Bankia Sells €37M NPL Portfolio to LCM Partners through Débitos

17 July 2019 – El Confidencial

Bankia has sold a portfolio of doubtful assets worth €37 million to the London-based fund LCM Partners. The portfolio, called Marshmello, contains more than 170 secured loans granted to SMEs and distributed primarily in Madrid, Cataluña and Murcia.

The deal is the first that the partially nationalised financial entity has completed through the Débitos platform. Débitos is a German fin-tech that works in association with Beka Finance in Spain to allow financial entities and companies with unpaid amounts on their balance sheets to offer portfolios for sale to institutional investors.

Original story: El Confidencial (by Óscar Giménez)

Translation/Summary: Carmel Drake

Haya to Sell €188M in Secured Loans from Sareb

19 February 2019 – Expansión

Yesterday, Haya Real Estate put up for sale a package of non-performing loans (NPLs) with real estate guarantees, owned by Sareb, worth €188 million. The portfolio, baptised Project Marconi, comprises loans with an average value of €5.7 million, which are backed by around 1,445 properties.

Original story: Expansión

Translation: Carmel Drake

Sareb Sells a €247M Property Developer Loan Portfolio

21 December 2018 – Europa Press

The Company for the Management of Assets proceeding from the Restructuring of the Banking System (Sareb) has closed the sale to an international consortium of a new portfolio of property developer loans, whose nominal value amounts to €247 million.

According to a statement issued by the bad bank, the portfolio, called Adra, groups together loans secured by properties located primarily in Andalucía, the Balearic Islands, Cantabria and the Community of Valencia.

The process was launched in June and the transaction has been undertaken in compliance with the most stringent requirements in terms of transparency and fair competition, assured Sareb.

The sale of this portfolio has received financial advice from Colliers and legal advice from Herbert Smith Freehills (HSF).

Original story: Europa Press 

Translation: Carmel Drake

Deutsche Bank: BBVA & Unicaja Cut Their Toxic Assets By 15% In 2017

14 November 2017 – Expansión

Deutsche Bank report / Sales to institutional investors of non-performing loans and properties allowed BBVA to reduce its stock by €4,589 million. Meanwhile, Unicaja has decreased its load by €818 million.

The clean up of the banks’ balance sheets is picking up speed thanks to the increasingly common sales of large property portfolios to specialist funds.

Between January and September, the average decrease in the stock of the large banks amounted to 6%; moreover, that figure reached 15% in the case of BBVA España. The next entity in the ranking was Unicaja, with a decrease of 14%.

During the third quarter, Santander España distorted the statistics with the sale of 51% of Popular’s toxic assets (€30,000 million) to Blackstone.

Project Jaipur

BBVA has closed several institutional sales in recent months. One of them, Project Jaipur, was sold to Cerberus, the fund with which it is now negotiating a macro-operation, which would include the sale of its real estate platform Anida. That portfolio comprises loans to property developers backed by real estate guarantees and has a gross nominal value of €600 million.

In February, BBVA sold a batch of 3,500 properties to the fund Blackstone. Another one of the representative operations of the year was the sale of 14 office buildings to Oaktree for €200 million.

Unicaja has sold several plots of land to various real estate developers in recent months. “Unlike in other quarters, during the third quarter of the year, most of the reduction in the banks’ problem assets came from the sale of foreclosed properties, despite the substantial decrease in activity in August”, says the recent report from Deutsche Bank.

Between June and September, CaixaBank was the most active entity, with sales worth €380 million.

The report cites several factors to explain the intensification of this real estate clean up. The first is the increase in the coverage ratio of these toxic assets on the banks’ balance sheets. “The volume of sales is directly linked to the coverage ratio”, it says.

The second is that many of these sales are generating capital gains. According to the data compiled by Deutsche Bank, Unicaja made €40 million in the third quarter and CaixaBank and Sabadell earned €6 million and €7 million, respectively. “These gains will allow them to accelerate future sales”, says the report.

Final quarter

The last quarter of the year tends to be the strongest for these types of operations. Sareb has put a package of doubtful loans up for sale, the vast majority of which are unsecured, for €2,600 million. “We expect to see an additional effort from the banking institutions to reduce the stock at year end. Having said that, the political uncertainty in Cataluna and the upcoming elections may affect prices and/or cause delays in institutional sales”, says Deutsche Bank, which forecasts further stock decreases of 15% in 2018 and 2019. According to its data, CaixaBank, Santander and BBVA are the banks with the highest volume of toxic assets. Since 2015, BBVA has decreased its real estate balance by 27% and Unicaja by 24%.

Original story: Expansión (by R. Lander)

Translation: Carmel Drake

Project Inés: Deutsche Finalises Purchase Of Sareb’s €400M Portfolio

17 October 2017 – Voz Pópuli

Sareb is at a critical point in one of its most important transactions of the year. The bad bank is negotiating with Deutsche Bank regarding the sale of the largest portfolio it has brought onto the market in the last 12 months. The portfolio in question is Project Inés and it was initially worth €500 million, but its final perimeter will amount to €400 million, according to financial sources consulted by Voz Pópuli. Oaktree and Bank of America also participated in the bid until the final round, but their offers were lower than Deutsche Bank’s bid. Sources at Sareb declined to comment.

Those three international investors were the final candidates after dozens of other funds interested in the operation fell by the wayside. One of the last candidates to be ruled out was KKR.

The portfolio comprises unpaid loans secured by residential assets in Madrid, Cataluña, Andalucía and Zaragoza. The inclusion of assets in Cataluña, despite everything that is currently happening in that autonomous region, caused many of the funds to hesitate and deduct value from their bids, according to the financial sources consulted by this newspaper.

These types of operations are key for Sareb to accelerate the rate of asset sales, given that it has been given the mandate of divesting €50,000 million of problem assets within 15 years; that period started at the end of 2012. The latest figures show that the cumulative divestment to the end of 2016 amounted to almost €10,000 million, leaving a balance of €40,134 million on the books.

Other operations

Project Inés is not the only operation that Sareb has underway. It has also put a portfolio worth €400 million on the market through an online platform for funds. On the portal, investors can bid for loans on an individual basis (Project Dubai), like they did with Haya Real Estate last year.

Moreover, it has just put another portfolio, known as Project Tambo, on the market through CBRE. That portfolio contains non-performing loans to property developers, worth €300 million.

Sareb normally accumulates lots of operations of this kind at the end of the year. In 2016, it sold seven portfolios after the summer, for a total combined value of almost €1,300 million. The largest portfolio was Project Eloise, which was awarded to Goldman Sachs.

Deutsche Bank and Bank of America are two regulars in these types of operations. In fact, the German bank already acquired two small portfolios from Sareb at the end of last year, known as Project Sevilla and Project Marina, for a combined total of €160 million.

Original story: Voz Pópuli (by Jorge Zuloaga)

Translation: Carmel Drake

Cerberus In Exclusive Negotiations With BBVA To Acquire €2,000M Portfolio

22 September 2017 – El Confidencial

The operation in question is called Project Sena and it is the most important portfolio that BBVA has put on the market to date. With a volume of toxic real estate assets worth €2,000 million, primarily comprising NPLs backed by residential collateral, the entity chaired by Francisco González is holding exclusive conversations with Cerberus, according to several sources in the know. Both the bank and the fund have declined to comment.

Nevertheless, the US fund’s appetite goes much further and extends to include the real estate company Anida, which could end up forming part of the transaction as well. That would result in the second largest real estate divestment to be undertaken by a Spanish entity this year, following the sale of €30,000 million in toxic assets agreed between the new Santander-Popular and Blackstone.

The negotiations between Cerberus and BBVA date back to last summer and are currently at a critical point, in terms of tilting the balance one way or the other. Options on the table include Cerberus acquiring Sena on its own, adding Anida into the mix, or acquiring the former and entering the process to compete for the latter, a decision that could be taken at the next meeting between the entity’s Board of Directors.

As El Confidencial revealed, the idea has been floated at La Vela (BBVA’s headquarters in Madrid) of selling Anida to accelerate the real estate unblocking that the Bank of Spain itself is encouraging all the entities to undertake. In fact, BBVA has engaged PwC to advise it on the operation, and it is open to receiving different offers.

In its favour, Cerberus has the advantage of being in pole position to acquire Sena, a card that it wants to play in its favour to also bid for Anida. Nevertheless, other investment giants, such as Lone Star and Apollo, may also be interested in acquiring the real estate firm, a giant with gross assets of more than €5,000 million and the heir, along with others, of the former fund BBVA Propiedad, which the bank practically rescued at the end of 2008, when the first signs of the crisis emerged.

The net real estate exposure on BBVA’s balance sheet amounts to €8,750 million, according to the bank’s most recent half-yearly accounts, thanks to high coverage levels, which amount to 57% on average, one of the most conservative figures in the sector.

With a strategy clearly aimed at divesting real estate, in the last year, BBVA has undertaken several major operations, such as the sale of its Boston and Buffalo portfolios, the transfer of 1,500 homes to Testa, whose gross value amounts to €485 million and the transfer of land worth €431 million to Metrovacesa. Moreover, alongside Santander, BBVA is a shareholder of Merlin Properties, the largest Socimi in Spain.

After all these movements, the largest pawn currently in play is Anida, which also includes a property developer division, Anida Desarrollos Inmobiliarios, and several subsidiaries that the bank has been gathering up under the same umbrella, such as Anida Operaciones Singulares and subsidiaries in Mexico and Portugal.

In theory, the overseas units would be left outside of the real estate company sales process that is currently on the table, an operation whose final outcome is regarded in the market with as much expectation as concern, given that in the past, the entity has received several expressions of interest for Anida that have never ended up materialising.

But now the panorama has changed, given that the operation between Santander and Blackstone has put pressure on the rest of the sector to make similar moves, and the entities are increasingly more inclined to accelerate the divestment of their real estate.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

How Will Santander Get Rid Of Popular’s RE Assets?

13 June 2017 – Expansión

Double approach / The bank will put some large portfolios on the market to sell them to opportunistic funds and will also transfer some of the assets to Metrovacesa, in which Santander is the majority shareholder. 

Last year, the real estate nightmare stopped causing headaches for Santander. The risk accounted for just 2% of the balance sheet of its Spanish subsidiary (…). Between 2012 and March 2017, its volume of damaged assets fell by 60% in net terms, according to its own numbers.

However, the arrival of a block of RE exposures worth €36,800 million from Popular will force its managers to roll their sleeves up once again. Nevertheless, this is happening at a point in the real estate cycle that, a priori, is much more favourable.

Santander’s intention is to cut Popular’s toxic assets in half within a year and a half, with the aim of reducing the balance to an immaterial amount within three years.

Santander will go to the market over the next few months to sell significant batches of assets to opportunistic funds that are dedicated to this business. These divestments tend to be made at a loss because the funds pay low prices. Santander starred in one of the fifteen large operations closed in 2016, with its sale of a portfolio to Grove and Lindorff. (…).

Popular did not have this solution available to it because of the low provisioning level that it had covering these assets. As a result, any such operation would have made the losses in its income statement even worse. In fact, during the whole crisis, Popular only made public two transactions, which together amounted to €621 million. The only channel that it could afford to use was retail.

Digestion

By contrast, Santander can afford to allow these divestments. One of the objectives of the €7,000 million macro-capital increase that it is going to undertake is precisely to increase the level of provisions for Popular from 45% to 67%. The average level in the sector stands at 52%. In the case of non-performing loans, the coverage will jump from 55% to 75%.

These future sales will lead to an intensification of this market, which last year moved €15,600 million, according to data compiled by KPMG. Since the start of the crisis, total divestments through this channel amount to almost €100,000 million.

Metrovacesa

Santander has another door open for providing a rapid exit to Popular’s real estate assets and its called Metrovacesa. Santander is the property developer’s largest shareholder, with 72% of the capital, in addition to Popular’s stake.

Ana Botín’s team already used this channel last year to transfer risks and it is likely that it will use it again with Popular, especially for its land. Santander also owns a stake in the Socimi Testa Residencial, which is scheduled to debut on the stock market in 2018. That company owns 8,064 rental homes, which could be supplemented with the buildings owned Popular that are most susceptible to rent. (…)

One of the first decisions taken by Ana Botín following the purchase of Popular has been to appoint Javier García Carranza, the Head of Santander’s Real Estate Restructuring area, to Popular’s new Board of Directors.

After several years of high provisions to cover the real estate assets, the large entities consider that the coverage level is now sufficient. The vast majority of the current costs are maintenance related. In other words, they stem from the payment of municipal taxes, neighbourhood costs, etc. (…).

Original story: Expansión (by R.Lander and R.Ruiz)

Translation: Carmel Drake

Spain’s Banks Have €6,200M In Toxic Assets Up For Sale

25 April 2017 – El Mundo

Spain’s banks want to take advantage of the improving conditions in the real estate market to accelerate the clean up of the non-performing assets that are still weighing down on their balance sheets, almost 10 years after the burst of the bubble. The main entities currently have €6,200 million in toxic assets of all kind up for sale, including land, doubtful loans, hard to recover loans, homes, hotels, industrial warehouses…

Spain’s banks have been working on this process for at least five years, and with particular intensity for the last three. Bankia, for example, has sold €10,000 million since 2013 and CaixaBank has sold €5,000 million in the last two years. The most recent major operation was closed by Banco Sabadell, in January, for €950 million.

Now, in addition to Banco Popular, which has a large volume of toxic assets still to clean up, entities such as Ibercaja, BBVA, CaixaBank and Bankia are offering investment funds assets worth thousands of millions of euros, because they prefer to sell them at a loss, than maintain them on their balance sheets. The entities are accepting losses to improve their default ratios and doubtful client figures. For the funds, the aim is to take advantage of the discounts on offer to obtain very high returns from the subsequent recovery or resale of the underlying assets. (…).

The €6,200 million currently up for sale on this wholesale market, which has a low profile despite its volume, increases to €7,800 million if we take into account the operations completed during the month of January by Banco Sabadell, BBVA, Deutsche Bank and Bankia.

Based on the operations currently on the market, Ibercaja, BBVA and Sareb (…) are the entities with the largest volume of assets up for sale. The bank chaired by Francisco González is planning to conduct a significant cleanup of its balance sheet in 2017 and is currently offering assets and secured and unsecured loans to small developers amounting to €860 million. During the first quarter of 2017, it sold 14 buildings in Cataluña and Valencia and a portfolio containing 3,500 properties to the fund Blackstone.

Meanwhile, last year, CaixaBank completed the sale of two portfolios to funds such as Apollo and DE Shaw, amounting to €1,400 million, and this year it has a portfolio of non-performing loans to property developers, amounting to €600 million. The default rate of the Catalan bank has decreased from 11% at the peak of the crisis to 6.9% now and its doubtful clients have decreased by 47% since 2013.

Nevertheless, the market expects more supply to come onto the market. The European Central Bank (ECB) is putting pressure on the entities to conduct a comprehensive clean-up in order to dispel the myths regarding how profitable they are. Bank of America Merrill Lynch considers that the volume of foreclosed assets held by the main banks still exceeds €34,000 million and that more than €10,000 million still needs to be sold in terms of land alone, which puts the sector’s capacity to clean itself up in real doubt.

The strategy that Banco Popular is following in this regard, which has to get rid of at least €16,000 million, is considered definitive. The prices that it sets and the outcome of its crisis may influence the plans of the other entities, especially those of the smallest, unlisted firms. (…).

Original story: El Mundo (by César Urrutia)

Translation: Carmel Drake

Banks Sell €11,000M NPLs To Clean Up Their B/Ss

30 June 2016 – El Confidencial

Property is still the main obstacle facing Spain’s banks. Although the majority of the domestic financial entities will comfortably pass the European Central Bank (ECB)’s upcoming stress test, most are still weighed down by non-performing loans linked to the real estate sector, which are blackening their balance sheets. To this end, CaixaBank, Bankia, Sabadell, Popular and even Deutsche Bank have put portfolios of non-performing loans up for sale amounting to almost €11,000 million, according to data compiled by El Confidencial.

The most active bank is Sabadell, which has engaged KPMG, PwC and N+1 to help get rid of €3,100 million in consumer loans, credit cards and loans granted to property developers. Of that amount, €1,000 million was sold to the funds Lindorff and Grove Capital last month in an operation known as Corus. Now, the entity has another €1,700 million on the market (Project Normandy), containing foreclosed loans from real estate developers and almost €500 million (Pirenee) corresponding to a mixture of assets. The entity is looking to close both transactions before the summer holidays.

After Sabadell, the most active bank in cleaning up its balance sheet is CaixaBank, which has two processes underway and one in the bag. These include the so-called “Project Carlit”, launched in April with the help of PwC to sell off €750 million in loans linked to shopping centres, offices and the industrial sector; and “Project Sun”, a portfolio of loans granted to almost 150 hotels that the entity foreclosed from businessmen in the sector. In total, around €1,000 million in non-performing loans.

The latter is backed by 11,000 tourist rooms, and several opportunistic funds may be interested, including Starwood, Davidson Kempner Capital and Bank of America. Those entities previously acquired similar liabilities from Bankia in 2014 and 2015 for €1,200 million. In Septemeber, the Catalan entity is planning to launch “Project More 2” containing €200 million of real estate loans, again with the help of PwC.

Bankia, which last year failed to find a buyer for its huge real estate portfolio containing €4,800 million of assets has engaged KPMG, Deloitte and PwC to advise it in 3 of its operations: “Project Lane” (€288 million), “Project Oceana” (€396 million) and “Project Tizona” (€1,000 million). The latter comprises residential mortgages and is the second part of the transaction known as “Project Wind”, when the entity sold €1,300 million in similar liabilities to the fund Oaktree.

Alongside these three major players, several other entities also have operations on the market, including Popular, Banca Mare Nostrum, Abanca (which just sold €1,300 million in NPLs to EOS) and Ibercaja…But the entity that has drawn the most attention is Deutsche Bank, because it had not chosen to clean up its accounts in this way until now. The German group, the only foreign bank with a presence in Spain, which has an extensive network of offices, is sounding out institutional investors regarding the sale of €800 million in non-performing mortgages.

Although the German entity was not greatly impacted by the real estate crash, thanks to its prudent strategy vis-à-vis granting property-related loans, the truth is that it was weighed down by packages of unpaid loans from high income clients. Antonio Rodríguez-Pina, Chairman of the bank’s Spanish subsidiary, has decided to get rid of these NPLs in order to improve its balance sheet and reduce the default ratio, a measure that coincides with Deutsche Bank’s decision to continue its operations in Spain, for the time being. (…).

Original story: El Confidencial (by Agustín Marco)

Translation: Carmel Drake

Sareb Sells A Secured Loan Portfolio Worth €73.7M

16 March 2016 – Reuters

On Tuesday, the so-called Spanish bad bank said that it has sold a package of loans with a nominal value of €73.7 million and secured by assets located in the provinces of Madrid, Barcelona, Cáceres and Tarragona.

68% of the assets are industrial-logistics properties, 26% are hotel and tourist assets and the remainder are offices, said Sareb in a press release.

This sale is the first institutional operation that the company has closed in 2016, in a segment of the market “that is beginning to show signs of recovery, following others, such as the residential and land segments”, said Sareb.

The Spanish bad bank was constituted at the end of 2012 by way of consideration for the aid package, amounting to €41,300 million, granted by the European partners to Spain for the clean up of its financial system.

Original story: Reuters

Translation: Carmel Drake