Banks such as Deutsche Bank and JPMorgan are teaming up with international funds to bid for a multi-billion-euro portfolio of Spanish property loans as the country's real estate market thaws, sources close to the process said.
The loan package of over 4 billion euros ($5.5 billion), from Germany's Commerzbank , is one of the biggest of its kind to be auctioned in Spain's six-year real estate slump as lenders burned in the crisis clean up their books.
It is made up of some soured debts and other performing loans backed by office blocks and shopping centers, rather than debts related to residential homes which have more commonly been offered to investors.
That is helping the portfolio attract buyers, the sources familiar with the process said, though funds have also been flocking to Spain recently as the country emerges from recession and property prices come closer to hitting bottom after falling around 40 percent since 2007.
Banks have been joining up with funds to bid together for the Commerzbank portfolio, and would most likely split the assets afterwards, with banks keeping the performing ones.
U.S. private equity firm Lone Star is bidding with JPMorgan for the loans, while Blackstone is working with Deutsche Bank, two sources familiar with those offers said. Apollo Global Managament has put in a joint offer with Spain's Santander , a third source said.
U.S. private equity firm Cerberus has also put in a bid, two other people said, as has Oaktree Capital Group, according to a sixth source, though it was unclear whether these investors had bank partners.
Commerzbank, and the banks and funds declined to comment, as did Lazard which is handling the auction. Over 10 parties have put in bids, which were due at the end of last week, the sources said. Another round of bids is scheduled for April.
"Bidders can put in offers for the whole package, or just the parts they're interested in, such as the non-performing loans for example," said a real estate adviser close to the auction, which is known as "Project Octopus."
The portfolio includes 3.3 billion euros in performing loans and roughly 1 billion in non-performing loans, people familiar with the transaction have previously said.
A lawyer familiar with the process added that the deal could come with a small real estate management platform and a team of people to handle the debts.
International funds have been chasing these kinds of assets in Spain so they can build up credit management units and buy more loan portfolios. Apollo recently bought 85 percent of Santander's property management division, while bailed-out lender Bankia transferred the management of its platform to Cerberus for the next 10 years.
Source: chicagotribune.com
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