Another bank (BBVA) sells its real estate business to a "vulture fund"

05/12/2017

The banks learned the lesson of the real estate crisis. A lot of brick is a lot of risk. So in these years they have been getting rid of their property portfolio; either creating a new company that manages it, joining others or selling almost all of the business. This is what BBVA is going to do. It will sell to Cerberus 80% of its real estate business for a price of approximately 4,000 million euros.

The bank chaired by Francisco González has reached an agreement with a subsidiary of Cerberus Capital Management (Cerberus) to create a joint venture for real estate business in Spain. In this way, the entity reduces almost completely its exposure to 'brick' and this fund, one of the so-called "vultures", consolidates its business in our country. One of Cerverus' advisers in Spain is José María Aznar Botella, son of the former president of the Government, José María Aznar.
At the closing date of the transaction, BBVA will transfer to Cerberus 80% of said company in a transaction that marks a milestone in the strategy of the financial institution, which will focus on its core business, banking, after remaining with the least exposure real estate within the sector, as reported to Europa Press in market sources.
The real estate business contemplated in the agreement is comprised of some 78,000 real estate assets with a gross book value of approximately 13,000 million euros, and the assets and employees necessary for the management of this business. The whole business has been valued at approximately 5,000 million euros.
The final price for 80% will be determined by the volume of assets finally contributed, which may vary, among other reasons, by the sales made until closing. Real estate assets are mainly distributed between Catalonia, Madrid and Valencia.
The transaction also includes an agreement between BBVA and the company of the Cerberus Haya Real Estate group for it to provide real estate 'servicing' services for the real estate portfolio of which the blue bank will be the holder once the operation has been closed. After obtaining the regulatory authorizations and once the operation closed, scheduled for the second half of 2018, BBVA will have the exposure relative to the lowest real estate sector of the main entities of the country.