Offers for Gescobro Fall Short of Cerberus’s Asking Price

13 May 2019 – La Información

Cerberus Capital Management cannot find a buyer for Gescobro. The US investment fund put the debt recovery specialist on the market at the beginning of the year, but so far the offers submitted have fallen well below its expectations in terms of price.

Hoist Finance, the Spanish subsidiary of a Swedish bank, and Cabot, a British fund dedicated to the purchase of non-performing loans (NPLs), have expressed the greatest interest in Gescobro, but their offers, amounting to around €200 million each, fall well short of Cerberus’s initial expectations of between €300 million and €350 million.

Sources in the market are questioning the value that Cerberus is assigning to Gescobro, given the current market prices and its operating profit (its EBITDA amounted to €11.3 million in 2018). Nevertheless, the US fund is defending its price thanks to the high number of problem loan portfolios that the company has acquired in recent years, whose gross value amounts to more than €8.6 billion.

Specifically, Gescobro is currently managing 12 unsecured loan portfolios with a combined nominal value of €8.3 million and 2 secured loan portfolios with a nominal value of €300 million. The prices of such portfolios typically reach less than 5% and around 30%, respectively. The debt recovery firm also employs 410 workers and has agreements to manage €3.5 billion in NPLs for the main Spanish banks.

Original story: La Información (by Pepe Bravo)

Translation/Summary: Carmel Drake

Lone Star Puts ‘Rivas Futura’ Retail Park Up For Sale

9 July 2015 – Cinco Días

The opportunistic fund Lone Star has put the Rivas Futura retail park, in the Madrilenian town of Rivas Vaciamadrid, up for sale. The retail space covers an area of more than 40,000 m2 and includes around 30 large stores, such as Toys’r’us, Leroy Merlin, Media Markt, Decathlon, Kiab and Prenatal.

The retail park opened in May 2006. In 2008, the insurance company Axa Reim purchased it from Avantis for €81 million. Subsequently, it was included in Eurohypo’s secured loan portfolio.

The asset was subsequently included in the so-called Project Octopus, loans that were sold by Commerzbank (after its acquisition of Eurohypo), which Lone Star ended up purchasing.

This retail park currently has an occupancy rate of 80% and market sources say that the sales price could stand at around €70 million. The transaction has been brokered by Knight Frank, which has declined to comment on proceedings.

In Spain, Lone Star also acquired Kutxabank’s real estate arm, Neinor, last December, for €930 million and obtained control over the former Basque cajas’ property management platform. This fund, led by Juan Pepa in Spain, is committed to the residential market, through Neinor, and has plans to invest up to €1,000 million in land.

Original story: Cinco Días (by Alfonso Simón Ruiz)

Translation: Carmel Drake

Botín Re-Opens The Mortgage Resale Market 8 Years On

10 June 2015 – Cinco Días

The packaging and resale of high-risk, or subprime, mortgages between large financial institutions in the United States was the epicentre of the international crisis that began to unravel in 2007 and which revealed its devastating force one year later, with the bankruptcy of Lehman Brothers.

When that bubble burst, it swept away much of the market for mortgage securitisations, amongst other things. In the case of Spain, which had become the second largest market in Europe and one of the most important on the global stage, the market vanished. But now, it is making a come back.

Unión de Créditos Inmobiliarios (UCI), the financing arm of Banco Santander that specialises in loans for home purchases, has just signed the first operation of this kind to be closed with investors since 2007.

Specifically, at the end of May, UCI placed a €450 million package of mortgages, backed by residential homes. The portfolio, which has been assigned a Aa2 rating by Moody’s, is considered to be a high quality product, since it comprises loans that, on average, cover 53.8% of the values of the homes (loan to value), compared with the limit of 80%, recommended as good practice in the sector.

It is understood, therefore, that the clients that took out these mortgages had (access to) significant resources beyond the financing they requested and that the real estate guarantee behind the loans (homes acquired across the whole of Spain between 2006 and 2013, of which 79% are located in Andalucía, Madrid and Cataluña) would more than cover any possible non-payment.

The sale received a great deal of interest from banks and investment funds, primarily those based in Germany, The Netherlands, France, the UK and Spain, with demand for the package exceeding its value by 1.7x, according to sources close to the operation.

The placement coupon was Euribor plus 0.85 points, compared with the differential of 25 or 30 basis points that was paid in Spain eight years ago. That lower differential is being paid now in the UK and The Netherlands, where the market has never completely closed, but where the differential increased to 150 basis points after the outbreak of the crisis.

Sources at UCI, which placed securitisations amounting to €12,000 million between 1994 and 2007, understand that “since this is the first transaction, a premium must be paid in order to return to the market”, but that it is still an “attractive level”.

The same sources say that the step has been taken as the result of three factors. “Until 2014, there were no transactions involving the public issuance of securitisation bonds in countries on the periphery of Europe. Nevertheless, following an RMBS (residential mortgage-based securitisation) bond issue in Italy, we saw an opportunity for us to issue debt”. They add that the debt purchase program launched by the European Central Bank has, in turn, led to the “revitalisation of the securitisation market”. “Despite that, after eight years of paralysis, bond issues have not been possible until now, since we needed to reach a post-crisis economic situation”.

UCI expects to undertake similar issues in the future and hopes that its example will encourage other entities to do the same.

Original story: Cinco Días (by Juande Portillo)

Translation: Carmel Drake