Santander Puts €6bn in Real Estate Assets Up For Sale

30 June 2018 – Cinco Días

Spain’s banks have put their foot down on the accelerator to end the property hangover once and for all. And there is no letup. On Thursday, CaixaBank announced that it had reached an agreement with Lone Star to sell it 80% of its problem assets, including its real estate platform Servihabitat, worth €7 billion altogether, which means that the fund will disburse around €5.6 billion for the property of the Catalan entity (based on the valuation as at October 2017).

This operation caused CaixaBank’s share price to soar on Friday, rising by almost 7%, and closing trading with an increase of 3.32%, to reach a value of €3.706 per share.

Sabadell also saw its share price soar on the stock market after closing the sale of a portfolio of non-performing loans worth €900 million to the Norwegian fund Axactor. That was Project Galerna, the smallest portfolio of the four containing foreclosed assets and non-performing loans that the bank has put up for sale, and whose deadline for the presentation of binding offers ended last Wednesday.

The bank’s objective is to close the sale of the four portfolios in a competitive process with a value of €10.8 billion over the next two weeks, before it presents its results for the first half of the year. Despite that, the Catalan bank will not be able to deconsolidate from its balance sheet more than €5 billion, equivalent to the largest portfolio comprising problem assets proceeding from the bank itself.

The other portfolios, whose contents came from CAM, cannot be removed from its balance sheet until the Deposit Guarantee Fund (FGD) reaches an agreement with the banks and Brussels so that the losses that these sales generate are not included in the public deficit. The stumbling block with these portfolios is that they are backed by an Asset Protection Scheme (EPA), in which the FGD initially assumes 80% of the losses generated by the operation, and Sabadell the remaining 20%, although the channel being considered to resolve this problem leaves those percentages to one side.

The market, on the news of the sale of the Galerna portfolio and the existence of seven offers in total for the purchase of almost all of the entity’s property, reacted with a rise of 4.7%. Although by close of trading the increase had dropped to just 1.74%, the third largest of the selective, to finish with a share price of €1.4355.

Santander has joined these operations, by placing up for sale foreclosed assets worth €6 billion, almost all of the property still held by Santander España. A spokesperson for the bank declined to comment on the operation.

The advisor on the sell-side is Crédit Suisse.

This macro-sale is the second largest operation that the group chaired by Ana Botín (pictured above) has ever undertaken and could be its last, given that this final disposal will allow the group to get rid of almost all of its real estate.

Indeed, Santander starred in the first macro-operation involving the sale of real estate assets one year ago. Last summer, it surprised the market with the sale in a single operation of all of the property proceeding from Banco Popular, around €30 billion, to Blackstone, with whom it created a company in which the US fund holds a 51% stake and the bank chaired by Ana Botín owns the remaining 49%.

That operation put pressure on the rest of the sector, which started to replicate the formula. The second to repeat the formula, in fact, was BBVA, with the sale of €13 billion to Cerberus.

Sareb is also now sounding out the market regarding the sale of gross assets worth around €30 billion (around €13 billion net). Nevertheless, the bad bank must wait for the green light from the Government to be able to carry out that operation, given that Sareb is an institution that depends on the Executive. It was created to unblock the former savings banks that received aid for their property, which is why it will try to maximise the value of any operation that is undertaken in order to return the public aid.

Original story: Cinco Días (by Ángeles Gonzalo Alconada)

Translation: Carmel Drake

Sabadell Evaluates the Sale of its RE Arm Solvia

26 April 2018 – Intereconomía

Banco Sabadell is evaluating the sale of Solvia, its real estate subsidiary. There has been no shortage of offers given that Blackstone, Cerberus and Lone Star have all expressed their interest. The value of the company was €900 million in 2015, but that figure could now be higher due to the rise in market prices.

The CEO of Banco Sabadell, Jaime Guardiola, said during the presentation of results for the first quarter, where he announced that Sabadell had earned €259.3 million, up by 32.7%, that the entity has no “vocation” to dedicate itself to the real estate sector, but rather the banking sector, and so “when the time is right and an opportunity arises to create value”, the possibility of divesting Solvia will be assessed.

“Given the current coverage levels and the appetite that exists in the market, it is feasible to analyse an operation of this kind”, said Guardiola, who stressed, however, that “the time has not arrived yet”.

In fact, Banco Sabadell is immersed in a process to sell several portfolios of toxic real estate assets amounting to €10.8 billion in total, which will allow it, if expectations are met, to divest almost all of its problematic real estate inheritance, worth close to €14 billion at the end of 2017.

To remove these toxic assets from its balance sheet, most of which it inherited from Caja de Ahorros del Mediterráneo (CAM), the entity chaired by Josep Oliu has placed two portfolios of foreclosed assets on the market worth €7.5 billion.

Those portfolios join two others launched at the beginning of the year, worth €3.3 billion (one worth €900 million and the other worth €2.4 billion), and so Banco Sabadell is already sounding out the market to place packages worth €10.8 billion in total.

Jaime Guardiola, meanwhile, considers that the Spanish mortgage business “is very healthy” and that the delinquency levels “have been very well managed”. He adds that the new pipeline is being carried out in an optimal way, and so he rules out the possibility of the mistakes of the past that triggered the crisis being made again.

Original story: Intereconomía

Translation: Carmel Drake

Kutxabank Prepares the Sale of Residential Land Worth €700M

26 February 2018 – Eje Prime

Kutxabank is awakening from its lethargy in the Spanish real estate sector. The Basque bank, which resulted from the merger of three savings banks from the region (Kutxa, BBK and Caja Vital), wants to get rid of 40% of its portfolio of toxic assets, which would mean launching onto the market a portfolio of land and promotions worth between €500 million and €700 million.

This operation will be the second most important divestment to be undertaken by the financial entity, after it sold its real estate arm, Neinor Homes, to the fund Lone Star, back in 2015 for €930 million.

The objective of the bank is to take advantage of the good times that the residential market in Spain is currently enjoying to place its assets with international funds and new property developers, according to Vozpópuli.

This option that Kutxabank is considering comes at a time when the sector is complaining about the lack of developable land, which means that it is likely that the bank will easily find groups interested in acquiring its land. The plots are largely inherited from the merged Cajasur, a Cordoban entity that BBK integrated in 2010.

If it carries out the transaction, Kutxabank would join Santander and BBVA on the roadmap of Spanish banks with respect to real estate. The sale of a large part of the property held by two of the country’s major financial institutions last year, both to US funds, set a course that other smaller banks are now starting to follow.

Original story: Eje Prime

Translation: Carmel Drake

Aelca Makes Its Debut In Valencia With 192 Homes

21 September 2017 – Levante EMV

The property developer Aelca has arrived in Valencia with the launch of two developments containing 192 homes in Patraix and Nou Campanar. The development in Patraix is owned by the property developer itself, whilst the one in Nou Camapanar is owned by Sareb.

Aelca is one of four large Spanish property developers linked to a US investment fund (known in the sector as the “big four”) that has backed Valencia heavily in the face of the shortage of new-build homes and the rise in the price of land in Madrid and Barcelona. The other three large property developers are Neinor Homes (which is going to build 450 homes in Malilla), Vía Célere (which is working on a development in La Petxina) and Aedas Homes (which is going to build homes in Cuatre Carreres).

Aelca was founded in Madrid in 2012 and in the middle of 2016, the US fund Värde Partners acquired a stake in the firm. The investment fund headquartered in Minneapolis is one of the players that has most heavily backed the recovery of the sector in Spain, as demonstrated by the fact that it has also invested in Vía Célere. With the financial muscle that it enjoys from having Värde Partners as a shareholder, Aelca plans to continue buying land.

Aelca’s own development in Valencia is called Residencial Llum, a complex containing 120 homes with 2, 3 and 4 bedrooms, in a private urbanisation between Avenida Tres Cruces and Calle Campos Crespo in Patraix. The prices of the homes there start at €125,000 including a parking space and storeroom.

Aelca’s second project in Valencia is called Residencial Sonet, a building with 72 homes that is being promoted by Sareb and marketed by Solvia. The urbanisation has a communal outdoor swimming pool, the homes have between two and four bedrooms and the development is located on Avenida Pío Baroja. The homes there are on the market for prices starting at €190,000.

Aelca recorded turnover of €103 million in 2016 having sold more than 600 homes. The company expects its revenues to increase by 49% this year (to reach €154 million) and for it to sell around 1,000 homes. The property developer currently has more than 2,220 homes under construction across Spain.

In addition to the four large property developers linked to US investment funds, there is another player in the market, Metrovacesa. That entity owns land for the construction of 5,550 homes in the Community of Valencia after it received plots from Santander, Popular and BBVA.

Original story: Levante EMV (by Ramón Ferrando)

Translation: Carmel Drake

CBRE: RE Inv’t Amounted To €3,417M In Q1 2017

6 April 2017 – Expansión

Investors’ appetite for real estate assets in Spain is continuing in 2017. After two record-breaking years, the pace has been maintained during the first three months of this year, with real estate purchases amounting to €3,417 million, according to the consultancy firm CBRE.

This figure represents an increase of 50% with respect to the same period last year. “The figure in 2017 reflects the fact that interest in buying in Spain has not slowed down at all and that although 2016 closed with a fast pace, there are still a lot of investors out there and a lot of liquidity in the Spanish real estate market. Moreover, the political and economic uncertainties of 2016 have now disappeared”, explained Mikel Marco-Gardoqui, Head of Investment at CBRE España.

Amongst this buyer furore, international investors are playing a leading role, accounting for 70% of the total volume disbursed during Q1, according to the consultancy firm’s report.

Of those, the most active have been the US funds, such as GreenOak, CBRE Global Investors (which acquired the Barclays offices in Plaza de Colón), Hines (the new owner of Popular’s headquarters in Barcelona) and HIG Capital, in terms of tertiary assets, and Värde (the majority shareholder of the property developers Vía Célere and Aelca) and Blackstone in the case of purchases in the residential sector. “International investors are primarily looking for opportunities in retail (both shopping centres and high street stores) and offices, although increasingly more funds are looking for opportunities in residential land and logistics”, said Marco-Gardoqui.

After the US funds, investors from the United Kingdom have been the most active in 2017, accounting for 29% of the total investment figure. Of those, Intu Properties stands out the most. The British company, which specialises in shopping centres, starred in the largest ever purchase in the Spanish retail market, by paying €530 million for the Madrid Xanadú shopping centre, in Arroyomolinos. “Core and core plus investors account for around 40% of the money invested in Spain, whilst those dedicated to adding value represent another 40%; by contrast, opportunistic funds now account for the remaining 20%.

By type of properties, retail assets (shopping centres and high street stores) have been the star products in the investment market, accounting for purchases amounting to €1,365 million in Q1. The sale and purchase of offices amounted to €646 million, according to CBRE’s figures, whilst investment in hotels stood at €564 million, followed by residential assets (€457 million) and logistics properties (€241 million) – the remaining €124 million corresponds to individual assets. “The figure in the hotel sector is noteworthy, given that during the first three months of 2017, the sector has achieved almost 30% of the record-breaking figure it registered in 2016 (€2,000 million)”, said Lola Martínez, Head of Research at CBRE.

Socimis

The Socimis, the other active profile alongside the foreign funds, spent €643 million buying up assets during the first quarter of 2017. Of that figure, Merlin accounted for almost half (around €300 million), with two significant operations: the purchase of a logistics portfolio from Saba and the acquisition of Torre Agbar, after the project to convert that property into a five-star hotel failed to materialise. “The Socimis continue to be major players in the investor market, and they will continue that role, with their respective specialisation strategies”, predicts the expert from CBRE.

Whilst international funds have starred in operations amounting to more than €100 million, domestic investors (primarily family offices) have become the major competitors against the insurance companies in operations ranging between €30 million and €40 million, accounting for 11% of the total volume, according to Marco-Gardoqui.

After a record investment volume of €14,000 million in 2016, the experts believe that this year, the figure will amount to around €10,000 million, which was the volume achieved at the height of the boom (2007).

Original story: Expansión (Rocío Ruiz)

Translation: Carmel Drake