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
