13 October 2017 – Cinco Días
Bankia is currently considering how it will deal with the exposure to real estate through BMN that it will end up with following the planned integration of the two entities at the beginning of 2018. The bank chaired by José Ignacio Goirigolzarri is considering the rapid sale of BMN’s problem assets to one of the opportunistic funds that typically participate in these types of operations.
Goirigolzarri’s entity has already made contact with several of the intermediaries that typically advise on these types of transaction, according to sources familiar with Bankia’s intentions, to sound out the options available. These intermediaries include large consultancy firms and several investment banks. The bank has reportedly asked all of these companies to share their ideas about how to best handle a potential sale.
Bankia’s initial idea involves carrying out a rapid operation, similar to the deal undertaken by Santander in August, with the sale of the portfolio that it inherited from Popular that it transferred to the fund Blackstone in just six weeks. That agile move was very well received by the market.
Unlike in the case of Popular, BMN’s exposure to property is considerably less. The entity owns around €1,100 million in net foreclosed assets, according to data about the merger of both entities reported by Bankia in June. The entity has a coverage ratio of 28% over its foreclosed assets and 40% in the case of its doubtful debts (somewhat lower than the average for the sector, which stands at around 50%).
Moreover, of the total net foreclosed assets, 64.4% correspond to finished homes and 19.1% relate to land. In terms of the entity’s total loan book, which amounts to €21,900 million, only 2.7% relates to property developer loans.
The merger of Bankia and BMN was approved by the General Shareholders’ Meetings of both entities in September. The authorities are expected to declare their approval of the union in December and the definitive integration is forecast to take place at the beginning of 2018. The operation will be articulated through the handover of 205.6 million newly issued shares in Bankia to the shareholders of BMN, which effectively means assigning a value of €825 million to the latter (0.41 times its book value).
As such, BMN’s shareholders will hold 6.7% of Bankia’s share capital. Following the merger, Bankia will be the fourth largest entity in the country, behind Santander, BBVA and Caixabank (…).
Another of the differences compared to the operation involving Popular is that BMN does not have its own servicer. In the case of the bank acquired by Santander, it repurchased the 51% stake in Aliseda that was held by the funds Värde Partners and Kennedy Wilson, to subsequently include it in the operation that was then sealed with Blackstone.
In 2014, BMN sold its real estate asset management company Inmare to the servicer Aktua (controlled by the Norwegian fund Lindorff), to become strategic partners in the management of those assets.
The most likely scenario is that Bankia will execute the sale of the assets proceeding from BMN as the single transfer of a portfolio, given that it no longer owns a servicer. The entity chaired by Goirigolzarri declined to comment on any possible operation given that the merger has not yet been approved by the authorities (…).
The potential buyers will presumably include the usual suspects, such as Apollo, Oaktree, Bain, Cerberus, Blackstone, Lone Star, Castlelake, Värde Partners, Lindorff, TPG and Goldman Sachs.
Original story: Cinco Días (by Alfonso Simón Ruiz)
Translation: Carmel Drake
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Source:: AURA Real Estate Experts