Spain’s Banks Look to Sell €19 Billion in Real Estate Assets and NPLs in 2019

21 October 2019 – Although the pace of sales has fallen in recent years, Spain’s banks are continuing their efforts to reduce their exposure to non-performing loans and foreclosed real estate assets left over from the financial crisis of the first half of this decade. In the year to date, those banks have sold portfolios of toxic assets worth a total of more than €7 billion. Another twelve other transactions worth approximately €11.7 billion, however, are on course to conclude by the end of this year.

Sabadell has been particularly active, having sold €2.55 billion in portfolios such as Greco and Rex. Unicaja and Ibercaja have also sold assets worth more than €1.5 billion. Santander is currently negotiating the sale of another two portfolios.

Spain’s financial institutions are expected to end the year with total sales of nearly €19 billion, compared to 41.7 billion euros last year, down by more than half.

Original Story: El Español – María Vega

Adaptation/Translation: Richard D. K. Turner

The Student Hotel Raises €90-Million in Financing for New Investments

14 October 2019 The Netherlands-based student hotel group The Student Hotel (TSH) announced that it had obtained €90-million in bank financing Santander, Sabadell and HSBC. TSH will use the funds to build two new hotels in Madrid and Barcelona as well as to refinance its existing debts in Spain. The investments are part of a €2-billion investment strategy that the group plans to implement over the next five years in Europe.

TSH is currently working on three projects in Spain: Madrid La Imprenta (340 rooms), Barcelona Provençals (300 rooms) and the TSH San Sebastian (328 rooms).

Original Story: Hosteltur

Adaptation/Translation: Richard D. K. Turner

Insur Refinances €100 Million in Outstanding Debts

20 July 2019 – Richard D. K. Turner

Inmobiliaria del Sur (Insur) took advantage of favorable market conditions to refinance its outstanding debt this week. The firm refinanced 100 million euros of debt, equal to 60% of its total net liabilities, at significantly better conditions, freeing up over 35 million euros over the next five years. Insur owns rental properties, including offices, commercial premises and car parks.

Insur Patrimonial arranged the refinancing in an operation involving a total of 11 banks, led by Santander. Those banks include Caixabank, BBVA, Unicaja, Sabadell, Bankinter and Novo Banco. In addition to the €100 million, the firm also borrowed another €10 million to acquire an office building in Seville for redevelopment into a hotel to be leased to Hotusa.

Original Story: El Confidencial – Carlos Pizá de Silva

Photo: F. Ruso

Sabadell Opts to Sell Subsidiary to Oaktree

1 July 2019

Banco Sabadell, a Catalan bank, has opted to sell its developer, Sabadell Desarrollos Inmobiliarios, to the U.S.-fund Oaktree in a transaction reportedly worth 850 million euros. The asset management firm beat out its main rival for the asset, a partnership made up of Cerberus and Kronos.

Sabadell and Oaktree will now negotiate any additional particulars to the agreement. The sale would bring in a windfall for the Catalan bank, strengthening its capital ratio while reducing its risk-weighted assets (RWA).

Oaktree, in turn, will now compete with Neinor, Metrovacesa, Aedas, Via Célere and others. The developer’s holdings include high-quality, developable lands to the north of Madrid and in Barcelona.  Two thirds of the land is ready to develop or already under construction.

Original Story: El Confidencial – Jorge Zuloaga

Adaptation/Translation: Richard D. K. Turner

 

Sabadell Comes Nearer to Completing Sale of Land Bank

24 June 2019Merc2

Sabadell came nearer to its goal of selling its land bank as Oaktree firmed up its position as the most likely buyer. The sales process has so far taken more than six months, but the transaction could bring in approximately 850 million euros to the Spanish bank’s coffers.

Both Oaktree, which has had a history of cooperation with Sabadell, and Cerberus, are still in the race for the assets. Regardless of which of the two comes out in front, Spain would have a new actor on the market, capable of taking on the four biggest developers: Neinor, Vía Célere, Metrovacesa and Aedas.

The sale would also be a significant success for Sabadell, as it continues to offload NPLs and REOs at a rapid pace, and at relatively attractive valuations.

Original Story: Merc2 – Carlos Lospitao

Translation/Summary – Richard D. Turner

The FROB Recorded a €382M Provision Against its Stake in Sareb in 2018

20 May 2019 – El Confidencial

The Spanish Fund for Orderly Banking Restructuring (FROB) presented its accounts for 2018 this week revealing that it decided to recognise a €382 million provision against its stake in Sareb last year.

In this way, the FROB has now written off 92.3% of its initial investment in the entity chaired by Jaime Echegoyen (pictured above), up from 75% in 2017. If the rest of the investor entities, namely all of the large Spanish banks with the exception of BBVA, do the same, then they will have to recognise losses of around €450 million.

In absolute terms, the FROB’s stake in Sareb is now worth €169 million compared with its initial investment of €2.192 billion. The FROB is Sareb’s largest shareholder with a 45.9% stake, followed by Santander (22.3%), CaixaBank (12.2%), Sabadell (6.6%) and Kutxabank (2.5%).

As the bad bank’s largest shareholder, the FROB typically sets the tone of the provisions for the other entities. Last year, after the FROB increased its cumulative provision to 75%, other shareholders such as CaixaBank and Sabadell recognised extraordinary provisions in their accounts for Q2. This year, the average provisioning rate is expected to increase from around 70% to 90%.

Sareb closed 2018 with losses of €878 million (up by 55%) due to the strong competition in the institutional market and the real estate crisis that still affects much of the country. The bad bank sold 21,152 properties last year and its income from property management soared by 19% to €1.4 billion, but its income from the loan portfolio fell by 16% to €2.2 billion and so total income fell by 5% to €3.7 billion.

The outlook for the bad bank for the next few years is not great and many experts forecast that not even a single euro will be recovered from Sareb.

Original story: El Confidencial (by Jorge Zuloaga)

Translation/Summary: Carmel Drake

Cerberus & Oaktree in the Final Round to Buy ‘Solvia Desarrollos Inmobiliarios’

5 April 2019 – Expansión

Banco Sabadell is on the home stretch for the sale of 100% of its property developer, Solvia Desarrollos Inmobiliarios (SDIn). The funds Cerberus, through its property developer Inmoglacier, and Oaktree have made it through to the final round of the operation, which could be closed within the next few days or weeks.

The consultancy firm Savills Aguirre Newman has estimated that SDIn’s assets are worth more than €1.3 billion and the entity chaired by Josep Oliu (pictured above) is hoping to record proceeds of around €1 billion from the sale.

The portfolio comprises 270 buildable plots for the construction of around 15,000 homes, half of which are in Cataluña, although it also contains plots in Madrid, Andalucía and Valencia.

It has been reported that two other investment funds may have also been selected for the final round (out of Apollo, Goldman Sachs and CPPIB) but Oaktree is understood to be the favourite. Rothschild is advising the divestment process.

Original story: Expansión (by R. Sampedro and S. Saborit)

Translation/Summary: Carmel Drake

Lone Star & Cerberus Increase their Commitment to Spanish Property

21 February 2019 – Expansión

The need for the banks to reduce their exposure to property and the funds’ appetite for the Spanish real estate sector have converged in recent years leading to the transfer of portfolios of debt and foreclosed assets worth millions of euros. Blackstone, Cerberus, Lone Star, the Canadian pension fund (CPPIB), Bain, Axactor and Lindorff are the funds that have been behind most of the major transactions involving portfolios of bank debt secured by real estate collateral during that period.

Emilio Portes, Director of Quantitative & Risk Management at JLL for Southern Europe, said that, following a frantic 2017 when more than €55 billion was transacted, last year saw portfolios sold with a gross value of more than €45 billion (…).

In 2018, the indisputable star was Lone Star, which took control of a portfolio worth around €12.8 billion from CaixaBank. Specifically, CaixaBank sold that portfolio along with Servihabitat to a company called Coral Homes in which Lone Star owns an 80% stake. Cerberus was also active last year with the purchase of several portfolios from Sabadell, Santander and CaixaBank with a total gross value of €12.5 billion. Behind it, came CPPIB, Axactor, D.E. Shaw and Lindorff, according to data provided by JLL.

“The sum of the transactions recorded over the last two years exceeds €100 billion, which places Spain as one of the countries with the largest transaction volume in Europe and the most liquid in terms of real transactions”, says Portes. In those portfolios, there are various types of assets, mainly residential, but also land, offices, premises and hotels.

The year ahead

During 2019, the banks will continue to divest assets, although with smaller portfolio sales. “In 2019, we expect a transaction volume of €20 billion, in addition to whatever Sareb ends up doing”, revealed Portes. He explains that most of the large Spanish banks have now reduced their NPA (non-performing asset) ratios to below 5%.

Following the activity undertaken by the large banks, all eyes are now focused on the medium and small-sized entities, particularly those with the greatest property exposure and therefore most pressure, as well as on Sareb, which has assets worth more than €35 billion still left to sell (…).

The heirs of the banks’ property, having purchased at significant discounts, have an average investment horizon of five years before they undo their positions (…)

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Cerberus Looking to Top Blackstone as the Largest US Investor in Spanish Real Estate

7 February 2019

Cerberus has a plan for Spain: the fund is looking for continued growth in the country. So, the US fund is putting together one of the most powerful teams in the Spanish real estate industry. Its goal in the medium term is to triple its investments in residential development, continue to grow its logistics business and start a new front in the rental business.

Cerberus has already invested more than 10 billion euros in Spain and now wants to exploit new lines of business such as rentals and logistics. The fund also has plans to leverage its development operations through the acquisition of more land and after buying Inmoglaciar. Blackstone, in total, has already invested more than 26 billion euros in Spain since 2014.

The American fund has generally avoided the limelight. In Spain, the fund has maintained a fairly low media profile, but that now seems about to change, as Gonzalo Gallego, who was responsible for the fund’s real estate investments in Spain, commented on Wednesday.

“We do not usually hold public events, and I think it’s a good time for a change. Cerberus has come to stay in Spain, we are 22 people dedicated to it, and it is already the second most important office in the world,” the representative said.

A look towards rentals

The change is also linked to the fund’s interest in expanding its investments in rentals. Mr Gallego stated that the sector is one of the pillars of the fund’s new strategy. Therefore, they have begun assembling a team dedicated exclusively to the sector.

Cerberus stated that the team consists of local experts who are seeking to “develop strategies that add value to their acquisitions.” The business will not be based solely on buying NPLs, though Mr Gallego stressed that the Spanish market has many such opportunities. “We invest in an asset by asset basis,” he said.

Another business the fund has experienced success with is REOs. Mr Gallego thinks that “they are wonderful.” “We know how to reposition and sell them to our investors; we work with almost 400 funds actively in the sale of these portfolios, it’s not a coincidence, it’s a strategy,” he explained.

Cerberus Real Estate believes that Spain still has enormous potential, although the current macro situation is forcing them to be more careful with their investments. “We are very optimistic regarding Spain, but some cold winds could freeze up some types of investments,” Mr Gallego said.

Opportunities and mergers

In the end, Cerberus believes that it has a ‘pipeline’ full of opportunities and that is why the fund is predicting an excellent year ahead, especially since there will be a “consolidation of the market” with “very important” corporate operations.

The North American fund came to Spain in the middle of the financial crisis (between 2010 and 2012) with the objective of taking over banks and real estate companies, as it did in other countries. The first did not go well after some attempts with the older banks (cajas). However, the fund’s luck with real estate has been better. Cerberus already controls more than €50 billion in assets, from Bankia, Sareb, Cajamar, Liberbank and BBVA.

Its next acquisition could be the developer Solvia Desarrollo Inmobiliario (SDIN) of Banco Sabadell, which is selling land worth more than 1 billion euros. The bid for these assets has already begun, and financial sources claim that the fund has shown interest in them.

Original Story: Vox Populi

Translation: Richard Turner

Sabadell & CaixaBank in the Top 5 European Ranking of Toxic Asset Sales in 2018

29 January 2019 – Expansión

CaixaBank starred in the fourth largest toxic asset sale operation in Europe in 2018 whilst Sabadell starred in the seventh largest. And they were not the only transactions that the two entities undertook (…). In fact, both banks feature in the list of the Top 5 entities in Europe by volume of toxic asset portfolio sales last year, according to data collected by the analysis firm specialising in debt Debtwire.

All of that, despite the fact that Spain’s two largest banks, Santander and BBVA, had a much quieter 2018 than 2017, when the former undertook the largest sale of toxic assets in the country’s history, with the transfer of assets with a nominal value of €30 billion inherited from Popular to Blackstone. Meanwhile, BBVA placed part of its real estate business in the hands of Cerberus that same year.

Last year, Sabadell and CaixaBank took over the baton. The bank chaired by Josep Oliu is the Spanish entity that recorded the largest toxic asset sales in 2018, divesting assets with a nominal value of €12.6 billion. That figure placed it fourth in the ranking, behind only the Italian entities Monte Dei PAschi, Banca Popolare di Vicenza and Banco BPM.

Meanwhile, CaixaBank (…) was the fifth most active bank in the ranking, with toxic asset sales of €12.1 billion, just behind Sabadell.

Together with contributions from the other banks, with Bankia and Santander in high-ranking places, the Spanish sector divested toxic assets worth €43.2 billion in 2018, compared with €51.7 billion in 2017, which represented a decrease of 16%.

Nevertheless, neither CaixaBank nor Sabadell managed to keep Spain at the top of the podium of countries that divested the most toxic assets last year. Italy is the new leader with NPL sales of €103.6 billion (…).

In Spain, the loans and foreclosed assets divested by the banks are now in the hands of Cerberus and Lone Star, primarily, the two funds that purchased the most in Spain last year, with €15.8 billion and €13 billion, respectively.

Well behind them in the ranking is Axactor, which is typically more interested in smaller operations. And Blackstone, which was out of the ranking last year, after starring as the absolute leader in 2017, thanks to the operation that it closed with Santander, according to the report from Debtwire, which takes into account all transactions exceeding €100 million (…).

Original story: Expansión (by Inés Abril)

Translation: Carmel Drake