The Owner of Santander’s HQ is Set to Emerge from Bankruptcy

26 January 2018 – Voz Pópuli

There is light at the end of the tunnel in the creditor bankruptcy of Marme Inversiones 2007, the company that owns Banco Santander’s Ciudad Financiera (in Madrid). This week, a key meeting was held to unblock the bankruptcy proceedings, with deliberation over several appeals, something that the courts will come to a decision about over the coming weeks.

The parties potentially interested in this process have started to take positions regarding the possible sale of the Ciudad Financiera, which could happen in the middle of this year. The best-positioned player is the fund AGC Equity Partners, with a proposal that values that bank’s headquarters at between €2.7 billion and €2.8 billion, as this newspaper revealed.

But two competitors have emerged: a consortium formed by Madison Capital, Glenn Maud and GCA; and a proposal from the Iranian-born financier, Robert Tchenguiz, according to financial sources consulted by Vozpópuli.

The offer that most concerns AGC is the one presented by the US funds (Madison and GCA) and the British property magnate Glenn Maud, who was one of the original buyers in 2008. The price that they may put on the table is close to the figure being offered by the Arab fund, around €2.7 billion.

Months of advantage

Nevertheless, AGC is the favourite in the race because it has been negotiating the operation with Santander for several months. Santander is not only the tenant in this case, it also holds a small part of the debt and a right of first refusal. Having said that, the Commercial Court number 9 of Madrid has denied that preferential right until now. Be that as it may, an agreement with Santander would facilitate everything.

Meanwhile, in addition to these two offers, further competition has emerged in the form of Tchenguiz, owner of the company Edgeworth Capital. The Iranian national has been trying to harness his investment in subordinated debt for years. By holding one of the riskiest tranches, he has to make sure that the liquidation plan protects him, otherwise, he will be exposed to discounts. That negative scenario would become a reality with AGC’s liquidation plan.

For this reason, Tchenguiz is offering an insolvency exit plan in which he would become the owner of the Ciudad Financiera by purchasing the stake owned by Glenn Maud.

To complete the picture, we should take into account that beyond the bankruptcy of Marme Inversiones, two other companies in Spain are involved in this insolvency: its two parent companies, Delma and Ramblas. And that those creditors and investors are awaiting trials in the UK and The Netherlands. This complex legal battle is starting to see the light at the end of the tunnel.

Original story: Voz Pópuli (by Jorge Zuloaga)

Translation: Carmel Drake

Colonial Launches €800M Bond Issue To Finance Axiare Takeover

21 November 2017 – Eje Prime

Colonial is pushing ahead with its plans for Axiare. The Socimi has launched a bond issue amounting to €800 million, funds it plans to use to partially finance the takeover that it has formulated for Axiare, with the aim of creating an office rental giant, as explained by the group in a statement.

The operation has been structured in two tranches, one amounting to €500 million over eight years and the second amounting to €300 million over twelve years. The real estate company led by Pere Viñolas (pictured above)  opened the placement books first thing on Tuesday and expected to close them by the end of the day.

Colonial is returning to the capital markets with an issue that forms part of the financial structure designed to finance the takeover of Axiare, launched on Monday 13 November, with the aim of acquiring the remaining 71% stake that it does not yet control in that Socimi.

The operation, worth €1,462 million, is currently being backed by a bridge loan facilitated by JP Morgan. The real estate company plans to replace that loan with this bond issue and, subsequently, reduce those securities with a program to sell non-strategic assets amounting to €300 million and other resources, including a capital increase, amounting to €450 million.

Original story: Eje Prime

Translation: Carmel Drake

Haya Real Estate Issues €475M In Guaranteed Bonds

10 November 2017 – Expansión

Debt market debut / The real estate and financial asset manager Haya Real Estate is reconfiguring its liabilities with its first bond issue

The real estate and financial asset manager Haya Real Estate, owned by the private equity fund Cerberus, has debuted on the debt market by placing €475 million in guaranteed senior bonds.

The operation has been divided into two tranches. The first, amounting to €250 million, has been placed at a fixed rate of 5.25% and the second (amounting to €225 million), has been placed at a variable rate, linked to three-month Euribor +5,125%. The floating coupon has a zero clause for Euribor in such a way that negative interest is not computed. Currently, three-year Euribor is at minimum levels of -0.32%. The firm guarantees the payment of these issues with shares in the company itself and its service contracts.

Haya Real Estate has been assigned a B- rating by S&P and a B3 rating by Moody’s, which means it is considered high yield. Market sources maintain that demand for the issue was equivalent to more than twice the amount awarded in the end. The strong investor appetite has allowed Haya Real Estate to increase the amount of the issue, given that initially, it was planning to raise €450 million. To bring the issue to a successful conclusion, the firm engaged the services of Morgan Stanley, JPMorgan, Bankia and Santander.

Haya Real Estate will use the funds to repay a syndicated loan, to distribute a dividend to Cerberus, to hold onto cash and to pay the commissions and fees associated with the issue. In addition, it will return money that Cerberus lent it to acquire Liberbank’s real estate asset manager, for which it paid €85 million.

“Cerberus lent us the money until we were able to close the bond issue because the syndicated loan terms were more restrictive”, explained Bárbara Zubiría, Financial Director at the company.

Original story: Expansión (by Andrés Stumpf)

Translation: Carmel Drake

Saba & Macquarie Compete For Spanish Car Parking Operator Empark

24 July 2017 – Reuters

Saba Aparcamientos and Macquarie have both submitted final offers for Spain’s Empark, valuing the car park operator at 900 million to 1.2 billion euros, sources close to the deal said.

Portuguese real estate group Silva & Silva is selling the 79% stake it owns in Empark, which operates 530,000 parking spaces is Spain, Portugal, Britain and Turkey, through holding companies Assip and Parkinvest.

Minority shareholder Haitong and Transport Infrastructure Investment Company (TIIC) could sell its 21% stake if satisfied with the price on offer, one source said.

But the minority shareholders have pre-emption rights and have agreed to sell these to Deutsche Asset Management if the offers are too low, the source added.

Saba, Macquarie and Deutsche Bank all declined to comment.

Last year, Empark recorded revenues of 201.3 million euros ($234 million) and earnings before interest, tax, depreciation and amortisation (EBITDA) of 71.4 million.

The company is funded with 385 million of corporate bonds maturing in 2019, including a 235 million fixed-rate tranche paying 6.75% and a 150 million floating-rate tranche paying 5.5% over three-month Euribor.

It also has 80.8 million euros of non-recourse debt across various project loans to finance 11 car parks that are not fully owned by Empark, where it holds stakes of 50% or more.

The company says its net debt amounts to 6.4 times its adjusted EBITDA.

JP Morgan and Caixa BI are advising the sellers.

Original story: Reuters

Translation: Carmel Drake

Blackstone Sells c. €300M Of Catalunya Banc’s Mortgages

8 May 2017 – Expansión

The banks’ non-performing assets are finally starting to generate returns for some of the entities that backed them during the worst moments of the crisis. Four and a half years after Catalunya Banc fell victim to the excesses of the real estate sector and was intervened by the State, and two years after Blackstone finalised its purchase of a portfolio of doubtful mortgages from the Catalan entity, which is now owned by BBVA, the US firm has shown that what were once toxic assets, are toxic no more.

And it has done so through the sale of some of the mortgages that it bought from Catalunya Banc. In fact, Blackstone has created a securitisation fund, with a nominal portfolio of €400 million in loans, and has placed it amongst investors at a price that represents selling almost €300 million of the total without a discount, according to official documentation submitted by the company.

Given that Blackstone purchased mortgages from Catalunya Banc worth almost €6,400 million nominal and that it paid €3,600 million for them, the fact that it has now sold the majority of the securitisation fund at its nominal value implies that investors no longer consider them to be problem loans and that they are willing to buy them without demanding an additional return for any higher risk.

Of course, there are several factors that have contributed to this. “Blackstone has included the best loans from the portfolio in the securitisation fund”, say sources in the market, who insist that the US firm still owns the majority of the loans it purchased two years ago.

In addition, the management of the loans plays a role, given that 82.75% of them have been restructured, according to figures from Fitch, which means that they have been granted grace periods or parallel financing since Blackstone took over the portfolio.

Different tranches

The result of these two factors is that Tranches A and B of the securitisation fund have been sold to investors without any discount on their nominal values. They will pay annual interest of 0.9% and 1.9%, respectively, until 2022 (from April of that year, the yield will rise to 1.6% and 3.3%).

The two tranches amount to €288 million, i.e. they represent 72% of the total fund. Meanwhile, Tranches C and D, which contain the worst mortgages and which have the lowest solvency rating, have been sold for 98% and 93% of their nominal values and will pay interest of 2.5% and 2.6%, respectively, for the first five years. Tranche E, the most risky, has been subscribed in its entirety by Blackstone, at a significant discount. (…).

Original story: Expansión (by Inés Abril)

Translation: Carmel Drake

Blackstone Puts €400M Of Catalunya Banc’s Mortgages Up For Sale

27 March 2017 – Expansión

The banks have put a red circle around 2017 in their calendars, as the year when the doubtful portfolios that have hurt them so hard in the past and that are still denting their balance sheets even now, will show signs of life. Some of the entities may end up generating more profits than they initially expected.

And Blackstone is leading the way. The US giant has created a securitisation fund containing some of the non-performing loans with a nominal value of €6,000 million that it purchased from Catalunya Banc in 2015 for almost €3,600 million. Two years later, and after restructuring many of the credits, the investment group has decided that the time has come to capitalise on its investment.

It will do so with the sale to investors of a portfolio containing €403 million of these formerly delinquent loans. It represents Blackstone’s second foray into this field. Last year, the firm opened fire with the first securitisation of structured loans in Europe, although now it is redoubling its efforts given that the volume up for sale is 52% higher.

The fund comprises 3,307 residential mortgages granted in Spain, with a loan to value (credit over the value of the home) of 60.9%. Almost 80% of these mortgages have been restructured and many of the borrowers are up to date with their repayments. Meanwhile, there has been no change to the rest, according to information that Blackstone has provided to Moody’s to allow the risk ratings agency to make its assessment.


Blackstone’s aim is to sell this portfolio to investors in order to materialise some of the gains obtained from the management of the non-performing loans. In all likelihood, the securitisation fund will be placed below its nominal value, but at a much higher level than Blackstone paid when it acquired the mortgages from Catalunya Banc, before the State intervened entity was acquired by BBVA.

In exchange, Blackstone will offer different coupons to investors, depending on the type of mortgages that they take on.

The fund has been divided into five tranches, depending on the risk. The first has a very high level of solvency and so will pay annual interest of 3-month Euribor plus a spread of 0.90%.

The second and third tranches, which still have high or intermediate solvency ratings, will pay premiums over Euribor of 1.9% and 2.5%, respectively. The fourth tranche is ranked below investment grade and will pay a return of 2.6%.

The objective of Blackstone and the three banks that it has engaged for the securitisation (Credit Suisse, Bank of America Merrill Lynch and Deutsche Bank) is that the operation will be completed next week.

A new market

This second securitisation by Blackstone is clear confirmation that a new market has opened up for buyers of delinquent portfolios from the banks. In fact, sources from several investment banks are confident that there will be a significant volume of secondary operations of this kind this year, where the new owners of the bank’s non-performing loans will sell their positions to other funds and to the market alike, through securitisations. (…).

Original story: Expansión (by Inés Abril)

Translation: Carmel Drake

S&P Confirms Merlin’s Investment Grade Rating

21 April 2016 – El Mundo

Standard & Poor’s (S&P) has ratified the BBB rating that it assigned to Merlin Properties back in February, after the Socimi successfully closed its recent €850 million bond issue, according to reports from the company.

The ratings agency considers that Merlin’s investment grade reflects the “optimal risk profile” of the Socimi, which is further supported by a portfolio of property assets worth around €6,100 million.

The firm also assigns a stable outlook to the rating for the company led by Ismael Clemente, because it considers that its “large and diversified” property portfolio constitutes a “source of recurring revenue generation”.

“The assets are also well located, which allows the company to benefit from the recovery in the real estate sector that Spain is currently enjoying”, added the ratings agency.

The ratings firm has also assigned the same BBB rating to the €850 million bond issue that the Socimi recently placed. Through this operation, the company will restructure one tranche of the debt that it inherited from Testa when it acquired the company from Sacyr.

Moreover, S&P leaves the door open to a possible increase in Merlin’s rating, in the event that the Socimi adopts a “more conservative” financing policy, however it also warns of a downgrade in the event that its debt exceeds the threshold of 50% of the value of its assets.

Original story: El Mundo

Translation: Carmel Drake

Merlin To Complete Its €850M Bond Issue Imminently

4 April 2016 – Cinco Días

The Socimi Merlin Properties, which is listed on the Ibex 35, will issue BBB-rated bonds amounting to €850 million within the next few days, for the first time in its short history. This operation forms part of the debt restructuring process supported by Testa, the real estate company acquired from Sacyr.

Within the next few days, the market will be filled with bonds from the Socimi Merlin Properties, which will use this financing instrument for the first time since it debuted on the stock exchange in June 2014. The entity chaired by Ismael Clemente (pictured above) hopes to launch €850 million of this type of security with a BBB rating, imminently, through an issue aimed at institutional investors, according to financial sources.

This operation forms part of the company’s debt restructuring plan following its acquisition, last year, of the real estate company Testa from Sacyr for around €1,800 million. As a result of that deal, the Socimi took on debt amounting to €1,700 million, which it needs to refinance soon (…).

Merlin’s first step involved refinancing a €1,700 million loan with ten overseas banking institutions to pay off the debt. The debt was structured into two tranches, amounting to €850 million each, which are due to mature in December 2017 and June 2021, respectively.

The upcoming €850 million bond issue relates to the first tranche, which matures in December 2017 and which Merlin plans to repay by approaching the capital markets. The bond issue will probably be registered in Luxembourg this week, which according to Ismael Clemente, is the most active market alongside Ireland and Frankfurt for this type of operation.

The roadshow will begin next week

Next week, the heads of Merlin will hold a roadshow for international institutional investors to explain the operation. They expect pension funds, debt funds and insurance companies to be most interested in the purchase. Financial sources indicate that the underwriting banks will be JP Morgan, Credit Suisse, ING, Goldman Sachs and BNP Paribas, amongst others. (…).

The Socimi will decide the term of the new bonds on the day that it places them, but in theory, the term will be between five and eight years, depending on demand from investors, and the interest rate will range between 2% and 3%. Merlin’s current loan with the 10 banks accrues interest at Euribor plus 100 basis points, which will increase to Euribor plus 200 basis points from December. (…).

The banks with which Merlin currently holds its €1,700 million loan are: Société Générale, Credit Suisse, BNP Paribas, Crédit Agricole, ING, Intesa Sanpaolo (an Italian bank with a limited history in Spain), Mediobanca, Deutsche Bank, JP Morgan and Goldman Sachs. (…).

Original story: Cinco Días (by Alfonso Simón Ruiz)

Translation: Carmel Drake

Deutsche Bank Injects €150M Into Aktua Ahead Of Its Sale

17 November 2015 – Expansión

Aktua is up for sale. Banesto’s former real estate arm was acquired by the US fund Centerbridge in 2012, at the height of the financial crisis.

Now, more than three years later, it is time to capitalise on that operation in an economic scenario that is very different from the one seen in 2012; but before completing the transfer, Centerbridge has been “adorning” Aktua so that the operation closes in the best possible way for the firm. In this way, it has undertaken a comprehensive reorganisation of the company’s financial structure.

To achieve this, Centerbridge has not resorted to traditional channels. It was not averse to that option and in fact, it was there that it took its first steps, but the offer of a direct loan then crossed its path. “Aktua received financing offers from several commercial banks, but then one entity offered it a different structure, which was interesting as it allowed more leverage”, says a financial source.

That entity was Deutsche Bank, but not the bank’s commercial banking division, rather its direct lending team. And that offer changed the plans for Aktua. Centerbridge accepted the offer and the result has been an injection of €150 million in funding, which has been used to refinance the company’s debt and also to enable the owner to recover some of the investment it made in 2012, and to pay a dividend, according to several market sources.

In this way, the money that Centerbridge receives from the sale of Aktua will not be the only return it generates from the operation.

Sharing the risk

The direct loan was structured in two tranches, one amounting to €100 million and the other amounting €50 million, both with a 7-year term, something that is not that easy to find amongst the traditional banks. The first loan was signed between Deutsche Bank and Aktua at the end of May, but that was just the beginning – since then, the financing structure has been evolving. With the money now in the coffers of the recipients, Deutsche Bank has gone one step further and has decided to retain title over the entire second loan tranche, but to syndicate out the first €100 million tranche and whereby share the risk with other entities. Santander, Sabadell and Bankinter all responded to the call and so now the financing is shared between those four entities.

All of them will receive 300 basis points above 3-month Euribor for the €100 million first loan tranche. The €50 million tranche that Deutsche continues to hold has different costs and conditions associated with it.

This operation represents the launch of Deutsche Bank’s direct lending business in Spain. And the debut has been conducted in style: the €150 million injection makes the loan to Aktua the first in the list of the largest transactions performed by the banks so far in 2015.

Meanwhile, Centerbridge is now handling the second phase of the operation, namely: the sale of Aktua. It has engaged the investment banks Barclays and Bank of America Merrill Lynch to coordinate the sale, alongside the law firm Linklaters. According to Reuters, Aktua is worth around €300 million and its sale has sparked interest amongst several international venture capital funds, including the British fund Permira.

Original story: Expansión (by Inés Abril)

Translation: Carmel Drake

Pimco Urges ECB To Buy Spanish Securitisation Products

14 October 2015 – Expansión

The US investment management company is proposing the creation of a new supra-national entity to acquire securitisation products.

Anniversaries are often a good time to take stock and a year has now passed since the European Central Bank (ECB) announced the launch of its plan to buy securitisation products in the market. The effective acquisitions began in November and so far amount to €13,105 million. Has the effort made by the ECB to support this program been worth it? According to Pimco, the global fixed income giant, the answer is a resounding no.

And not only because the amount acquired so far represents only a tenth of the bond purchase program to date and less than 4% of the public assets, or because the acquisitions have centred on those countries that need the least help in their securitisations markets (Central Europe). All of those factors counts towards to the overall assessment, but Pimco thinks that there is much more to it.

For starters, the US investment management company considers that it is neither the appetite of investors, nor the price that is strangling the issuance of securitisations. The banks have limited liquidity needs at the moment and they can obtain the financing they do need through other simpler instruments, such as bonds or by appealing to the ECB. It is the regulation and the impossibility of freeing up capital with the sale of securitisation products to investors that is causing this issuer drought in Europe. “The banks that need relief for capital requirements are not receiving it under the current regulatory and economic framework for securitisation products”, explains Pimco, in a report published by the company that specialises in this field.

To that it adds the design of the ECB’s plan itself. There is general criticism that the supervisor is being excessively cautious with its purchases: the slowness with which it is analysing each possible purchase and the fear it is showing when it comes to buying assets that may generate problems, have been the commonplace. And the US management company is joining the ever-growing list of critics of the program. They say that purchases are being concentrated in the wrong countries, as well as in the wrong sectors and tranches of the securitisation products, because that is not where the banks need help. Pimco believes that the ECB should focus on buying the most risky tranches of debt issues, because that would help lower prices and free up capital for the banks.

Moreover, the ECB should not only buy the tranches with the highest risk, it should also do so in those countries in which, until now, it has barely made a mark. Pimco points to the periphery of Europe, “where the prices of loans are still high and access to credit is scare”. And by way of example, it cites Spain, the rate of growth in terms of loans is low and the margins being charged on those loans are high. (…)

If power needs to be granted to the European Investment Fund to do make these purchases or a new supra-national entity needs to be created to assume the first losses from the securitisation products acquired, then Pimco insists that that is exactly the action that should be taken.

And all of this would be for the greater good. “If carried out correctly, we think that the European securitisations market could help to cure the continent’s economy, stimulating credit and access to it, especially in the peripheral regions”, concludes the investment management company.

Original story: Expansión (by Inés Abril)

Translation: Carmel Drake