Mazabi to Grow its Socimi to Make Stock Market Debut with €1bn in Assets

18 March 2019 – Expansión

Mazabi, the firm that manages the wealth of 35 family offices and which owns €1.54 billion in assets, is getting its ducks in a row ahead of the planned debut of its Socimi Silicius. The intention is for that entity to take ownership of the majority of the firm’s rental properties and whereby grow its portfolio to at least €1 billion before its IPO.

Currently, Silicius owns 17 assets, spanning 71,244 m2, worth €156 million in the office, retail, hotel and logistics segments. During 2019, new properties will be transferred to it to increase its portfolio to €740 million by the end of the year, with an associated debt of €240 million.

Moreover, 80% of the operations that the manager executes over the coming months will also be transferred to the Socimi. Mazabi typically invests between €100 million and €150 million per year, according to its CEO, Juan Antonio Gutiérrez (pictured above).

New investors

At the same time, Mazabi is looking for investors who want to get involved in its project. To this end, it has engaged KPMG to find an investor to acquire a stake in the Socimi before it is listed. At this stage, the firm has not decided whether Silicius will make its debut on the MAB or the main stock market. The timings have not been confirmed either, but if Silicius is registered as a Socimi in July, then it would make its debut on the MAB no later than July 2021.

Original story: Expansión (by Rebeca Arroyo)

Translation/Summary: Carmel Drake

Santander Transfers Land Worth €4bn to a Newly Created Land Manager

18 March 2019 – Cinco Días

Santander is making history once again. The entity has created a company to which it is going to transfer all of the land proceeding from its exposure to property, which has a gross book value of around €4 billion (and a net value of around €2 billion).

The purpose of this new vehicle, known as Landmark Iberia, will be to advance with the urban planning procedures required to generate value from these plots and to continue selling the land, with the ultimate goal of selling the whole company if an attractive offer is received.

Landmark is not like any of the bank’s previous projects given that it is not a servicer. Its job is to generate value from the plots that it receives from Santander – it is the first entity of its kind in Spain.

The operation forms part of the group’s overall strategy to reduce its exposure to real estate, in accordance with the instructions of the Bank of Spain. Last year, Santander decreased the value of its exposure by 55.9% in gross terms to €15.1 billion, according to the entity’s annual accounts, thanks to its operations with Blackstone (project Quasar) and Cerberus.

Landmark will likely become the largest landowner in the country, alongside other major companies in the sector such as the property developer Metrovacesa and the fund Cerberus.

Original story: Cinco Días 

Translation/Summary: Carmel Drake

Project Apple: Apollo Bids Hard for Santander’s Last Real Estate Portfolio

30 July 2018 – El Confidencial

Project Apple, the name chosen for the €5 billion real estate portfolio that Banco Santander has put up for sale, is entering the home stretch. The entity chaired by Ana Botín has asked the interested funds to submit their definitive offers this week, according to sources close to the operation.

As this newspaper revealed, the firms that have expressed their interest in the operation include the giants Lone Star, Cerberus, Blackstone and Apollo, although, the latter two are regarded as the favourites, given that they have significant recent history with the Cantabrian bank’s property.

Just one year ago, Blackstone was awarded project Quasar, the €30 billion portfolio of gross toxic assets that Santander sold (following its acquisition of Banco Popular). Meanwhile, Apollo owns 85% of Altamira, the real estate asset manager that the financial entity created and which is currently administering the €5 billion portfolio up for sale.

Having been left out of all of the major real estate processes involving the banks, Apollo has decided to bid hard for Apple, according to the same sources, a move that has been launched in parallel to the possible sale of  (its stake in) Altamira, the manager that would lose some of its appeal if another fund were to manage to acquire this portfolio.

In addition, the firm led in Spain by Andrés Rubio has just reached an agreement with Santander to modify Altamira’s management contract and to refinance the servicer’s debt, in a deal that has allowed the fund to distribute a dividend of €200 million.

For Santander, the sale of Project Apple will mean completing the divestment of all of its real estate exposure, a move that took a giant leap forward last year with the transfer of the Quasar portfolio to Blackstone.

Nevertheless, and precisely because it has already cleaned up the bulk of its balance sheet, the entity does not have any need to sell and, therefore, if the bids come in below its expectations, it may decide not to transfer the portfolio after all, at least not through this process.

After the Cantabrian bank, BBVA reached an agreement with Cerberus to sell it 80% of its toxic property, whose gross value amounts to €13 billion, in an operation that is expected to be completed later this year.

More recently, CaixaBank reached an agreement with Lone Star to sell it 100% of Servihabitat and the majority of a portfolio of properties worth €6.7 billion; and Banco Sabadell made a deal to transfer €12.3 billion in toxic assets to Cerberus (€9.1 billion), Deutsche Bank (€2.3 billion) and Axactor (€900 million).

Original story: El Confidencial (by R. Ugalde)

Translation: Carmel Drake

Sareb Quarantines its €30bn Mega-Portfolio Entrusted to Goldmans For The Time Being

11 June 2018 – El Confidencial

The most important operation in Sareb’s history is going to have to wait. Despite the wishes of Goldman Sachs, the bank charged with leading the sale of €30 million in toxic assets, to formally launch the process before the end of June, the entity chaired by Jaime Echegoyen would rather be cautious and have everything locked down, and well locked down, before it gives the final green light to an operation of this magnitude.

Particularly, when its largest shareholders, the State through the FROB, has just experienced an unexpected change of Government. Although sources at Sareb insist that a firm date has not yet been set for this sale and that all of the work carried out to date has been preliminary, during the conversations that Goldmans held with interested funds before the vote of no confidence (in the Spanish parliament), it was understood that the process would begin this month, according to several sources in the know.

Nevertheless, the change in the political panorama, which has resulted in Pedro Sánchez’s appointment as President and Nadia Calviño as the Minister for the Economy, lends itself to prudence, to avoiding any rushed decisions and to allowing time for the new Government to analyse this operation. Above all, when one of the objectives of the PSOE’s economics team has, for months, been to conduct a thorough audit of Sareb to understand the real extent of the public debt as a whole, according to Voz Pópuli.

The sale of the portfolio entrusted to Goldman would allow Sareb to decimate its liabilities in one fell swoop and generate two years worth of revenues in a single operation. The question is at what cost, in other words, what losses would such a divestment generate, given that all of these sales are being undertaken at discounts that the bad bank is finding very difficult to bear.

In fact, in order to play in this league of major operations, Sareb has been analysing for months all kinds of formulae to reduce its losses. One way of mitigating the losses and achieving better offers is to share the ownership of the capital of the new company to which these toxic assets would be transferred, like Santander and BBVA have done in similar cases.

Another lever that has already been analysed is to take advantage of the FAB (Banking Assets Fund) – that Sareb created in its early stages, because that would provide the operation with tax incentives, or associate it with the servicing contract, which has been in the hands of Haya until now.

That “servicer”, which is controlled by Cerberus, manages all of the toxic property that Bankia transferred to Sareb, whose deficit was the largest, in absolute numbers, of the bank rescue, another important argument why the new Government wants to understand in detail the design and consequences of the Goldman operation before giving it the green light, or not.

What is happening with Ebro and the property development plans?

(…) In terms of the entity’s other two star projects: the search for a partner to promote €800 million in residential assets and the sale of a €10 billion portfolio baptised Ebro.

The former has two finalists, Aelca and Aedas, and looks to be on schedule for a winner to be selected ahead of the summer (…).

In the case of Ebro, Sareb’s decision to not go ahead with this portfolio responds to, amongst other reasons, the fact that some of the perimeter proceeded from Haya assets, which are the ones that make up the entire Goldman portfolio, and so a decision was taken to desist from this project to give priority to the Goldman deal.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

The FROB Engages Intermoney Valora to Revalue Former CX Assets

5 February 2018 – Expansión

The Spanish Fund for Orderly Banking Restructuring (FROB) has engaged the financial consultancy firm Intermoney Valora to carry out a “valuation service for certain assets in the framework of the process to wind up Catalunya Banc (CX)”.

Sources familiar with the process indicate that this project stems from the process to privatise the former Catalan savings bank, which was nationalised by the FROB in 2012. In accordance with the design of the divestment at the time, the banking business was transferred in its entirety to BBVA, whilst the real estate business (known as the Hercules portfolio) was acquired by the fund Blackstone.

Those same sources indicate that at the time, a small percentage of the assets that should have been transferred to Blackstone, remained under the umbrella of BBVA for technical reasons and could not be transferred. “That has generated what is known as compensable damage, which was anticipated for in the sales contract and, therefore, had been provisioned”, they add.

The role of Intermoney Valora will be to estimate the economic value today of that small percentage of assets pending transfer to Blackstone, so that the indemnities can be calculated.

According to details specified on the Frob’s public contracting page, Intermoney (which competed with five other firms) will receive €130,000 for this assignment and will have two months (extendable for up to one more) to carry out the work.

Last week, the President of BBVA, Francisco González, admitted that he would not have bought CX today. “We are delighted to have purchased savings banks but that was five years ago. Would we buy CX today? Probably not”, he said.

Original story: Expansión (by N. Sarriés)

Translation: Carmel Drake

Aena Submits The Only Bid To Manage ‘Ghost’ Airport In Murcia

31 October 2017 – Expansión

Yesterday, Aena came to the rescue of the international airport for the Region of Murcia with a multi-million euro offer to take over its operation, management and conservation for a period of 25 years. This ghost infrastructure was planned before the crisis by the regional government and a consortium of companies led by Sacyr, at a cost of €270 million. Nevertheless, the outbreak of the crisis submerged the installation into a tsunami of financial and legal problems, which prevented it from being opened even after the construction work had been completed, in 2012.

Five years later, in April, the regional executive opened a tender process, with a budget of €600 million. Aena, in which the Spanish State holds a 51% stake, was the only company that expressed interest in managing the infrastructure and it formalised its offer yesterday. Sources close to the bid say that the amount offered by Aena falls well below the tender price.

In all likelihood, the airport manager’s plan will involve moving operations from the San Javier military airport, 30 km away, to Corvera. The new president of Aena, Jaime García-Legaz, who has only been in the job for two weeks, has focused on the need to secure the management of the Murcian airport. “We are going to make an offer to win that is profitable for Aena”, he said last week in meetings held with the group’s personnel (…). García-Legaz is Murcian, but the offer had already been prepared by his predecessor, José Manuel Vargas.

Currently, 400 employees work at San Javier airport, of whom 72 form part of the workforce, which would be affected by the move. The managers themselves have reviewed the facilities in recent weeks to check that everything is in order so as to start the operation in the most agile way possible.

Some sources say that the first flights could begin next summer (2018). “The main objective should be to secure Iberia or another major airline to turn the airport into a key infrastructure hub”, they add.

The arrival of one or more large companies is key if the reduction in passenger numbers at the Murcian airport is to be plugged. Since 2007, traffic volumes have fallen by half, from 2 million users to 1 million in 2016, proceeding from low-cost airlines such as Easyjet, Ryanair and Norwegian. And that decrease has happened despite the recent investment of €70 million made by Aena to construct a second runway. The airport has a single domestic route, connecting with Madrid, and 19 international routes, primarily to/from the United Kingdom. 92% of users are foreigners visiting the region for tourist purposes.

By contrast, the aerodrome in Alicante – 90km away – has seen its user number increase from 9 million to 12 million during the same period. Corvera is now adding capacity to manage a visitor flow of 3.5 million each year. If Aena does end up winning the contract to manage the installation, Corvera would become the 47th airport that the group manages in the country. The company has the capacity to welcome 330 million travellers, 30% more than the 230 million that used its airports in 2016.

Sources at Aena highlight that the airport in Murcia would generate profits for the group (…).

The Region of Murcia’s Ministry of Development will convene a meeting on Friday to analyse Aena’s offer and proceed to award the contract to manage the airport “as soon as possible”.

Original story: Expansión (by Víctor Martínez)

Translation: Carmel Drake

BBVA Sells 3,500 Properties To Blackstone For c. €300M

20 February 2017 – El Confidencial 

BBVA has started the year with the sale of the largest real estate portfolio in its history: Project Buffalo. The portfolio contains 3,500 assets, the vast majority of which are finished homes, but it also includes storerooms, garages and retail premises, worth around €300 million in total. The whole package has been acquired by Blackstone.

All of these properties had been foreclosed and so the bank was holding them on its balance sheet. They are located mainly in Cataluña (28%), Andalucía (20%) the Community of Valencia (18%), Madrid (6%), the Canary Islands (6%) and Castilla-La Mancha (6%).

With this move, the entity has fired the starting gun on a year in which experts hope that the financial sector as a whole will accelerate its real estate divestments, not only of loans with collateral linked to properties, but also in the placement of large blocks of finished assets, like in this case.

The new regulatory requirements have represented a genuine revolution for bringing these types of portfolios onto the market. And BBVA has dealt with this change in the rules by engaging its Strategy and M&A team, led by Javier Rodríguez Soler, to be responsible for closing this kind of transaction.

Two-thirds of the more than €20,000 million real estate-related assets on BBVA’s balance sheet are foreclosed assets, whilst the remainder are loans, a clear indication of the importance for the bank of undoing these positions.

In addition to portfolio sales, the entity chaired by Francisco González (pictured above) has committed itself to joining other players in the market as a way of deconsolidating these assets. On the one hand, it is taking advantage of the merger between Merlin and Metrovacesa, by transferring thousands of homes to Testa; on the other hand, it is working with Santander and Popular to create a large bad land bank, which will allow it to also start divesting its land.

Original story: El Confidencial (by R.U.)

Translation: Carmel Drake

 

Popular Stakes Its Future On The Segregation Of Its RE Arm

4 November 2016 – Expansión

Banco Popular is in the eye of the storm. The bank’s senior officials are facing the future by effectively placing a firewall between the entity’s normal banking activity and its real estate risk, however, the markets do not seem to be able to trust that they will succeed in finding their way out of the tunnel the entity entered when the real estate bubble was about to burst.

Following two major capital increases, amounting to €2,500 million each, and a third, smaller, capital injection of €450 million, as a result of which a Mexican investment group, led by the Del Valle family, became a shareholder of the group, the value of the bank (based on its share price) currently amounts to less than €4,000 million, making it the domestic financial entity that has seen its market capitalisation decreased by the most this year.

Popular has two lives: one afforded by its traditional business, which focuses on rendering financial services to individuals, self-employed people and SMEs, and where its efficiency and profitability ratios are high; and the other one, linked to the real estate sector, where the cumulative losses due to the impairment of its assets represent a real threat to the rest of its activity. (…).

Although the bank has received several offers to join a larger and more powerful financial group, the Board of Directors and the main shareholders who serve on the Board have categorically rejected them all, preferring instead to continue to lead the entity along its own path. “We do not want Popular’s intrinsic value to benefit others”, the entity has said time and time again, in order to justify its negativity towards a corporate operation in which it would fail to take over the reins. (…).

The two capital increases (the first one was carried out in December 2012 and the second one at the start of the summer) were accompanied by the appointment of Francisco Gómez (a man who has worked at the bank for his entire life) as the CEO (in the case of the first) and by his replacement by Pedro Larena, previously from Deutsche Bank and Banesto (in the case of the second). The aim was the same in both cases: to try to convince the market each time that the change in management was going to effectively deal with the recurrent problems, in other words, to eliminate the real estate risk.

Popular has tried to resolve its problems in the traditional way…by selling off its damaged assets at significant discounts, offset by growing provisions…but this has not proved sufficient, not least because the entry of damaged assets onto the balance sheet has been higher than the volume it has managed to sell through individual sales. (…).

Now, Popular is pursuing a strategy to segregate a substantial part of the real estate risk that it holds on its balance sheet (€6,000 million in book value), by placing it into a company that it will also endow with sufficient capital (around 20% of its liabilities). This capital will distributed free of charge amongst Popular’s existing shareholders in a way that will completely dissociate the entity from the transfer/sale. (…).

However, even once Popular has managed to eliminate a significant part of its real estate risk, the bank’s problems will not be over. That is reflected in the ERE that it is currently negotiating with the trade unions (which should be finalised by Sunday 6 November at the latest), which proposes the closure of 300 branches and a reduction in personnel of around 1,600 people through early retirement and voluntary redundancy packages. (…).

Original story: Expansión (by Salvador Arancibia)

Translation: Carmel Drake

Popular’s New RE Company Will By Publicly Listed From Day 1

16 September 2016 – Expansión

The real estate company that Banco Popular wants to create from a significant portion of the foreclosed real estate assets that it has on its balance sheet, and whose shares will be distributed on a proportional basis amongst its shareholders, without any cost whatsoever to them, will be listed on the stock exchange from the day it is constituted, in such a way that its shares will have the necessary liquidity to enable their owners to do what they deem most appropriate with them.

At the moment, the heads of Banco Popular are focusing their activities on finalising the outstanding details of the design of the operation to create a real estate company, which still does not have a name, but which will incorporate real estate assets with a gross value of €6,000 million, chosen from the foreclosed assets that the bank owns, amounting to €11,140 million, and which form part of the entity’s balance sheet. And it also obtaining the necessary authorisations from the supervisors, the Bank of Spain and the National Securities and Markets Commission, as well as from the authorities at the Ministry of Economy, although the latter is not mandatory.

There is no specific timetable for completing the final phase of the process, but sources close to it indicate that it is hoped that it will become a reality during the first half of 2017, and that its launch will be announced sufficiently in advance to allow for a general shareholders’ meeting to be called, where the carve-out of the real estate company will have to be approved, along with the distribution of the shares amongst the bank’s shareholders, as if they were an extraordinary dividend.

The company will start trading on the stock market on the day of its constitution, when its shares will also be delivered to their new owners. It will have its own control and management bodies, which will operate completely independently of the bank. In this sense, a search will soon begin for a Chairman and CEO of the new company and the Board will be formed, almost in its entirety, by independent directors, with financing training and knowledge of the real estate sector.

It has not been ruled out the some of the bank’s main shareholders, who will also be main shareholders of the new company, may want to take a seat on the Board, given their shareholdings, but that is not something that is currently on the table.

The bank reported a foreclosed asset balance worth €11,140 million at the end of June, with a provisioning level that, at the end of this year, will amount to around 50% following the application of the results generated during the year and some of the recent capital increase amounting to €2,500 million, aimed at increasing the bank’s total provisioning level. This means that approximately half of these foreclosed assets (especially homes, offices and retail premises that have been completed and to a lesser extent those still in progress, and a small amount of land under development) will be included in the new company.

The company’s liabilities will be comprised of its capital, which the bank will disburse and transfer to the new shareholders; subordinated debt which Popular will purchase; and external financing for which, according to market sources, there is currently high potential demand, which will be determined on the basis of the return on the bonds issued and the relationship between capital, subordinated debt and the other financing. (…).

Original story: Expansión (by Salvador Arancibia)

Translation: Carmel Drake

Acciona Prepares To Launch Its New RE Company

7 April 2016 – Expansión

Acciona has lots of irons in the fire. The most pressing, this month at least, is the completion of the merger of its wind turbine business with Nordex to become its largest shareholder.

The company, which closed 2015 with a profit of €207 million, is also preparing to promote its real estate division, which could end up being converted into a listed Socimi at some point down the line. As a preliminary step, the group separated out its pure property developer activity from its asset ownership business. The homes, buildings and land that it leases out were transferred to a new company called Acciona Real Estate in the middle of 2015. According to the company itself, that entity was worth €630 million at its latest valuation.

This year the energy company will absorb two thirds of the €600 million of investment planned by Acciona. The company expects to maintain EBITDA in line with 2015 thanks to electricity pool prices.

Original story: Expansión

Translation: Carmel Drake