10 July 2018 – El Confidencial
A new twist in the relationship between Santander and Apollo. The Spanish entity and the US fund have restructured the contract that they signed four years ago, when the former sold 85% of Altamira to the latter. As such, they have laid the foundations that will allow for the refinancing of the debt of their shared subsidiary, which specialises in real estate services.
Specifically, the new agreement involves a significant reduction in the commissions that Altamira will charge the bank, in exchange for which Santander will pay Apollo €200 million now. Moreover, a series of agreements made between the two parties means that Apollo will receive another €70 million, according to confirmation from several sources in the know.
Thanks to the cash injection that the reduction in commissions brings, Altamira has improved the conditions of its €270 million syndicated loan that it has signed with Santander, Bankinter, Bankia, Sabadell, Crédit Agricole and Mediobanca. That liability has seen its term improve by two years, to 2023, but without the repayment of the principal, given that Apollo’s aim with all of these changes (the new management contract and the new debt conditions) is to be able to distribute a juicy dividend.
Specifically, according to the sources consulted, the fund wants to take advantage of the new liquidity injection to distribute remuneration of around €200 million. In fact, Altamira’s total financial commitments, which exceed €320 million, will remain the same and will not decrease following all of this restructuring.
It was in January 2014 when Banco Santander closed the sale of 85% of Altamira to Apollo for €664 million, in an operation that included a management contract for the bank’s real estate assets until 2028. That term will be maintained following the new restructuring of the agreement.
Since then, the relationship between the two partners has gone through various phases, which have included an attempt by the bank to buy back 100% of the platform, although that deal never came to fruition for price reasons, and the acceleration made by Santander to rapidly divest all of its property (…).
One strategy, which has involved the transfer of assets to Metrovacesa and Testa, the creation of a joint vehicle with Blackstone, baptised Quasar, to provide an exit for €30 billion in toxic assets and, now, the sales process involving €5 billion in residential and tertiary assets that has been entrusted to Credit Suisse.
This operation forms part of the horizon that the bank defined last year, when it completed Quasar and announced that it was giving itself until the end of 2018 to reduce its exposure to property to an “immaterial” level, in the words of the bank’s own CEO, José Antonio Álvarez.
Nevertheless, this desire to reduce the real estate exposure to zero will have a direct impact on Altamira, given that the portfolio now up for sale accounts for the bulk of Santander’s assets, which are still managed by the servicer.
Historically, Altamira’s two main clients have been Sareb, which awarded it the contract to manage €29 billion in assets and property developer loans, and Santander, a base Apollo has been expanding by signing agreements with other entities, such as BBVA, which has entrusted it with a €200 million loan portfolio, and Bain Capital, which has engaged it to manage the €600 million portfolio that it purchased from Liberbank.
In addition, the servicer has committed to expanding internationally to grow in size, a strategy that has already seen it take over €10 billion of assets under management in Portugal and Cyprus, the first two markets into which Altamira has made the leap.
Original story: El Confidencial (by Ruth Ugalde)
Translation: Carmel Drake
Source:: AURA Real Estate Experts