies in Spain, the semi-public body is getting tough. “When you have been negotiating with a debtor for years and you know he’s not going to pay you…he doesn’t want to pay you, you are left with no other option than to go to court”, says the President of Sareb, Jaime Echegoyen.

Sareb is present in approximately 3,800 real estate bankruptcies, declared since 2008, when the property bubble burst and the Spanish economy entered the worst crisis of its young democracy. According to sources at the organisation, Sareb is demanding a total debt of €9 billion through these bankruptcy proceedings.

The company has a portfolio of loans worth €26 billion and is present in 12,200 legal processes in total, all of which involve loans to property developers (there are no mortgages to individuals). Of that total amount, 7,500 are for mortgages and 3,800 are creditor bankruptcies.

“We cannot give our blessing to people who don’t pay”, warns Echegoyen, who presented Sareb’s results for 2017 last Friday. The company has started a legal offensive on two fronts to accelerate the sale of its loan portfolio: it will boost the bankruptcy processes in which it is present as a creditor; and it will go to court to request payments from those companies that still have not responded to the debt demanded.

“We have spoken with the debtors and we will continue to do so”, said the President of Sareb. “We prefer to find an amicable solution rather than play hardball, but if we have to resort to other means, we will go to court”, he said, admitting that it is probable that the number of litigation cases involving Sareb will increase in the near future.

In recent months, a more decided approach from Sareb has been noted in certain bankruptcy processes. Like in the case of the bankruptcy of Reyal Urbis, one of the largest corporate failures in Spain’s history, where, after years of negotiation to reach an agreement, which seemed unfeasible from the beginning, Sareb’s proposal to continue reassessing the matter resulted in the liquidation of the company last September. The debt of Reyal Urbis with Sareb alone exceeds €800 million.

Sareb’s presence has also been felt in the bankruptcy of the company that used to own the In Tempo skyscraper in Benidorm, the tallest residential building in Europe, which was sold to a fund last year. And in the case of the bankruptcy of Nozar, where Sareb recently requested greater agility in the process, almost ten years after the bankruptcy was declared.

“Sareb is involved in the bankruptcies of the most well-known real estate companies; but also in thousands of other much smaller bankruptcies, each one in its own province, judged by its own bankruptcy administrators and its own idiosyncrasies”, say sources at the organisation. “Over the last few years, we have had to put in order our positions in all of these processes”, they add.

During Sareb’s five-year life, the entity, known increasingly less as the bad bank, has liquidated 27% (around €13.6 billion) of the portfolio that it was created with. The management and divestment of loans and properties has generated €20.7 billion of revenues. During the same period, the entity has paid off 25.4% of its debt, €12.9 billion. Last year, it recorded losses of €565 million, down by 15%.

Original story: Voz Pópuli (by Alberto Ortín)

Translation: Carmel Drake

Proinsa: The Final Piece of Reyal Urbis’ Empire Files for Bankruptcy

12 February 2018 – El Confidencial

Proinsa, Promotora Inmobiliaria del Este, has filed for creditor bankruptcy. The company is chaired by Rafael Santamaria, who, together with Joaquín Rivero, Enrique Bañuelos, Luis Portillo and Manuel Jove, were the property “lords” of the last real estate boom. Santamaría was also the President of Reyal Urbis, which starred in the second-largest dissolution ever of a real estate company in 2016, after that of Martinsa Fadesa.

Specifically, Reyal Urbis, which filed for its own creditor bankruptcy last summer, controls 70% of the company Proinsa, which is also dedicated to real estate development. Moreover, the two firms share a registered address on the Madrilenian street of Calle Ayala, just 50m from Paseo de la Castellana, where Rafael Santamaría Trigo, who also used to serve as the President of the Property Developers of Madrid (Asprima), used to have his office.

Last week, Mercantile Court number 1 of Madrid declared that Proinsa had filed for bankruptcy with a debt of almost €62 million and assets worth around €57 million, after it had withdrawn from a refinancing agreement in the middle of December 2016. In fact, that company’s short-term debt amounts to €34 million, of which €10 million corresponds to debt with various financial institutions and €21.5 million to Sareb. On the other hand, it has short-term debt amounting to €21.6 million with group companies. Moreover, at the end of 2016, the firm’s losses amounted to €1.1 million, and it held negative equity of almost €5 million.

In addition to Reyal Urbis, the firm’s minority shareholders include several companies from Burgos that form part of the same group: Inmobiliaria Espolón, Promotora Fuente Redonda, Grupo Río Vena Gestión de Obras and Alqlunia 2.

Proinsa held onto just one asset: a plot of land under development in Los Berrocales, one of the developments in the southeast of Madrid that was blocked by the Town Hall of Madrid fifteen days ago. Specifically, it owned 75% of an estate (La Fortuna) with a fair value of €57.1 million at the end of 2016, according to a valuation performed by Knight Frank. A single syndicated mortgage loan was secured over that estate from Sareb, Banco CEISS, Banco Mare Nostrum, Ibercaja and Unicaja, and with EBN Banco de Negocios acting as the agent bank. That loan was constituted in December 2006 and was subsequently novated on three occasions until the end of 2014. Moreover, in terms of unforeseen costs, Proinsa owed €6.5 million to the Compensation Board of Los Berrocales.

Almost half a century dedicated to real estate

The real estate businesses of the Santamaría family date back to 1970. As Nacho Cardero recounts in his novel “The Property Lords”, Reyal Urbis was constituted in March of that year by the current Chairman’s father, Rafael Santamaría Moreno, owner of the Layer Farm in Pinto, dedicated to the wholesale of eggs. “The laying hens were exchanged for cranes and the company turned the company on its head, changing its name to Reyal, which is Layer written backwards”.

The small construction firm would become one of the largest property developers in the country, after it purchased Urbis from Banesto in July 2006 for €3.3 billion, at the height of the real estate boom (…).

Until last week, Proinsa was the final piece at the base of that real estate emporium. And that final piece in the house of cards left many cards along the way, such as the ghost city of Valdeluz, just 67km from Puerta del Sol, in the province of Guadalajara and another symbol, alongside Seseña (Toledo) (…) of the excesses of the real estate party (…).

Original story: El Confidencial (by Elena Sanz)

Translation: Carmel Drake

Pryconsa is Awarded the Bus Depot Plot in Madrid for €19.1M

15 January 2018 – Eje Prime

Pryconsa didn’t end up having to put up a fight for the plot in Carabanchel. Rather, the Spanish property developer was awarded the plot that used to house the EMT (Municipal Transport Company) bus depot in Madrid, for which the Town Hall was asking €16.3 million and for which it will end up receiving €19.1 million. In reality, no one else submitted a bid in the auction for this residential-use plot on which around 268 homes may be built and which has an available buildable surface area of 26,820 m2.

The total surface area of the land spans 37,475 m2 and, at the height of the pre-crisis boom, it was worth €75 million, according to El Confidencial. The plot has been put up for sale before, on up to five occasions, without success for the Spanish capital’s Town Hall. Now, and despite the clear decrease in market prices, the EMT has managed to improve the asking price with which it started the auction a month ago by 21%.

Located in the neighbourhood of Buenavista, interest in the plot has changed sharply over the last decade. The first auction for the plot was held in 2006, when besides the company chaired by Marco Colomer (Pryconsa), the EMT also received offers that were significantly higher than the current one from several other large real estate companies, some of which no longer exist. Back then, possible suitors included Colonial, Reyal Urbis, Sacyr, Fadesa and Agofer, the property developer owned at the time by Juan Antonio Gómez Pintado, the current boss of the emerging Vía Célere.

Original story: Eje Prime

Translation: Carmel Drake

 

FT: Spain’s Construction Sector Rises From The Ashes

28 September 2017 – Financial Times

When Juan Velayos left his job at the accountancy firm PwC to become chief executive of Spanish housebuilder Neinor Homes two years ago, some people thought he was crazy.

Construction companies in Spain once built more residential homes every year than the rest of western Europe combined, fuelled by cheap debt. But a 35% slump in prices after the 2007 financial crisis left much of the sector bankrupt.

Spain still has half a million new unsold homes, many in surreal empty cities that have become monuments to a speculative property bubble that brought down the country’s banking sector and the wider economy.

“The markets at the time were sceptical about the opportunity [in Spanish house building],” says Mr Velayos. “They were sceptical about the momentum for residential. They were surprised we were buying land so aggressively.”

But Neinor, created by US private equity group Lone Star in 2014, has become a success story, one of the country’s first residential homebuilders able to rise out of the ashes of the ruined sector and build again.

Six months ago Neinor Homes became the first to float on the Madrid stock exchange, with Lone Star selling 60% of the company, which was valued at €1.3bn. Its share price has risen by 13% since then.

“We knew there was an opportunity because the Spanish economy was growing again and for nearly a decade there had been practically no new residential homes built,” says Mr Velayos.

Neinor served as a catalyst for the whole sector, with others entering the market. Companies such as Aedas, Vía Célere, Aelca and Metrovacesa are also building, giving the sector depth for investors.

“Residential construction activity in Spain is finally back,” says Adolfo Ramirez-Escudero, chief executive of the Spanish arm of real estate service firm CBRE. “The demand is there and companies are building again.”

Many of these companies are also now considering initial public offerings. Two people with knowledge of the deal say that Aedas is considering a listing this year. Aedas declined to comment.

This comes as the wider Spanish property market seems to have turned a corner. House prices fell by 35.2% from 2007 to 2015, according to property site Idealista, but are up by 3% this year and rose by 2% last year.

Analysts say this is set to continue as Spain’s economy continues to grow at about 3% a year — one of the strongest in the eurozone.

“The scarcity of new housing in some places and the impulse of demand, supported by employment growth, point to new price increases,” says Jorge Sicilia, the chief economist of BBVA, the Spanish banking group.

Investment into Spain’s property market has come in stages, starting with international funds run by Goldman Sachs, Cerberus Capital Management and Blackstone, which bought bad loans and apartment portfolios as early as 2013.

This was followed by the creation of real estate investment trusts — known in Spain as Socimi — which shortly afterwards started looking at the commercial property and rental markets.

Four big Spanish Socimis — Axiare, Merlin Properties, Hispania and Lar España — are already up and running. Combined profits for the four groups in the first quarter of 2017 were up 50% from the same period last year.

But the return of the residential building sector on top of commercial suggests that the market is maturing and returning to normal after a decade of crisis that saw big players such as Reyal Urbis and Martinsa Fadesa file for bankruptcy.

“In commercial and residential property, everyone has the same thesis,” says Fernando Ramirez, head of investor relations at Merlin. “Spain is recovering and property is still cheap.”

The return of Spanish construction is good for the wider Spanish economy, particularly job creation. The construction sector once employed more than 2.5m people, compared with just 1m after the crash.

A rise in house prices is also positive for the banking sector, which has benefited from the influx of institutional money that has pushed up the prices of their portfolios of distressed property assets and provided a market to sell.

However, the story is not all positive.

Spain’s biggest listed construction groups such as ACS or Ferrovial are unlikely to benefit from higher property prices, as they are focused on large infrastructure projects, which are still in short supply as the government holds back on spending.

The recovery is also concentrated in big cities such as Madrid, Barcelona and Valencia, as well as the tourist hotspots such as Málaga and the Balearic Islands. In much of more rural Spain, the recovery has not happened.

This is partly due to the overhang of half a million unsold new houses in parts of Spain. “In Madrid and Barcelona, there is nowhere near enough houses and demand is outstripping supply,” says Fernando Encinar, the chief executive of Idealista.

“If you drive 40km from Madrid through to Valdeluz there are still thousands of empty properties and that market is a long way from recovering,” he says.

Mr Velayos adds that while the market is coming back, the country is a long way from the pre-financial crisis boom — adding that the frothy exuberance of those years is unlikely to return.

In effect, the market is developing on a different model from before the financial crisis, with building financed by equity rather than debt. “The days where the builder and the buyer were both 100% debt financed are long gone,” he says.

Original story: Financial Times

Apollo, Bain & Oaktree Compete To Acquire Habitat

25 September 2017 – El Confidencial

A new large real estate operation is on the horizon. The process to sell Habitat Inmobiliaria has entered the home stretch, after the Catalan company selected a shortlist of three candidates to submit their bids.

The three finalists are the international funds Apollo, Bain and Oaktree, whose binding offers are expected to be received by the beginning of October, according to several sources familiar with the operation. The bids are expected to amount to between €200 million – €250 million and the intention is to announce the winner before the end of the year.

Habitat is the heir of the former Ferrovial Inmobiliaria, the subsidiary that the Del Pino family’s group sold to the Catalan property developer, controlled at the time by Bruno Figueras, for €2,200 million at the end of 2006. That deal was signed just before the outbreak of the crisis and it converted the Catalan company into the fifth largest property developer in the country. Nevertheless, that glory was short-lived.

Just two years after that Pharaonic purchase, Habitat filed for the fourth largest creditor bankruptcy in history, by declaring itself in ‘suspension of payments’ with debt amounting to €2,800 million, exceeded only by Abengoa, Martinsa-Fadesa and Reyal-Urbis.

From there, it began a titanic fight to survive, which included a preliminary agreement in the spring of 2010, which saw it emerge from bankruptcy and then, a modification to that agreement, five years later, which gave control of the company to its creditor funds.

In 2015, firms such as Capstone, Goldman Sachs, Bank of America, Värde and Marathon acquired 70% of the company’s capital, by converting the bulk of its debt into shares, and they ordered a return to house construction, to take advantage of the recovery in the sector.

Moreover, those firms continued as the group’s main financiers, with a participation loan of €70 million and another senior loan of €80 million, they took over the management, and they gradually sidelined Bruno Figueras; he currently holds the role of Vice-President.

At the time, the company analysed the option of organising a sales process, but that never ended up happening. The same idea was revived during the first half of this year when Habitat engaged Irea to organise a sale, merger or the entry of a new shareholder into the company.

After almost 11 years (since the purchase of Ferrovial Inmobiliaria), the Catalan property developer is barely a shadow of its former self, but it still holds a juicy portfolio of buildable land – currently, the most sought-after asset by international funds – concentrated in Madrid, Cataluña, Andalucía and Valencia, plus the company also has a presence in Aragón, Portugal and Hungary.

The three finalists in the bid for Habitat have competed in the past for some of the most important real estate operations of recent times, such as the purchase of Vía Célere by Värde, which Bain analysed, and the acquisition of the €30,000 million in real estate assets from Santander-Popular by Blackstone, which Apollo bid for.

Whoever ends up taking control of Habitat will have the perfect platform to create its own group and to start to compete with other investment giants who have already trodden this path, such as Lone Star, the owner of Neinor Homes; Castlelake, owner of Aedas; and Värde, the primary shareholder of Vía Célere and Aelca.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

Reyal Urbis’ Liquidation Process Begins

6 September 2017 – Expansión

Three months after receiving the “No” decision from its creditors to its payment proposal, the real estate company Reyal Urbis is starting its liquidation process, with Sareb, the Tax Authority and several banks, such as Santander, as the main beneficiaries.

On Monday, the property developer controlled by Rafael Santamaría received the ruling from Mercantile Court number six in Madrid, ordering the launch of the liquidation phase. In this way, Reyal Urbis will star in the second largest bankruptcy in Spain’s history, with debt amounting to more than €3,500 million, exceeded only by that of Martinsa Fadesa.

This new phase will be led by the bankruptcy administrator, given that the judge is continuing to suspend the managers of the company and has ordered the termination of its corporate governance bodies.

Since its appointment as the bankruptcy administrator in February 2013, the audit firm DBO has taken care of the company’s legal proceedings. It was responsible for submitting the payment proposal prepared by the company for its creditors, which included discounts of more than 90% on its liabilities. Only 32.7% of its shareholders supported that payment plan in June, which effectively condemned the company to extinction.

Now, the administrations will have to determine the best solution for the creditors, which are owed around €3,600 million, according to the most recent figures presented, whilst the company owns assets worth €1,170 million as at 31 December 2016.

Portfolio

The company’s assets include €188 million corresponding to properties that generate rental income and €863 million relating to around 200 finished homes and land. Specifically, Reyal Urbis owns one of the largest land portfolios in Spain, with 6.7 million m2, exceeding the large property developers such as Metrovacesa (6 million) and Neinor Homes (1.3 million).

Distributed over more than 30 cities in Spain and Portugal (the company owns assets in Lisbon and Porto), the portfolio of land and rental assets, such as the best-located hotels in the Rafael Hoteles chain, as well as its stake in the Castellana 200 retail and office complex, will be the jewels in the crown to be shared out amongst the creditors or sold to allow them to recover at least some of their investment, according to sources close to the process.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

Reyal Urbis Files For Spain’s Second Largest Bankruptcy

21 June 2017 – Cinco Días

The long-awaited death of Reyal Urbis is approaching. The real estate company has failed to convince a majority of its creditors to accept the proposed agreement presented by the entity chaired by Rafael Santamaría, which included significant discounts of between 80% and 90% of a total debt balance amounting to €4,600 million. It is the second largest liquidation ever in history, following that of the property developer Martinsa-Fadesa, which folded with a debt of around €7,000 million.

The proposed agreement presented by the company has not received sufficient backing given that in the case of the ordinary debt, it only obtained favourable votes from 32.7% of the creditors; another 37.79% voted against the proposal and the remaining 29% abstained, according to legal sources. In the case of the syndicated loan, the votes did not reach the 75% threshold either.

The bankruptcy administrator, namely, the audit firm BDO, is obliged to communicate the result of the vote that takes place in Commercial Court number 6 in Madrid, where the judge will issue the proposed liquidation ruling, with an equity black hole of €3,436 million.

The liquidation of Reyal Urbis was finalised after its major creditors, including Sareb and the opportunistic funds that had acquired some of the liabilities in recent weeks, rejected the proposed agreement, as disclosed by Cinco Días at the end of May.

The company has liabilities worth more than €3,200 million corresponding to a syndicated loan, in which Sareb holds a crucial stake, with more than €1,000 million proceeding from loans from the former savings banks. In addition, Reyal Urbis owed almost €900 million in ordinary debt and more than €400 million to the Tax Authorities. In fact, the real estate company is the largest debtor on the list of overdue debtors published by the Tax Authorities.

The property developer is dying just a decade after its merger which saw it become one of the large real estate companies in the country, together with Martinsa-Fadesa, Colonial and Astroc. Its President, Rafael Santamaría, a technical architect by training, has spent his whole life working for the family business. He was appointed CEO in 1985 and took over from his father as President in 1997. In 2006, he starred in one of the largest deals in the sector, after acquiring Urbis from Banesto for €3,300 million.

But that joy was short-lived. The burst of the real estate bubble dragged him down, just like it did Martinsa, Habitat and Nozar. The company filed for voluntary creditors’ bankruptcy in February 2013 after Sareb, BBVA and Santander refused to refinance its debt.

Santamaría’s last ditch attempt to save the company came with an aggressive liquidation proposal. That plan included discounts of 90% on the ordinary loans. In the case of the syndicated loan, the offer included the “dación en pago” of assets, which would have meant accepting discounts of around 80%. In turn, the Tax Authorities negotiated a unilateral payment plan for the €400 million owed.

That aggressive plan did not seduce the creditors, who have seen the possibility of recovering their capital go up in smoke, choosing instead the option of liquidating the company’s remaining assets, which are currently worth almost €1,200 million.

Original story: Cinco Días (by Alfonso Simón Ruiz)

Translation: Carmel Drake

Värde Sells Reyal Urbis’ Debt & Launches Bid For Habitat

7 June 2017 – Expansión

Corporate movements / The US fund is selling its stake in the debt of the property developer to the firm Taconic Capital after failing to reach an agreement ahead of the liquidation. In exchange, it will strengthen its commitment to Habitat.

After several intense weeks of negotiations, Värde has put an end to its relationship with Reyal Urbis. The US firm’s first dealings with the real estate firm saw it purchase a package of debt at the height of the process to negotiate an agreement that would allow the property developer to emerge from the bankruptcy proceeding in which it has been immersed since 2013. In a repeat of the deal struck with the real estate arm of San José, the final objective of the US fund was to obtain access to Reyal Urbis’ portfolio of assets (primarily land) by exchanging it for debt. To this end, Värde had started to negotiate with some of the most high-profile creditors, to buy up loans and propose an orderly liquidation plan, according to sources in the sector.

Nevertheless, Värde’s plans were thwarted by the Tax Authorities. Reyal owes the Public Administration more than €400 million (…), which was not willing to accept Värde’s proposal. As such, the US fund opted to sell its stake to another fund, specifically, to Taconic Capital.

According to sources in the sector, in addition to Taconic, some of Reyal’s other creditors include other funds such as Aurelius and Morgan Stanley. It will be them, along with the banks such as Santander, the Tax Authorities and Sareb who will now decide the future of the company.

Habitat

The decision to sell its debt in Reyal Urbis does not represent a setback in Värde’s commitment to the Spanish real estate sector and, in fact, the fund has already placed its focus on another one of the country’s large real estate companies: the Catalan firm Promociones Habitat.

Controlled by several funds such as Bank of America, Melf, Goldman Sachs and SP 101, the owners of Habitat put the company up for sale in March, through a process organised by the consultancy firm Irea.

These funds acquired stakes in Habitat’s share capital in 2015, after exchanging the debt that they acquired months earlier from the creditor bank. Although a longer period of continuity in the company was established at the time, in the end, the investors have decided to exit two years early, in light of the interest that investors have expressed in the Spanish real estate company. Although the process is still in its initial phase, Värde seems to be the best-placed candidate to purchase it, according to sources close to the process. The sale of the company is expected to be completed before the end of the year.

Sources in the sector indicate that other possible candidates in the running to acquire Habitat include Apollo, Cerberus, Bain Capital and Bank of America Merrill Lynch.

Habitat is one of the most highly regarded Catalan real estate companies in the sector. Led by Bruno Figueras, the company filed for voluntary creditor bankruptcy at the end of 2008, a process that it then emerged from in 2010 (…). After a series of negotiations with the creditors (…), the banks that had financed Habitat back in the day agreed to give way to the international funds that specialise in debt purchases. Two years later, those same funds have started to look for their exit route.

The real estate company has convened a General Shareholders’ Meeting to be held on 21 June 2017, where it will present the results for last year. In 2015, the most recent year for which results are publicly availabe, Habitat recorded revenues of €10.53 million, compared to €27.7 million in 2014. (…), which translated into gains of €1,073 million in 2015, compared with losses of €370 million the year before (…).

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

Sareb Rejects Reyal’s Proposed Payment Plan

1 June 2017 – Expansión

Reyal Urbis has taken another step closer to the precipice. Sareb, its main creditor, has voted against the agreement presented by the property developer to circumvent its liquidation. Yesterday, the deadline set by the judge for Reyal’s creditors to sign up to the proposed agreement came to an end and, according to market sources, the public company has rejected the plan submitted by Reyal Urbis, which filed for bankruptcy four years ago.

Sareb, the real estate company’s main creditor, with debt amounting to €1,000 million, had already expressed its doubts regarding Reyal’s payment plan. In the end, it has opposed the plan because it considers that the proposed discounts (on the debt), of between 88% and 93%, are too high and that the proposal to free up assets that are securing certain loans only serve to benefit Rafael Santamaría, the company’s President and majority shareholder.

Reyal’s other major creditors include Santander and funds such as Värde Partners, which are now working to find out the current value of the company’s assets, with a view to its possible liquidation. The US fund has been acquiring some of Reyal’s debt from overseas entities over the last few months and is now negotiating the purchase of more land, as Expansión revealed on 22 May. Värde’s aim is to take ownership of some of the real estate company’s plots of land and whereby strengthen its commitment to Spanish property, which has led it to buy Vía Célere and Aelca in recent times.

Another key player in the creditor pool is the Tax Authority, to which Reyal Urbis owes more than €400 million. The real estate company has offered to pay this debt using the funds it obtains from the sale of its assets, but it is proposing a very long term horizon.

At the end of 2016, Reyal Urbis’ liabilities amounted to €4,660 million and the group had negative own funds of €3,449 million. The assets, most of which are plots of land to be developed, were worth €1,170 million and its annual revenues amounted to less than €9 million. Reyal Urbis was created in 2007 following the merger of Reyal, led by Santamaría, and Urbis, the real estate arm of Banesto.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

Reyal Urbis Faces Key Week In Its Effort To Avoid Liquidation

29 May 2017 – Expansión

Reyal Urbis is facing a key week for determining whether or not it will receive sufficient backing from its banks and creditors to allow it to emerge from the bankruptcy in which the real estate company has been immersed since 2013 and whereby avoid liquidation.

The deadline for the creditors of the company, which is controlled and chaired by Rafael Santamaría, to communicate whether or not they accept the debt payment plan proposed by the firm, is this Wednesday 31 May.

The Tax Authority is one of Reyal Urbis’ largest creditors, given that the company owes around €400 million to the public purse, as well as to Sareb and the main financial institutions.

In the event that the real estate company does not obtain sufficient backing from its creditors, it would be forced to file for liquidation. That would constitute the second disappearance of a large real estate company after Martinsa Fadesa’s demise.

Reyal Urbis owes debt amounting to €3,572 million to the banks alone, and at the end of the first quarter of this year, it reported negative equity of €3,436 million.

The plan through which the company hopes to ensure its viability involves agreeing a unilateral payment plan with the Tax Authorities, different from the one offered to the other creditors.

The real estate company is proposing paying off the debt it owes to the financial institutions using real estate assets, an offer that, given the depreciations in values, would represent a discount (on the debt).

Overcoming paralysis

By emerging from bankruptcy, Reyal is also looking to overcome the paralysation that it has been immersed in for the last four years, during which time it has not constructed a single home and has barely managed to sell any assets or manage the hotels for rent in its real estate portfolio, covering 123,000 m2.

In this way, at the end of 2016, the company reported losses of €155 million, similar to the previous year.

In addition, Reyal Urbis’ bankruptcy procedure has been delayed, given that, at the end of 2015, Commercial Court number 6 in Madrid rejected the proposed agreement that had been presented by the company at the beginning of that year. After appealing to the Provincial Court, the real estate company managed to get the proposal agreed and processed more than a year later, at the beginning of 2017.

Original story: Expansión

Translation: Carmel Drake