Tag: unpaid debt

Starwood Wins the Bid to Acquire the San Fernando Business Park for €120M

22 May 2018 – Eje Prime

Starwood Capital has sealed the purchase of a new asset in Madrid. The private equity fund has reached an agreement with Oaktree to acquire the San Fernando Business Park for €120 million. The operation, according to market sources, is pending the finishing touches, but technically has now been completed.

In this way, Starwood has broken into the Spanish office market by outbidding other international investors, such as the PE house Carlyle, which had expressed interest in the asset, according to Expansión.

San Fernando Business Park ended up in the hands of Oaktree three years ago. It was then that the US fund purchased a portfolio of unpaid debt worth €750 million from the German bad bank FMS Wertmanagement (FMS WM).

That portfolio included, in addition to this office complex, luxury hotels such as the Arts Hotel in Barcelona and another hotel in Cascais (Portugal); five shopping centres, including the Madrilenian Plaza Éboli and Heron City Las Rozas; several storeroom buildings; and some residential and industrial assets.

Original story: Eje Prime 

Translation: Carmel Drake

Sabadell To Invest €450M In Its Hotel Arm

4 December 2015 – Expansión

Hotel Investments Partnership (HI Partners), the hotel management and investment arm of Banco Sabadell, is backing itself forward to become one of the main players in the Spanish hotel sector. The firm wants to become one of the largest hotel owners in Spain, involving itself in the management of hotels and improving their income statements. “There is a significant opportunity in the market for the creation of large portfolios of hotel assets”, says Alejandro Hernández-Puértolas (pictured above, centre), CEO of HI Partners.

The company will invest €450 million over the next three years to refurbish and increase the value of its hotels, an amount that will be completely financed by Sabadell during this first phase.

The bank controls 99% of the company’s capital and Hernández-Puértolas and two other partners, Sergio Carrascosa and Santiago Fisas (pictured above, left and right, respectively), own the remaining 1%. Enric Rovira, Deputy CEO of the Sabadell, is the President of HI Partners, which has a dedicated team comprising 22 professionals and is managed independently of the bank.

Creation of two vehicles

Sabadell transferred 22 hotels with 1,600 rooms to HI Partners, after it had accumulated them on its balance sheet during the crisis as the result of foreclosures due to unpaid debts. Moreover, the entity has entrusted the team with the management of a portfolio of hotel debt amounting to €800 million, which as around one hundred assets associated with it. According to Hernández-Puértolas, around thirty of these hotels may be transferred to HI Partners over the next few years, increasing the number of rooms owned by the investment company from 1,600 to 8,000. Meanwhile, HI Partners is also analysing the purchase of assets in the market that are not linked to the bank.

For the management of this real estate portfolio, HI Partners has just constituted two new companies: HI Partners Holdco Value Added and HI Partners Holdco Gestión Activa. The first vehicle will be the focus of most of the company’s efforts and will receive around 90% of the investment. It will take ownership of the best hotels in the portfolio, notably the largest properties, those situated in premium areas and those capable of generating significant yields once they have been refurbished. This company currently owns three assets: the Hotel Prestige Coral Playa, located on the Costa Brava; the Silken Málaga – which HI has just purchased from Urvasco -; and the new hotel that the company is constructing on Calle Atocha in Madrid, which will be managed by the Axel chain.

The thirty-odd hotels to be transferred to HI Partners from Sabadell’s debt portfolio are also expected to be incorporated into the Value Added company. The challenge is for that vehicle to generate an EBITDA of €35 million in 2018 and of €70 million in 2021.

Meanwhile, HI Partners Holdco Gestión Activa now owns 19 hotels, the majority of which are smaller properties, located in secondary areas. The objective is to divest the majority of these establishments, although the firm wants optimise their management first. As such, it expects to sign agreements with several hotel operators to this end.

Original story: Expansión (by Sergi Saborit)

Translation: Carmel Drake

BMN Sells Part Of Its Recovery Business To Lindorff

6 October 2015 – Expansión

BMN is completing the sale and outsourcing of its recovery business in an agreement with Lindorff. The entity, led by Carlos Egea, has awarded the management of its late-stage non-performing debt portfolio (balances that have been overdue for more than 120 days) to the Norwegian financial group, according to financial sources consulted by Expansión.

According to the same sources, Lindorff has paid around €20 million for the contract to manage this debt for ten years.

It is the second such contract that BMN has awarded to Lindorff. The Norwegian group has been managing BMN’s early-stage non-performing debt portfolio (balances that have been overdue for up to 120 days) since the beginning of 2014; it paid €36 million for this contract.

The nationalised group also did the same thing with its own firm Inmare, dedicated to the management of foreclosed assets and real estate debt; it sold the company to Aktua (owned by Centerbridge) for almost €50 million.

In total, BMN has obtained just over €100 million from these kinds of operations in recent years. These types of sale allow the entity to generate capital gains, which it uses to strengthen its capital base. Although the funds, in this case Lindorff, pay the capital upfront, they recover it subsequently through commissions based on objectives.

Specialisation

One of the other reasons behind such deals, which would have carried less weight in this transaction, is the outsourcing of a service in which banks are not experts and whose results improve when it is delegated to specialist firms such as Lindorff.

The operation has been advised by Montalbán Atlas Capital, a firm that has coordinated similar transactions in the past, such as the one closed by Popular, which sold its recovery business EOS for €135 million; and Sabadell, which sold its business to Lindorff, for €162 million.

In addition to the sale by BMN, Ibercaja has launched the transfer of its real estate management division, together with all of its foreclosed assets, in an operation known as Project Kite.

Original story: Expansión (by J. Zuloaga)

Translation: Carmel Drake

Project Silk: Sareb Puts €1,000M Debt Portfolio Up For Sale

12 August 2015 – Expansión

Sareb is getting ready to increase its revenues during the last few months of the year. The first half of 2015 saw a slow down in the bad bank’s property sales, as it focused on migrating assets across to new managers. However, the company chaired by Jaime Echegoyen (pictured above) is now going to concentrate on selling portfolios to large funds.

In this context, Sareb is currently preparing its largest transaction to date: Project Silk, comprising small unpaid loans to property developers, amounting to €1,000 million in total.

The project is being led by Haya Real Estate, the real estate manager heir of Bankia Habitat. The firm, which is owned by Cerberus, is responsible for administering the loans transferred by the group chaired by José Ignacio Goirigolzarri.

Initially, property developers will be offered the option to buy up their own debt. Then, any loans that have not been sold will be packaged up and sold in a competitive tender process, to be managed by N+1.

At the end of 2014, the company chaired by Echegoyen held assets amounting to €44,263 million, of which three quarters related to loans.

Revenue drivers

Sales to institutional investors are going to be key for Sareb in 2015, given the slowdown in terms of house sales. Since the end of last year, the company has been focusing its efforts on the process to migrate assets from the former managers – i.e. the entities that transferred €50,000 million worth of problem homes and loans – to the four chosen firms: Haya Real Estate, Solvia, Servihabitat and Altamira.

This migration is due to be completed at the end of the year. Meanwhile, Sareb sold 5,400 homes during the first half of 2015, i.e. one third fewer than during the same period in 2014.

In this context, it is critical that the bad bank increases its revenues from the institutional channel, since its main objective is still the repayment of its debt; and it has set itself the goal of repaying €3,000 million at the end of this year. Currently, the company still needs to return c. €45,000 million of bonds guaranteed by the State.

Sareb has at least two other portfolios, besides Project Silk, up for sale at the moment. Project Birdie is in the most advanced stage of the three – whereby the bad bank wants to sell assets inherited from Polaris. That portfolio comprises three golf courses, two five-star hotels and several residential complexes in Murcia, with a nominal value of €500 million. Sareb inherited them from loans to property developers granted by Banco de Valencia and Bankia.

In addition, the company has launched the sale of a €180 million debt portfolio, secured mainly by land, as part of Project Vega, according to Idealista News.

Many expect Sareb to put new portfolios up for sale after the summer, just like it has done in previous years. During 2014, the company transferred 11 large portfolios for €1,115 million, which accounted for 20% of its revenues. That figure is expected to be higher in 2015. (…).

Upcoming challenges

In addition to its objective of increasing revenues, Sareb faces several other challenges between now and the end of the year, including: completing the migrations to the new managers and adapting to the new accounting circular that the Bank of Spain is preparing for the company.

Original story: Expansión (by Jorge Zuloaga)

Translation: Carmel Drake

Fortress Is Preparing For Another ERE At Geslico

12 February 2015 – El Confidencial

Fortress, the alternative investment fund that bought the savings banks’ financing business, has announced to its employees that is it going to undertake a statutory redundancy procedure (un expediente de regulación de empleo or ERE) at Geslico, the subsidiary dedicated to loan recovery. Although the US entity has not quantified how many people will be affected by the drastic measure, sources close to the firm say that almost 40% of the workforce could be made redundant.

Geslico, the group formed by three subsidiaries with headquarters in Madrid, Valencia and Zaragoza, currently employs 450 people, of which around 200 could be made redundant as a result of the ERE. Although Fortress has not yet explained the real reasons for adopting this measure, sources close to the company explain the that job cuts are due to the loss of business resulting from the mergers of savings banks.

The announcement was made at Paratus, the business centre created by Fortress in Barcelona to manage all of the acquisitions the fund has made in Spain since it started to buy non-performing loans from financial institutions such as Banco Santander and debt from the real estate company Realia. Subsequently, between 2012 and 2013, Fortress acquired Lico Leasing, the holding company that provides financing to companies in the Spanish Confederation of Savings Banks (Confederación Española de Cajas de Ahorros or CECA), and Geslico, which it bought for almost €220 million.

Nevertheless, the name Fortress gained notoriety in Spain when the fund tried to sell 300 homes it had bought from Sareb, at a much higher price than the State’s bad bank had agreed to transfer them to a group of individuals.

These types of funds, known as opportunistic or vulture funds, have become the new owners of mountains of unpaid debt – estimated to amount to €50,000 million – which originated from the balance sheets of Spanish banks and was transferred for a price significantly below its face value. Subsequently, these funds manage the debts by trying to negotiate long-term payment plans with the borrowers to recover the initial amounts loaned.

The ERE at Geslico is not the first to be proposed by Fortress, which already significantly reduced Geslico’s workforce, at the end of 2013. At that time, Paratus informed its employees that 174 of the 470 strong workforce were going to be made redundant, with their contracts terminated. Another 40 were told that their employment contracts would be suspended temporarily (una suspensión temporal de empleo or ERTE), which was to result in 210 employees losing their jobs on a permanent or temporary basis. In the end, following internal negotiations, the list of redundancies was reduced to 120 people.

Prior to this, in 2012, the shareholders of Lico Corporation, which included BBVA, Banco Sabadell, Mapfre, Ibercaja, Unicaja, CECA, Novagalicia, CatalunyaCaixa and Bankia, amongst others, had already announced a redundancy procedure, which affected 95 of the 230 employees at the financing company.

In the most recent annual report filed by Fortress, the fund claimed that it had “confidence in the robust future of Geslico’s activity, due to its broad range of clients and the trend towards outsourcing debt recovery work”. Nevertheless, it warned in its forecast for 2014 that “annual recoveries may decline slightly with respect to 2013, as a result of the restructuring of the banking sector and the reduction in lending in recent years”. The reality has proven to be worse than expected and Geslico’s employees are paying the price.

Original story: El Confidencial (by Agustín Marco)

Translation: Carmel Drake