Project Traveler: Sabadell Sells €364M NPL Portfolio To Bain

29 December 2016 – Vozpópuli

The fund Bain Capital Credit (formerly Sankaty) is consolidating its presence in the financial-real estate sector with its fourth acquisition this year. Within the last few days, the investor, which is one of the largest private equity funds in the world, has acquired a portfolio from Banco Sabadell: Project Traveler contains debt relating to 60 developments and hotels worth €364 million.

The entity chaired by Josep Oliu has received around €150 million from this operation, according to financial sources consulted. As such, Sabadell has removed some more non-strategic assets from its balance sheet, which were consuming capital and provisions. This bank is one of the most active in these types of sales as it continues to clean up its balance sheet.

With this acquisition, Bain Capital Credit brings to an end a record year for investment in Spain. The fund has been awarded four large banking portfolios (two from Sabadell, one from Cajamar and one from Bankia) with a combined value of €1,510 million. Given that the banks are selling their real estate debt at prices of between 0.3 and 0.4 times the nominal value, Bain must have spent more than €500 million on these purchases.

As such, the US fund has placed itself amongst the major players in the market for the purchase of distressed assets (those close to bankruptcy) from the banks, alongside Blackstone, Apollo, Goldman Sachs, Cerberus, Oaktree and Deutsche Bank.

“We continue to see Spain as one of the most attractive markets in Europe. We see potential for future investments in the south of Europe, particularly in the real estate sector and the field of unpaid loans”, said Fabio Longo, Director General and Head of European Business at Bain Capital Credit for the real estate sector and doubtful debt.

The other portfolio Bain purchased from Sabadell contained non-performing loans to property developers, with a nominal value of €415 million. Cajamar sold Bain a package of loans worth €511 million, with the special feature that they were all loans to real estate companies that had filed for bankruptcy. Meanwhile, Bankia awarded Bain a batch of 2,500 homes with a combined appraisal value of €220 million. (…).

Copernicus provided financial advisory in this transaction; Aura REE, CBRE, Horwath and Cushman & Wakefield were the real estate valuations providers; Allen & Overy was the legal advisor.

Original story: Vozpópuli (by Jorge Zuloaga)

Translation: Carmel Drake

Project Traveler: Sabadell Puts A €500M RE Portfolio Up For Sale

14 October 2016 – Voz Pópuli

Banco Sabadell has taken the lead in the Spanish banking sector once again with the sale of its toxic assets. Over the last few days, the Catalan entity has distributed a teaser (information brochure for investors) detailing a new real estate operation: Project Traveler. The portfolio contains 30 hotels, 30 work in progress real estate developments and other debts to SMEs, according to financial sources.

The operation involves collateral worth €500 million and it is already generating a lot of interest amongst international funds.

With this latest deal, Sabadell now has €1,500 million up for sale, given that straight after the summer, it put Project Normandy on the market, through which it wants to sell doubtful debt amounting to €1,000 million. Following the receipt of non-binding offers, that operation has recently entered its final phase, which will last for around a month.

The entity chaired by Josep Oliu has been one of the most active in recent years in terms of selling problem assets. Sabadell wants to reduce the real estate portfolio that it mainly inherited from the acquisitions that it made during the crisis in Spain, such as CAM, Caixa Penedès and Banco Guizpuzcoano, as quickly as possible.

According to the most recently published figures, as at June 2016, the bank held €19,900 million in problem assets, having reduced that balance by €6,000 million over the last two years. Along with portfolio sales, one of the key elements of the bank’s strategy is the work being performed by its real estate arm Solvia. That entity sells homes through the bank’s network and agents, and is responsible for managing overdue debt.

Project Traveler has attracted attention in the market because it is the second portfolio containing hotels to come onto the market in 2016, after Project Sun, being sold by CaixaBank, which is in the very final stages of negotiation.

Other operations

After the short break at the end of July due to the impact of Brexit on the market, the sale of portfolios has resumed once again in recent weeks. The first operation involved Abanca, which sold €300 million in unpaid mortgages to KKR; and then came Sareb’s return to the market – it is offering investors portfolios worth more than €1,000 million, after a year without any operations following the introduction of the Bank of Spain’s accounting circular.

For the large opportunistic funds, such as Cerberus, Blackstone, Apollo, Bain Capital – formerly Sankaty – and TPG, and the large investment banks, such as Goldman Sachs and Bank of America, these operations represent one of the best ways of making money in Spain at the moment. (…).

Original story: Voz Pópuli (by Jorge Zuloaga)

Translation: Carmel Drake

Bain Capital Raises €2,770M & Sets Its Sights On Spain

8 August 2016 – Expansión

Bain Capital wants to become one of the largest buyers of real estate in Spain. On Thursday, the US fund announced that it has completed the acquisition of three asset portfolios from Spanish banks, worth €1,146 million, over the last few months. The sellers are Cajamar, Sabadell and Bankia in three separate deals.

The acquisitions have been made through the fund’s Bain Capital Credit business unit, known until now as Sankaty.

And as if that weren’t enough, in the last few days, the US investor has completed the creation of a new fund in the USA worth $3,100 million (€2,769 million) for distressed investments (assets close to bankruptcy) and assets in special situations, according to Bloomberg.

“We see potential for making new investments in the Iberian Peninsula, especially in the real estate and overdue loan markets”, said Fabio Longo, CEO and Head of the real estate and overdue loan business in Europe at Bain Capital Credit. “We are excited about the opportunity to consolidate our position in the market for non-performing real estate assets in Spain through these investments”, added Alon Avner, CEO and Head of Bain Capital Credit’s European business.

Individual transactions

Of the three portfolios purchased, the largest was bought from Cajamar, containing €511 million of overdue syndicated and bilateral loans, granted primarily to real estate developers in different phases of bankruptcy. This deal, known as Project Baracoa, was the first major competitive sale of loans by a Spanish entity.

In addition, Bain Capital Credit acquired a portfolio of loans with a nominal value of €415 million from Sabadell, comprising overdue loans to property developers, mainly secured by residential and tertiary assets. This operation was known in the market as Project Pirene.

The most recent purchase by the US fund in Spain involved the Project Lane portfolio, comprising €220 million of foreclosed assets sold by Bankia. This was the first operation of its kind carried out by the nationalised group after the failed sale of Project Big Bang at the end of last year, through which it had wanted to sell all of the homes, developments and land on its balance sheet. In the end, Bankia was unable to reach an agreement with the investor who had expressed the most interest, Cerberus.

For all of these operations, Bain Capital has been advised by the asset managers Copernicus, HipoGes and Altamira; the consultancy firms Aura REE and CBRE; and the lawyers J&A Garrigues and Cuatrecasas.

Original story: Expansión (by J. Zuloaga)

Translation: Carmel Drake

Deutsche Buys €400M Developer Loan Portfolio From Bankia

4 July 2016 – Expansión

Deutsche Bank has reaffirmed its commitment to the Spanish real estate market despite instability in the markets caused by Brexit. Last week, funds from the German entity sealed the acquisition of almost €400 million in doubtful property developer loans from Bankia.

This is the second transaction of its kind that Deutsche Bank has signed with Bankia in just six months. At the end of 2015, it acquired just over €600 million in unpaid company loans, backed by real estate collateral. In this way, the German bank became the owner of at least one hundred loans linked to property that had originated on Bankia’s balance sheet.

Sources in the market estimate that Deutsche Bank could have paid just under €150 million for this latest operation, known as Project Ocean.

With these types of portfolios, funds are typically looking for loans that give them relatively easy access to real estate collateral, either through legal foreclosures or agreements with the borrowers.

These deals allow the vendor entities to reduce their default rates; lower their risk-weighted assets; generate gains, in some cases; and focus their resources on granting new, profitable, loans.

In fact, Bankia is close to completing another major divestment within the next few days, with the transfer of 2,500 flats to the fund Sankaty, the subsidiary of the US giant Bain Capital. These properties have been valued at between €300 million and €400 million.

A new star

This investor has become the largest purchaser of problem assets from the banks (in Spain) in 2016. In this way, in addition to Bankia’s portfolio, Sankaty signed another two acquisitions last week: Project Pirene, comprising €460 million in problem assets linked to property developers, from Sabadell; and Project Baracoa, containing 2,400 loans to bankrupt companies, worth €530 million, from Cajamar.

Sector sources say that these operations prove that investors are still interested in Spain, even through Brexit has made the financing of these purchases more difficult.

Original story: Expansión (by J. Zuloaga)

Translation: Carmel Drake

Sabadell & Bankia Finalise RE Portfolio Sales To Sankaty

29 June 2016 – Expansión

Spanish banks and international funds are negotiating against the clock as they seek to close operations worth hundreds of millions of euros within the next few days. Entities have offers on the table for real estate assets worth almost €4,000 million. And some of them are expected to bear fruit today or tomorrow, so that they can be accounted for in the half-year results.

The negotiations are even more frantic than in previous years due to the slowdown caused by the electoral calendar, which caused opportunistic funds to be prudent with their offers. One of the most influential factors was the fear that Podemos would enjoy electoral success.

Now that the uncertainty (surrounding Podemos) has been resolved, Sabadell and Bankia have been particularly agile in reaching agreements.

Yesterday, the Catalan entity sold a portfolio containing €460 million of problem assets linked to property developers, as part of Project Pirene. The buyer is the fund Sankaty Advisors, a subsidiary of the US giant Bain Capital. Sources in the market estimate that the investor paid Sabadell between €150 and €200 million for these assets.

Dominant investors

Sankaty’s interest in Spain has not been limited to that portfolio, given that it is close to securing another deal that has attracted significant interest from other large international investors: Project Lane, sold by Bankia, comprising 2,500 homes worth €400 million. This is the first portfolio to emerge from the carved up Project Big Bang; the entity had wanted to sell all of its foreclosed assets together, but that plan was suspended at the end of last year. Sources expect to know whether this operation will go ahead within the next few days.

The sale of the other two asset portfolios that Bankia has on the market are proceeding more slowly: one contains non-performing mortgages – Project Tizona – worth €520 million; and the other contains non-performing property developer loans – Project Ocean – amounting to €400 million.

Sankaty expects the recovery of the Spanish real estate sector to go beyond Sabadell and Bankia’s portfolios, as indicated by the fact that it is one of the main favourites to acquire Project Baracoa, from Cajamar. That will be the first sale of bankrupt loans by a Spanish bank. In total, the rural savings bank is looking to get rid of €800 million of these types of loans, which account for 70% of all of its bankrupt assets. 85% of them are secured by real estate collateral.

Another operation that is generating significant interest is Project Carlit, launched by CaixaBank, through which the Catalan group wants to transfer €790 million of doubtful loans to property developers. The bid is in its final phase with two key favourites in the running: Cerberus, which according to sources consulted is “putting all of its eggs into one basket”; and the alliance between Goldman Sachs and TPG, two US investors who have joined forces in the past. The US fund D. E. Shaw is also through to the final round, but it has not participated in any operations in Spain for a long time and the market considers that it is less likely to win the portfolio.

CaixaBank has another major operation underway: Project Sun, through which it wants to sell 155 hotel assets worth almost €1,000 million.

Another one of the most active entities is Abanca, which recently sold €1,400 million in non-performing loans to EOS Spain and which will be negotiating the sale of €400 million property developer loans over the next few weeks.

Original story: Expansión (by J. Zuloaga)

Translation: Carmel Drake

Blackstone Buys 4,500 Rental Homes From Sabadell

13 January 2016 – Expansión

Blackstone has won one of the largest ever real estate auctions and it did so during the final days of 2015. A few weeks ago, the US fund completed the acquisition of 4,500 rental homes from Banco Sabadell, according to financial sources consulted by Expansión.

This represents the largest block sale of homes by a Spanish bank in recent years, given that the sale is still pending of two larger portfolios that Bankia and Ibercaja have put on the market.

The latest operation, which forms part of Project Empire, has now been signed by both parties; a few conditions precedent are still outstanding, but they are expected to be resolved within the next few weeks. Given that the agreement was actually reached in 2015, it will be accounted for within last year’s results, which Banco Sabadell will announce on 29 January.

The portfolio was initially valued at around €600 million, however, after it was first put on the market, the number of flats included in the portfolio decreased from 5,000 to 4,500 (bringing the valuation down to €540 million). The interested funds had been demanding discounts of between 40% and 70% for banks’ portfolios of homes, on the basis of the quality of the assets. In the case of Project Empire, since the homes in the portfolio are all rented out, the price obtained by Sabadell could have been higher, given that Blackstone will obtain regular rental income, as well as taking ownership of the assets.

Firm commitment

This purchase strengthens the US fund’s position in Spain, whose senior advisor is Claudio Boada. The homes will be managed by Blackstone’s real estate subsidiary, Anticipa, the entity formerly known as CatalunyaCaixa Inmobiliaria, led by Eduard Mendiluce. In addition, the fund has three other subsidiaries in Spain, which also manage property investments, namely: Fidere, which focuses on homes for rent (many of which are social housing properties); Logicor, which concentrates on the logistics asset segment; and Multi Development, which specialises in shopping centres.

Blackstone completed its largest ever investment in Spain last year, with the purchase of 40,000 mortgages from Catalunya Banc, worth €6,400 million for €3,600 million. Anticipa manages that portfolio, together with a few others acquired from entities such as CaixaBank, taking the entity’s total assets under management to €10,000 million.

Another one of the most active investors in Spain in recent months has been Oaktree, which competed against Blackstone to take over Sabadell’s portfolio.

For the Catalan entity, this operation allows it to continue improving the quality of its balance sheet through the sale of non-performing assets. Sabadell has reduced the volume of problem assets on its balance sheet by €3,500 million since the start of 2014 ,to €22,350 million at the end of September 2015.

In addition to Project Empire, Sabadell sold other portfolios last year to investors such as Pimco, Aiqon and Sankaty. Altogether, it transferred assets worth €2,400 million to those funds in 2015.

Original story: Expansión (by J. Zuloaga/S. Saborit)

Translation: Carmel Drake

Bankia Reduced Its Doubtful Loans By €2,000M In 2015

11 January 2016 – Expansión

The BFA-Bankia group reduced its doubtful debt balance by more than €2,000 million in 2015 through the sale of several loan portfolios. According to the entity, these operations allowed the bank to improve the quality of its balance sheet, raise liquidity and free up resources to grant new credit.

During the year, the bank completed four major operations involving the sale of loan portfolios with a total value of almost €2,800 million.

In May, BFA-Bankia agreed the sale of a portfolio of doubtful property developer loans amounting to €558 million to the fund Sankaty. Some of those loans were secured by real estate collateral.

A month later, the bank sold a portfolio of loans secured by hotel assets amounting to €383 million. The portfolio contained 91 operations in total, linked to 45 assets, and was sold to Bank of America and the investor Davidson Kemper.

In September, the bank closed the largest of its operations, by selling a portfolio of loans linked to the real estate sector amounting to €1,206 million, of which €986.8 million was secured. The purchasers in this case were the funds Oaktree and Chenavari.

In the last few weeks, BFA-Bankia has transferred a loan portfolio amounting to €645.1 million, all granted to the business sector and partly secured by real estate collateral, to Deutsche Bank.

Sources at Bankia highlight that, in order to maximise the prices obtained, a competitive process has been adopted for all of the portfolio sales between prestigious institutional investors and financial institutions.

Original story: Expansión

Translation: Carmel Drake

Banks Expect To Sell Land & Developments Worth €12,000M

10 December 2015 – Expansión

The banks’ divestment teams are facing a frantic couple of weeks. The main Spanish entities have twenty operations underway through which they are seeking to remove more than €12,000 million in loans and real estate assets from their balance sheets, equivalent to 5.5% of their current exposure. Most of these deals will be closed before the end of the year.

Thanks to these operations – and others closed since June, plus the sale of homes through the retail channel – Spain’s banks may reduce their problematic loans to €200,000 million within the next few months, compared with the balance in June (€224,000 million). This level represents 8.7% of the total assets held by Spain’s banks, which “put downwards pressure on the entities’ income statements, reducing their ability to generate profits”, according to the Bank of Spain.

The portfolios currently up for sale include all types of assets, including homes, plots of land and developments – both completed and in progress. Of the €12,000 million, around half are doubtful loans secured by these types of collateral and the remainder are foreclosed assets.

Key operation

The largest operation in progress is Bankia’s Project Big Bang, whereby the nationalised entity is looking to transfer the majority of its foreclosed assets: 38,500 homes, 2,600 plots of land and 5,000 commercial premises, worth €4,800 million.

The bank has two offers on the table: one from Cerberus for 75% of the assets and another from Oaktree, although the technical complexity and the upcoming general election mean that this operation is going to be delayed until the first quarter of 2016.

Bankia also has another portfolio up for sale, containing €700 million doubtful property developer loans, linked to commercial and industrial assets – namely, Project Babieca.

The most active entity in the market at the moment is Sareb. The bad bank has five portfolios up for sale with a nominal volume of €2,200 million. Through these, the bank is seeking to increase its revenues in a year that has been made difficult by the migration of assets to new managers and the new accounting circular.

CaixaBank and Sabadell have been just as active this year. The entity led by Isidro Fainé has already sold two portfolios and has a third one up for sale, containing doubtful property development loans, for €900 million. Meanwhile, Sabadell is finalising the sale of 5,000 homes for rent, which comes soon after its sale of CAM’s real estate companies to Sankaty.

Other entities that are working hard to complete major divestments include Ibercaja – with an operation to sell the majority of its foreclosed assets, forecast for the beginning of 2016 – and BMN, which has a portfolio of doubtful loans and homes up for sale.

Looking ahead to 2016, the experts expect to see large operations involving the sale of problematic assets such as those of Bankia and Ibercaja, and a larger role for the major banks, Santander and BBVA, which decided to suspend their sales in 2015.

Original story: Expansión (by Jorge Zuloaga)

Translation: Carmel Drake

Sankaty Buys CAM’s RE Companies From Sabadell

4 December 2015 – Expansión

The fund Sankaty is finalising the purchase of a large package of real estate subsidiaries from Banco Sabadell, which the entity inherited from CAM. The US investor, which is itself a subsidiary of Bain Capital, has won a competitive auction held as part of Project Chloe, which will be signed before the end of the year, according to market sources.

The operation includes stakes in the companies’ shares, as well as debt, together worth €800 million. According to various sources, the sales price will range between €200 million and €250 million, which represents a discount over the nominal value of around 30%.

By purchasing the companies’ shares and debt, the fund will exert direct control over their real estate assets: land, work-in-progress property developments and finished properties.

This is Sankaty’s second major operation in Spain in 2015. In May, the fund acquired 40 large real estate loans from Bankia, worth €500 million.

Like many other overseas investors, Sankaty is committing itself to the acquisition of land and work-in-progress property developments in the hope of benefitting from the recovery of the Spanish economy, with an improvement that is already taking shape in the real estate market. These funds are joining forces with local property developers and, by purchasing at deep discounts, are hoping to obtain returns on their investments of up to 20%.

For Project Chloe, Sankaty will delegate the management of the assets to Altamira Inmuebles, the management platform owned by Apollo (85%) and Santander (15%), which has advised the fund during the process.

For Sabadell, this divestment is the latest in a series of similar deals undertaken in recent months, such as Project Cadi, which involved the transfer of €240 million of property developer loans to the US giant Pimco and the platform Finsolutia. In addition, it sold a portfolio of written-off receivables worth €800 million to the Malaysian fund Aiqon and it is negotiating the transfer of 3,000 rental homes, as part of Project Empire.

Exposure to real estate

Just like the rest of the Spanish financial sector, Sabadell is trying to reduce its exposure to real estate by combining the sale of homes through its network – its subsidiary Solvia is responsible for this – with the sale of portfolios to large international funds.

The bank, led by Josep Oliu, has one of the highest degrees of exposure to the real estate sector, due, in large part, to its purchase of CAM in 2011, although that was partially covered by an asset protection scheme (un ‘esquema de protección de activos’ or EPA) of up to €14,000 million. The entity has been working for several quarters now to reduce its volume of problem assets, which amounted to €22,350 million in September, and in recent months it has managed to stabilise its balance of foreclosed assets at €9,200 million, i.e. it has reached the point where the amount of (newly foreclosed) properties being incorporated onto its balance sheet is lower than the amount (of previously foreclosed properties) it is selling.

As the entity explained when it presented its results for the third quarter, it sold 7,654 foreclosed assets between January and September 2015, which represented an increase of 6% compared with the same period in 2014, and it achieved this even though it offered lower discounts on those properties compared with prior year.

Original story: Expansión (by J. Zuloaga)

Translation: Carmel Drake

Project Formentera: Santander To Sell €170M Hotel Debt Portfolio

18 May 2015 – El Confidencial

A new portfolio of hotel debt has just come onto the market. At a time when investors’ interest in these transactions is at an all time high, Santander has put loans worth €170 million relating to 17 hotels up for sale.

A new portfolio of hotel debt has just come onto the market. At a time when investors’ interest in these transactions is at an all time high, Santander, the largest Spanish bank, has decided to pique the insatiable interest of international funds in this type of transaction through the launch of an operation known as: Project Formentera.

It involves a portfolio of loans worth €170 million, linked to 17 hotels. The majority are located in the Community of Valencia and the Canary Islands, which encourages operations with investors interested, primarily, in the holiday segment and in the (Canarian) archipelago.

The portfolio that Santander has just launched joins those being promoted by two of its main rivals, BBVA and Bankia, which have also decided to take advantage of the window of opportunity that has opened to try to offload some of their debts, which include loans that the financial entities are very keen to divest.

According to sources in the market, unlike what may happen in the residential market – a business the banks know very well, since historically they have had the best prepared teams to manage such assets when they fail – the hotel business is a very specialised segment, whose incident rate (casuística) is more difficult for financial entities to manage.

This means that their priority, in general terms, is to try and sell debt, rather than foreclose it and take ownership of assets that they are much less familiar with than residential. If we add the insatiable appetite of the large international investors for the hotel sector, fuelled by the perfect combination of low prices and a strong recovery in the tourism sector, now is the perfect time to carry out these kinds of transactions.

A string of transactions

In fact, at the end of last year, Bankia closed the sale of a batch of hotel loans to Starwood and Sankaty for €400 million (Project Amazona) and is now finalising the second part of that transaction, known as Castle, whose finalists are Apollo, Oaktree and Bank of America. BBVA has also just opened the bidding for 14 hotels it inherited from unpaid loans, a process known as Project Otelo; meanwhile Sareb has just engaged N+1 to manage the sale of a portfolio with a nominal value of €500 million, which is linked to the property developer Polaris World, in an operation known as Project Birdie.

And so the list goes on. A few weeks ago, the German bad bank FMS Wertmanagement sold the portfolio known as Gaudí to Oaktree for close to €500 million – a batch of problem loans linked to, amongst others, the iconic luxury hotel Arts de Barcelona, as well as another high-end property in Cascais (Portugal), five shopping centres, including Plaza Éboli and Heron City, several storage buildings, and residential and industrial assets.

Moreover, the large financial entities that signed the €152 million syndicated loan with the Basque property developer Urvasco, which, in turn, owns the hotel chain Silken, have spent the last few months selling their stakes both in this debt, as well as in those linked to certain establishments, including the Puerta de America hotel in Madrid; Bank of America is taking advantage of this window to enter through the ‘front door’ of what is considered to be the last great Spanish hotel chain up for sale.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake