Tag: unsecured portfolio

Axactor & Grove Compete to Acquire Sareb’s Largest NPL Portfolio

23 July 2018 – Voz Pópuli

The Norwegian investment fund Axactor and the US fund Grove, which is in the process of merging with the British firm Cabot, are competing to be awarded a non-performing loan portfolio with a nominal value of €2.335 billion by Sareb. The portfolio is the largest of its kind to be sold by the company chaired by Jaime Echegoyen (pictured below), according to financial sources consulted by Vozpópuli.

Sareb has recently received binding offers from the two aforementioned funds, as well as from Kruk, a Polish company specialising in debt recovery. Nevertheless, the proposal made by the latter was well below those submitted by the other two. According to the sources consulted, the Norwegian fund, which recently acquired a €900 million portfolio from Sabadell, as this newspaper revealed, looks to be the favourite to win the auction this time around.

The portfolio in question, which forms part of Project Dune, regarding which Sareb is being advised by KPMG, comprises unsecured non-performing loans. In fact, the assets are mortgage tails – loans that have not been repaid following the execution of their corresponding mortgage contracts – from small- and medium-sized property developers.

In this specific operation, the offers that the interested parties have presented reflect significant discounts, which may even amount to 99% of the nominal value of the portfolio, with the aim of trying to recover the maximum possible amount of the debt, which is no longer secured by any collateral.

Gains

In any case, whatever Sareb obtains for this portfolio will represent a gain for the entity, given that all of the loans, which are considered almost irrecoverable, have already been fully provisioned. The completion of the operation will happen in the month of September, at the earliest, according to the sources consulted.

Last week, Sareb shelved the block sale of between €20 billion and €30 billion in real estate assets due to the high cost of the operation. In fact, the Board of Directors of the entity known as the bad bank decided not to undertake that operation for the time being, due to the capital hole that the sale of those assets would have generated for the acquiring fund, which require higher discounts than individual investors.

That deal was called Project Alpha and Goldman Sachs had been working on it for months, to determine how, when and to whom the portfolio could be sold. Sareb was also supported in that deal by the consultancy firm CBRE and the audit firm EY (…).

Original story: Voz Pópuli (by Pepe Bravo)

Translation: Carmel Drake

Sabadell Sells €9.1bn to Cerberus & €2.5bn to Deutsche Bank

19 July 2018 – Voz Pópuli

Banco Sabadell is selling its property to Cerberus and Deutsche Bank. The Catalan entity has agreed with the US fund to transfer 80% of its foreclosed assets, worth €9.1 billion for €3.9 billion. And is finalising the sale of €2.5 billion in real estate loans proceeding from CAM to Deutsche Bank, according to financial sources consulted by Vozpópuli. The entities involved all declined to comment.

The agreement with Cerberus, which this newspaper revealed, includes two of the four large portfolios for sale: “Challenger”, containing assets from the bank – around €5 billion – and “Coliseum”, containing foreclosed assets proceeding from CAM and with public aid from the Deposit Guarantee Fund (FGD).

According to a statement filed with the CNMV, Sabadell values those two portfolios at €9.1 billion and is selling them to a new company for €3.9 billion, equivalent to 42% of the initial appraisal value. Cerberus will own 80% of the new company and Sabadell the remaining 20%, in such a way that the bank will receive around €3.1 billion. The sale requires provisions of €92 million. The Solvia platform was left out of the agreement.

Agreement with Deutsche Bank

Meanwhile, the agreement with Deutsche Bank is for Project Makalu, another of the four portfolios that Sabadell put up for sale. It already sold the first, unsecured, portfolio – Project Galerna – to the fund Axactor.

Of the four portfolios, this is the largest containing loans backed by real estate collateral. And it is protected by the public aid that Sabadell received for the purchase of CAM, at the end of 2011. For that reason, this operation, which may be signed in the next few days, requires the approval of the FGD.

Deutsche Bank has fought off tough competition from Oaktree and Lone Star to acquire this portfolio. The price of the operation could reach between €800 million to €900 million, according to market valuations. The advisor on the sale has been KPMG.

The German bank is one of the typical buyers of these types of portfolio, although until now, it had not purchased anything of this magnitude in Spain. Last year, it closed two operations, one with Sareb amounting to €400 million and the other with CaixaBank amounting to €700 million.

Balance sheet

Following the imminent agreement with Deutsche Bank, the divestment team at Sabadell led by Jaume Oliu and Simon Castellá will have transferred €12.5 billion in problem assets to Cerberus, Deutsche Bank and Axactor.

This latest acquisition by Cerberus is the fourth largest in history in Spain, behind the sale of Popular’s property to Blackstone – €30 billion; the sale of BBVA’s property to Cerberus – €14 billion; and the most recent sale of CaixaBank’s property to Lone Star – €12.8 billion.

Original story: Voz Pópuli (by Jorge Zuloaga)

Translation: Carmel Drake

Cerberus Gets its Cheque Book out again to Buy NPLs from CaixaBank

4 December 2017 – Voz Pópuli

Cerberus is stepping on the accelerator in Spain. The US fund has starred in another major operation just days after acquiring a real estate portfolio from BBVA. One of Cerberus’s subsidiaries, Gescobro, has won an auction for €0.8 billion in non-performing loans and real estate from CaixaBank.

The fund has purchased part of that portfolio, known as Project Egeo, whilst the Norwegian group Lindorff has bought the rest, according to financial sources consulted by this newspaper.

Part (€0.5 billion – €0.6 billion) of this €0.8 billion portfolio comprises unsecured loans (credit cards, personal loans and others without any guarantee) and just over €0.2 billion relates to loans to SMEs secured by real estate.

This is Cerberus’s fourth operation in the Spanish financial and real estate sector in 2017 following the acquisition of Project Jaipur from BBVA (€0.6 billion in non-performing property developer loans; the purchase of the real estate arm of Liberbank, Mihabitans, for €85 million; and the acquisition of €13 billion in property from BBVA for €4 billion.

Strategic fit

The sale of Project Egeo, which is still pending the completion of the necessary paperwork, forms part of the routine divestment plans of the Catalan group. In this way, it is managing and controlling its default rate and complying with the regulatory requirements of the European Central Bank (ECB).

Currently, the group’s default rate stands at 6.4%, after falling by seven tenths in the last year. In total, its doubtful loans amount to €15.3 billion, of which €13.9 billion are in Spain. It has another €7.2 billion in foreclosed assets.

The firm that has won the auction, Gescobro, has been led by Iheb Nafaa until now, but he was recently poached by Servihabitat, the real estate company owned by TPG (51%) and CaixaBank (49%).

Meanwhile, Lindorff has been one of the main competitors in the bank debt market since 2012. More than a year ago, it expanded its real estate business with the purchase of Aktua, the former real estate arm of Banesto; and it strengthened its business through a merger with Intrum Justicia.

Original story: Voz Pópuli (by Jorge Zuloaga)

Translation: Carmel Drake

Sareb Puts Spain’s Largest Ever NPL Portfolio Up For Sale

7 November 2017 – Voz Pópuli

Sareb wants to star in the largest sale to date of non-performing loans in Spain. The company chaired by Jaime Echegoyen has put a portfolio of unpaid loans worth €2,600 million up for sale, according to financial sources consulted by Vozpópuli. It hopes to sell the portfolio before the end of the year and since it contains NPLs that are recognised off-balance sheet, all of the consideration paid will correspond to profits.

This operation has been baptised as Project Dune and is being advised by KPMG. Until now, the largest sale of an unsecured non-performing loan portfolio was completed by BBVA in 2014, when it sold a portfolio worth €1,700 million to Deutsche Bank.

Non-performing loans are credits that have been written off by the banks, which remove them from their balance sheets after recognising 100% provisions against them. In the case of Sareb, they are what is known in the market as mortgage tails: essentially, they are loans that remained uncollected following the execution of a real estate loan. These loans are purchased by opportunistic funds at significant discounts, of between 95% and 97%, which try to recover the maximum amount by taking the debtors to court. Since they are fully provisioned, the entire amount that Sareb receives from this sale will be recognised as profits.

Project Dune actually comprises two sub-portfolios: Pilat, containing 2,261 unsecured non-performing loans to 1,500 small- and medium-sized property developers, worth €2,442 million; and Kirbus, containing 115 loans secured by real estate, with a combined nominal value of €176 million.

In this way, the second sub-portfolio has almost 1,000 properties as collateral, of which around half are apartments, located primarily in Barcelona, A Corñua and Madrid. Half of the Dune portfolio is located in Cataluña, the Community of Valencia and Aragón.

On the basis of the prices that tend to be paid in this market, Sareb could end up generating revenues/gross profits of between €125 million and €175 million from this sale, depending on the degree of interest that the portfolio sparks amongst the funds and the level of competition between them.

Project Dune is not the only deal that Sareb has underway since it also has other portfolios worth more than €1,000 million on the market. The largest process currently in progress is known as Project Inés, containing €400 million, whose purchase is being finalised by Deutsche Bank. The bad bank typically uses these types of operations towards the end of the year to balance its budget and generate higher revenues to allow it to pay off some of its debt.

This sale is being coordinated by the prestigious portfolio team at KPMG, led by Carlos Rubí. Most of the team came from PwC and joined the firm in 2014.

Original story: Voz Pópuli (by Jorge Zuloaga)

Translation: Carmel Drake

Bain Buys c. €1,000M In NPLs From Ibercaja & Caixa Geral

13 July 2017 – El Confidencial

Bain Capital Credit has set its sights on Spain and Portugal and has purchased a total of €1,000 million in non-performing loans from Ibercaja and Caixa Geral. On Wednesday, the entity announced the acquisition of a portfolio of loans from Banco Ibercaja, which constituted the ninth acquisition of a portfolio in Spain by Bain Capital since 2014. The portfolio has a nominal value of €489 million and contains non-performing bilateral and low-yield loans with first ranking lien over property developer assets. The collateral behind the loans primarily comprises plots of land in the most reputed cities in the country for the development of residential properties and by real estate assets.

“We are excited about the opportunity to strengthen our position in the property development sector through this investment”, said the Director and Head of European Business at Bain Capital Credit, Alon Avner. Similarly, the firm has said that Spain is one of the most attractive markets in Europe in terms of unsecured non-performing loans and real estate assets.

In addition, for the acquisition to be successful, Bain Capital has engaged Hipoges and Altamira Asset Management, both loan management specialists; Basico, Deloitte Real Estate and JLL, as providers of real estate valuations; and Allen & Overy, as legal advisors.

On a roll with its European expansion

With the aim of strengthening its presence in the European markets, the US private equity fund has also just made its debut in Portugal. Its first operation there has involved the purchase of a portfolio of non-performing and low-yield loans with a total outstanding balance of around €476 million, as well as some recovered real estate from Caixa Geral de Depósitos, the most important bank in Portugal in terms of assets.

The offer has come after the Portuguese Government allocated €2,500 million to these types of assets as a stimulus measure. “We see great potential in Portugal, especially in the markets for real estate and low yield assets. We hope to close more operations in the future”, said the Director and Head of the Real Estate and NPL business for Europe, Fabio Longo.

The portfolio mainly consists of bilateral loans, backed by real estate guarantees, to small and medium-sized companies, as well as to larger companies. The loan guarantees span a wide range of asset classes, such as residential complexes, both finished and in progress, industrial and tertiary real estate assets, and land. “This investment demonstrates our expertise when it comes to carrying out complex transactions that require dedication and close collaboration with the vendor”, added Longo.

The following players participated in the operations: Hipoges and Finangest, as loan management specialists; Aura REE, JLL and CBRE, as suppliers of real estate valuations; and Uría Menéndez Proença de Carvalho, a local law firm.

Original story: El Confidencial (by Carmen Alba)

Translation: Carmel Drake

Bankia Sells €1,300M Loan Portfolio To Oaktree & Chenavari

6 July 2015 – Idealista.com

As the summer approaches, many financial entities are stepping down on the accelerator to sell their unwanted real estate portfolios as soon as possible. To this end, Bankia has just sold a portfolio known as ‘Project Wind’ to the funds Oaktree and Chenavari, in a mega-transaction worth €1,300 million, which primarily contains doubtful mortgages to individual borrowers.

The transaction actually comprises three different portfolios, which have been shared between the US fund Oaktree and the British fund Chenavari, although according to financial sources, the signing of the sale is still pending:

  1. Portfolio Mast: €918 million of unpaid mortgages from individual borrowers, which has been shared between Oaktree and Chenavari.
  2. Portfolio Board: €178 million of debt backed by real estate collateral, which has been awarded to Oaktree.
  3. Portfolio Find: €216 million of unsecured debt without any real estate collateral. There are lots of lines of credit in this package. It has been awarded to Chenavari.

This transaction follows Bankia’s sale of another portfolio, containing hotel debt, to Bank of America at the beginning of June. That operation, known as ‘Project Castle’, comprised 91 operations, in total, linked to 45 assets. 56% of that portfolio related to doubtful debts.

But Bankia also has another packet of real estate assets up for sale, the so-called ‘Project Big Bang’, which includes a portfolio of residential and commercial assets, as well as land, worth €4,800 million. The bank is very keen to accelerate the sale of that portfolio, which would represent the largest sale of real estate assets since the real estate bubble burst.

CaixaBank is also selling off property

2015 is turning into the year of the large real estate transactions. CaixaBank has put several portfolios up for sale. One of those contains new-builds, known as Project ‘Tourmalet’ and it contains loans secured by 271 completed new residential developments, 160 plots of land and work-in-progress residential developments. The packet is worth close to €1,000 million.

Another package up for sale is the so-called ‘Eurostars’ portfolio containing 1,091 assets, including 807 homes, 253 parking spaces, 26 storerooms and 5 commercial premises. It is worth almost €103 million and the transaction is being managed by the real estate consultancy JLL.

Original story: Idealista.com (by P. Martínez Almeida)

Translation: Carmel Drake

BBVA Gauges Investor Appetite For Two Big Portfolios

29 June 2015 – WSJ

Banco Bilbao Vizcaya Argentaria SA is sounding out investor appetite for two large portfolios of non-performing debt and real estate assets, according to sources briefed on the potential deals, as Spain’s economic recovery helps banks shed more of their bad loans.

BBVA, Spain’s No. 2 bank by market value, has spoken with investors in recent weeks to gauge their interest in the purchase of a portfolio that could contain around €1 billion worth of non-performing real estate loans and repossessed property assets and another portfolio that could contain between €500 million to €1 billion worth of nonperforming consumer, business and real estate loans.

BBVA has not sent investors “teasers”—documents that lay out details of an operation—because the parameters of the potential deals are still being designed, and the portfolios may not materialize, some of the sources said.

One source said that BBVA could formalize the sale of the two portfolios in September, and that the large size of the potential deals indicates that the portfolios could be partitioned and sold to various investors.

A spokesman for BBVA declined to comment.

Amid strong demand for Spanish real-estate assets, BBVA has hired KPMG LLP to oversee the sale of its loan-recovery unit. (…). A spokesman for KPMG also declined to comment.

Background

The potential sale by BBVA follows efforts by other Spanish lenders to sell real estate assets. They are encouraged by an economic growth rate—forecast by the Bank of Spain to reach 3.1% this year—that is outpacing that of other major eurozone countries.

Bankia SA has recently received non binding offers for €4.8 billion of property, including 38,545 residential units, 4,938 commercial units and 2,589 plots of land throughout Spain, according to a deal document sent to investors by Credit Suisse Group AG in April. Spain spent €22.4 billion in European Union funds to bail out Bankia in 2012. (…)

Spanish lender Banco de Sabadell SA sold its unpaid debt management and collection unit last July to Norwegian debt collection company Lindorff Group.

Major investors, such as Apollo Global Management LLC and TPG Capital Management, have stepped up their presence in Spain’s property market, as the economic recovery has helped to buoy real estate prices in some cities. (…).

Blackstone Group also bought the real estate servicer of bailed-out lender Catalunya Banc SA, and paid €3.6 billion to buy €6.4 billion of home loans issued by the bank.

Apollo, TPG, Cerberus Capital Management LP and Sabadell were selected in December by Spain’s “bad bank” to market and sell billions of property assets on its behalf, a contract that brings commissions and insight into the real-estate market.

Investors and analysts expect the real-estate servicers to consolidate in coming years as investment funds continue to seek high returns while they whittle down the amount of foreclosures and bad loans they oversee.

Original story: WSJ (by Jeannette Neumann)

Edited by: Carmel Drake