FRANKFURT/MADRID: Germany’s Commerzbank is finalising the sale of Spanish property loans to US investors for up to ¤3.9bn ($5.4bn), sources said, in what would be one of the biggest deals of its kind since Spain’s 2008 real estate crash.
JPMorgan and private equity firm Lone Star have been picked as the winning bidders for the portfolio — in a deal codenamed “Project Octopus” — the three sources close to the matter said yesterday, adding that the deal had yet to be formally signed.
“The main parts of the agreement are already done ... the final closing will be in the coming weeks,” one of the sources said.
Commerzbank, Lone Star and JPMorgan declined to comment.
The portfolio is one of the largest sold in the wake of Spain’s real estate market collapse in 2008. House prices have fallen around 40 percent since then, hurting banks exposed to the sector and pushing some Spanish lenders into state bailouts.
Foreign investors have flocked to Spain in search of real estate bargains, but many banks were initially reluctant to sell at big discounts, and large portfolio auctions have been rare.
In the past year, however, more deals have emerged as Spanish banks, and some in other countries, have booked hefty provisions against losses and are in a stronger position to sell loan portfolios at discounts.
Investors such as Blackstone and Cerberus Capital Management have also started buying real estate management divisions from banks, to help them manage the loans and housing.
Commerzbank, Germany’s second-biggest lender, is taking advantage of the renewed appetite for the Spanish real estate market as it cleans up its finances, but it will still have to sell the package at a discount, the sources said.
The sale price is between ¤3.7bn and ¤3.9bn, two of the financial sources said.
The loans had a face value of between ¤4bn and ¤4.5bn when Commerzbank took them on, sources have previously said.
The sale of the “Octopus” portfolio should pave the way for more disposals of packages of loans and properties, bankers in Madrid said, adding that some deals had been held up because investors were focusing on this one.
The Commerzbank package was particularly attractive for buyers as it includes loans backed by commercial buildings such as hotels and shopping centres, rather than the residential mortgages banks usually try to shift. The loans include ones to the luxury Ritz hotel in Madrid, for example.
That helped it draw offers from banks as well as funds, and JPMorgan was up against bidders including Deutsche Bank. Banks were attracted by the performing loans in the portfolio, sources have said.
Reuters
