US Fund HMC Buys Old Office Building In Madrid From BBVA

13 March 2017 – El Mundo

The US investment fund HMC has acquired one of the real estate jewels that was up for sale in Madrid and which, according to El Mundo, was far from lacking in suitors. The company has purchased the building located on Calles Clara del Rey 26 and Corazón de María 17 from BBVA.

The property has a buildable surface area of 22,507 m2 and is currently a disused office. However, the days of tertiary activity there are numbered given that the new owner is going to develop an attractive residential project in one of the areas in the capital where no new build homes have come onto the market for years.

The planned investment for the Clara del Rey 26 project amounts to €60 million and the project will comprise one- to four-bedroom homes with common areas including a swimming pool, gym, children’s playground, multi-use rooms, amongst others. The marketing process will begin in a few weeks, although given the high demand that has already been received, a list of interested parties has been opened online at: www.claradelrey26.com.

The operation has been advised by the law firm Eversheds Nicea on the buy side and the sales process has been managed by the real estate consultancy firm JLL.

The operation forms part of HMC’s investment strategy in Spain, focusing on residential projects, in collaboration with its local partner Momentum Reim. Clara del Rey 26 is the latest in a group of projects that both companies are already developing in Madrid and Alcobendas: Aravaca Garden, Encinar Garden and Juncal Garden. In Málaga capital, they are also working on Teatinos Sky Garden and El Limonar.

Original story: El Mundo

Translation: Carmel Drake

Project Normandy: Sabadell Sells NPL Portfolio To Oaktree

9 January 2017 – Catalunya Press

Oaktree, the US fund has won the latest auction of problem assets by Banco Sabadell, as part of Project Normandy. The US fund will pay €250 million for a portfolio of overdue real estate loans worth €950 million.

Oaktree will acquire the assets for a discount of between 25% and 30%, however, the finishing touches still need to be agreed for the operation, which means that it may not be formalised for another month or so.

Oaktree will absorb 500 loans to property developers, amongst others, than Sabadell inherited when it purchased CAM. The loans are secured by property developments, retail premises and land, but their borrowers ran aground following the outbreak of the crisis. Two different strategies are now being pursued: restructure the loan in exchange for a reduction below the price paid (above 25-30%); and/or acquire the assets by legal means and join forces with local property developers (in some cases the same developers whose assets are being repossessed) to carry out the project.

Thanks to Project Normandy, Sabadell has cleaned up more than €8,000 million of problem assets from its balance sheet, whereby reducing the balance from €26,000 million to less than €18,000 million.

In addition to Banco Sabadell, other entities such as Sareb have also closed divestments in recent weeks.

Original story: Catalunya Press

Translation: Carmel Drake

Banco de Portugal Chooses Lone Star To Buy Novo Banco

5 January 2017 – ABC

The Board of Directors of Banco de Portugal has selected the US fund Lone Star to participate in the final negotiations to purchase Novo Banco. Its decision is based on the fund’s €770 million proposal, which would be accompanied by a subsequent injection of an equivalent amount to strengthen the bank’s capital.

But Antonio Costa’s Socialist Government will have the last word, and so the complex process is far from complete. Even so, it is clear that Lone Star’s offer is the most attractive, after the bid from the Chinese giant Minsheng was deemed to lack the necessary financial guarantees.

Lone Star’s only competitor in the bidding was an alliance between two other US private equity funds, Apollo and Centerbridge, whose most senior managers travelled to Lisbon to try to complete their negotiations against the clock.

The major difficulty stems from the fact that Lone Star is shielding itself through the creation of a commission bridge that holds Novo Banco’s non-strategic assets. Novo Banco is the cleaned up heir of the now extinct entity Espírito Santo. That situation is something that concerns the Portuguese Finance Minister, Mário Centeno, to such an extent that he has even raised the possibility of nationalising the entity.

In any case, the proposal from Lone Star falls well below the figure required for the operation to be considered a success by the Portuguese State, given that it put €4,900 million on the table in 2014 to avoid the total collapse of the entity when Espírituo Santo went bankrupt that same year.

Original story: ABC (by Francisco Chacón)

Translation: Carmel Drake

Värde Creates A New RE Company: Dospuntos

21 June 2016 – Cinco Días

One of the real estate firms that suffered during the real estate crisis has been reborn under a new name and with new owners. Värde Partners has created a new property developer, Dospuntos, out of the San José Desarrollo Imobiliarios structure, which it acquired from the San José Group last year. The US fund has an ambitious plan to turn the company into one of the major players in the sector as the incipient recovery starts to heat up.

“Värde and the rest of our shareholders believe in the recovery of Spain and in the growth of the real estate sector”, said Javier Eguidazu (pictured above), CEO of Dospuntos, who joined the firm in September from the Valdebebas urban development in Madrid. According to the Director, Värde and its partners paid more than €1,000 million to purchase the real estate company from San José, basically the amount equivalent to the value of its debt, and the debt clock was reset when the agreement was signed.

The company now owns land from the former subsidiary of San José, as well as from Várde, which was a dynamic and discrete purchaser of land during the recession in Spain. “We now have 800,000 sqm of land, on which we will build 7,000 homes”, said Eguidazu. “Värde is a very active operator in the market and is always studying deals. It is our majority shareholder, but that does not mean that it constructs all of its developments through our entity, nevertheless, it is likely that it will”, said the Director.

The major shareholder of this new real estate company is the US fund, with a stake of more than 50%; it manages assets worth more than €10,000 million all over the world. Värde has been particularly active in Spain in recent years, with the acquisition of Popular’s credit card bsiness, as well as half of the real estate firm Aliseda, from the same bank, in an operation that it entered into together with the fund Kennedy Wilson. Moreover, it is currently holding negotiations to acquire a stake in Procisa’s office business.

Värde (which means “value” in Swedish) is accompanied in its shareholder capacity in Dospuntos by the funds Marathon and Attestor, as well as banks such as Bank of America and Barclays.

The shareholders plan to invest €2,000 million between 2016 and 2012, at an average rate of €400 million per annum, of which €800 million will be allocated to continuing to acquire land on which to build homes. Over the long term, 30% or 40% of the company’s resources will come from bank financing. “Our aim is to create the best land bank in the country and to be the most profitable property developer in Spain”, said Eguidazu. The firm has already invested €100 million in land and another €55 million launching developments. (…).

The new property developer plans to put its first 1,300 homes up for sale in 2018, given that it is already starting to construct its first properties in Madrid, Málaga, Sevilla and A Coruña. Its other target locations include Pamplona, Valladolid, Zaragoza, Sevilla, Barcelona and Tenerife. From 2019, it plans to reach a cruising speed of 2,000 homes per year on average. By then, the company also expects to be generating revenues of between €500 million and €600 million.

Original story: Cinco Días (by Alfonso Simón Ruiz)

Translation: Carmel Drake

Marathon Buys Bahía Azul Shopping Centre For €18.5M

27 January 2016 – Expansión

The US fund Marathon has acquired the Bahía Azul de Málaga shopping centre from Bahía Málaga Desarrollos Integrales for €18.5 million. Inaugurated in 2008, the shopping centre has a surface area of 13,827 m2 and is located opposite Ikea.

Original story: Expansión

Translation: Carmel Drake

Fortress Finalises Its Withdrawal From Spain

17 November 2015 – Expansión

Strategy / The US fund will close the sale of Paratus to Elliott and Cabot Financial this week. It will also complete the ERE affecting more than 50% of Lico Leasing’s workforce.

The opportunistic fund Fortress is continuing its withdrawal from the Spanish financial sector. The US investor is finalising the sale of one of its financial businesses in the country, namely, Paratus, a platform that specialises in the management of problematic banking assets, which Fortress has controlled since 2009.

According to several financial sources, the sale of Paratus will be signed this week with the fund Elliott Advisors and the British group Cabot Credit Management Group, owned by JC Flowers and Encore Capital, taking ownership.

Each of the investors will take over a different part of Paratus’ business. Elliott is most interested in the real estate division and in the team. At the beginning of the sales process – known as Project Coast and advised by N+1 – Paratus held loans amounting to €152 million, secured by 866 properties; 500 homes worth just over €100 million; and a team comprising 43 professionals.

Meanwhile, Cabot is interested in acquiring the unsecured loans, which Fortress is selling for €426 million. The British group is looking to build upon its recent entry into the Spanish market, following its purchase of the Gesif platform from Elliott.

In addition to this possible sale, Fortress is also reducing its exposure to the Spanish financial sector by conducting an ERE at Lico Leasing. At the end of 2014, this subsidiary of Fortress had 130 employees. Through the restructuring, the fund has got rid of the commercial divisions of Lico Leasing, its other major financial business in Spain, which it acquired from the savings banks just one year ago; this means that it will no longer capture any new loans.

Complex operation

Fortress will continue to manage Lico Leasing’s existing portfolio and will continue to operate Geslico, its subsidiary that specialises in problem loans. That company recently integrated two of Fortress’s other companies in Spain: Auxiliar de Servicios y Cobros and Gestión de Activos de Aragón.

Fortress’s commitment to Lico Leasing was cut short due to the time required for its approval – almost two years – and by the re-opening of the credit tap by banks following the measures introduced by the ECB.

The US fund will continue with its other activities in Spain, by providing financing to companies and the real estate market.

Original story: Expansión

Translation: Carmel Drake

Värde Buys San José’s RE Arm & Will Build 1,500 Homes

7 August 2015 – El Confidencial

After months working on the sidelines, the private equity firm Värde Partners has finally taken control of San José Desarrollos Inmobiliarios, the real estate arm of the Galician group. The US fund has purchased a 25% stake in the company from Banco Popular for €90 million, in a deal signed on Wednesday, taking its ownership stake to 51%.

From this position of power, Värde expects to immediately carry out a €60 million capital increase, in a move aimed at shoring up the company and laying the necessary foundations to start developing properties. The aim of the fund, which will invest €150 million in the company in total, through its purchase from Popular and the subsequent capital injection, is to start the construction of 1,500 homes across Spain, clearly underlining its commitment to the Spanish property market.

The US firm is one of the most active foreign investors in the sector, where it has now made three major investments. It all began in the Summer of 2013, when it partnered up with Kennedy Wilson in an agreement to acquire Catalunya Banc’s real estate management platform for almost €30 million, although the two parties ended up breaking that pact a few months later.

The two firms crossed paths once again at the end of 2013, when they pipped Centerbridge at the post, to acquire Aliseda, the real estate arm of Banco Popular, for €815 million. That operation allowed them to take over the management of mortgage-backed loans with a net value of €9,350 million and foreclosed assets worth €6,500 million.

Far from being content with that transaction, Värde then began to acquire stakes in San José Desarrollos Inmobiliarios through the back door, by purchasing loans from its creditor entities. It signed those purchase agreements with discounts of around 90% and whereby became the company’s main creditor, just when the parent company of the Galician group was finalising the refinancing of its €1,600 million debt with the banks.

The final agreement was signed at the end of 2014 and involved dividing the company chaired by Jacinto Rey (pictured above) into two: on the one hand, the construction business, and on the other hand, the real estate company, which it was agreed would pass into the hands of the creditors to repay €743 million of the debt.

Sources state that Värde does not currently have any plans to integrate Aliseda with its recent purchase of San José Desarrollos Inmobiliarios…(…).

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

Sankaty Finalises Purchase Of 40 Large Loans From Bankia

6 May 2015 – Expansión

During 2015, Bankia has become an important focus point for international funds. Along with the sale of properties amounting to €4,800 million, the nationalised entity has launched three other large sales processes to divest non-strategic assets: one contains hotel debt – Project Castle; another involves problem mortgages – Project Wind; and the third includes large loans to real estate companies – Project Commander. The last of these is likely to close first, since the US fund Sankaty, a subsidiary of Bain Capital, is now in exclusive negotiations to seal the purchase and may sign an agreement in the next few days.

If the agreement comes to fruition, the investor will acquire 170 loans granted to 39 companies linked to the property sector. Of those, 31 are property developers that have filed for bankruptcy or liquidation. The portfolio include several loans granted to companies such as the Catalan firm Promociones Habitat.

Most of the loans are syndicated and bilateral, secured by rural land and industrial warehouses. The nominal value of the portfolio amounts to €500 million. Sankaty already acquired one portfolio from Bankia last year, together with the hotel investment giant Starwood. They paid the bank €400 million for hotel and real estate loans.

Original story: Expansión

Translation: Carmel Drake

KKR Considers Buying One Third Of Acciona’s RE Subsidiary

18 March 2015 – El Confidencial

The group owned by the Entrecanales family is looking for a partner to allow it to ‘ride the wave’ of the real estate recovery and has invited the US fund to be its travel companion.

KKR. The acronym of Kohlberg Kravis Roberts has become Acciona’s most important partner in recent times. Last June, the private equity giant purchased a third of the international renewable energy business owned by the Entrecanales family’s group for €417 million, and in a stroke, that allowed the Spanish group to clean up its accounts, fulfil its divestment plan six months early and rethink other sales that it had on the table, such as Bestinver and Acciona Inmobiliaria.

The sale of the latter became more attractive after the company was strengthened through the hiring of Walter de Luna, who was until then the number two at Sareb, as the CEO, and Luis Moreno, who was his right hand man at the bad bank; they joined the company with the clear challenge of designing a plan for growth. Nevertheless, that plan requires resources and, once again, Acciona’s American friend seems to be willing to help out.

According to knowledgeable sources, KKR is considering buying share capital in Acciona Inmobiliaria; and if the negotiations between the two parties go well, they will culminate in a third large transaction between the fund and the Spanish group, because, as well as having acquired the international renewable energy business from the construction company, KKR has also created a joint venture with the Spanish group, containing wind assets, the famous ‘yieldco’, which it expects to list on the Nasdaq soon.

In recent official presentations, Acciona itself has formally acknowledged the badly-kept secret that it is looking for a partner to inject the money it needs to reinvigorate its real estate subsidiary and thus be in a position to benefit from the recovery that is emerging in the sector, now that it has managed to sort out the direction of the parent company.

The book value of Acciona Inmobiliaria amounts to c. €1,500 million and market sources indicate that the goal of the Entrecanales family would be for the new partner to take ownership of around one third of its share capital. Nevertheless, other alternatives have also been put on the table (in the discussions with KKR), such as tackling projects together, since the Spanish group has (lots of) projects (in the pipeline) and the American fund has cash.

KKR’s commitment to Spain

Spain has become a priority market for KKR in Europe, where its Operations Director, the Spaniard Jesús Olmos, has been the main driver behind the firm’s growth in our country in recent years. He has led the investment of more than 2,400 million dollars in companies such as Saba, Telepizza, Uralita, Grupo Alfonso Gallardo, Port Aventura, T-Solar and, of course, Acciona. These transactions have been strengthened by the fund’s decision to open an office in Madrid and recruit Alejo Vidal-Quadras, who was the CEO of 3i España until last December.

Now, one of KKR’s next goals in our country is to position itself as a player of reference in the real estate sector, as well as to open its sphere of operation to investments in credit and to continue its growth in infrastructure.

Meanwhile, after seven years of crisis and various failed sale attempts, Acciona Inmobiliaria managed to recover in 2014 to record positive results; it closed last December with an EBITDA – earnings before interest, tax, depreciation and amortisation – of €3 million, compared with losses of €2 million a year earlier.

The group owned by the Entrecanales family values its subsidiary at €1,529 million, of which it considers around 70% (€1,199 million) to be gross gains by the group. By geographical region, 87% of the subsidiaries’ assets are located in Spain and only 13% are overseas; whereas if we analyse the subsidiary in terms of turnover, 45% relates to property (primarily residential), 37% corresponds to land in Spain, 8% is land overseas and development activity accounts for the remaining 10%.

Original story: El Confidencial (by R. Ugalde)

Translation: Carmel Drake

Cerberus Purchases Gescobro From Spanish Fund Miura

18 February 2015 – Expansión

Transaction / The US firm acquires the company that specialises in debt recovery, which has been controlled by the private equity firm Miura for five years.

Following its acquisition of Sotogrande, the US fund Cerberus is continuing to dominant transactions in Spain. Its latest target has been Gescobro, the debt recovery company, owned by the private equity firm Miura since 2010, which held more than 90% of its share capital, according to market sources.

The management team, which held a minority stake in the company, continue at the helm. Through this transaction (for which the consideration paid has not been disclosed), Cerberus strengthens its debt management capability, in particular after investing in bank debt in the Spanish market in recent months.

The US fund already owned Haya Real Estate (formerly Bankia Habitat), which, in addition to its real estate management services, also operates in the field of mortgages.

With the acquisition of Gescobro, Cerberus enhances its position in the debt recovery market, specifically in the consumer credit segment. Last year, Gescobro managed files with a value of €4,000 million. Miura first acquired shares in the company in 2010; until then it was owned by the founding family, the García-Godalls.

Gescobro employs nearly 300 professionals between its headquarters in Barcelona and its offices in Madrid. Heading up the company is Iheb Nafaa, the CEO, who is supported by Gemma García Godall, Head of Business Development and the daughter of the firm’s founders. The two executives were also shareholders of the group when Miura controlled the company and, according to market sources, both continue to hold a minority share.

The transaction, which was closed on Monday, is the second divestment made by the Spanish fund since it was established in 2008. The advisors to the transaction included PwC, on the side of Miura, and the law firm Ashurst, who worked with Cerberus.

Original story: Expansión (by Sergio Saiz)

Translation: Carmel Drake