Sareb announced that it has entered into a definitive agreement for the sale of its first pool of real-estate assets, known as Project Bull. The buyer selected is H.I.G. Capital, a leading global investment firm with assets over €10 billion. The transaction has been closed through its affiliate Bayside Capital.
The sale - which was advised on by KPMG as financial adviser, Baker & McKenzie, Ashurst and Monthisa - values the portfolio at €100m and allows Sareb to participate in future gains.
The sales process has been carried out according to the timetable and the conditions established by Sareb, and in line with transparency and competition principles that regulate all of the sales transactions that the company is involved in.
Sareb's president, Belén Romana, has assessed the keen interest that this transaction has sparked amongst institutional investors worldwide. "The quality of the bids submitted shows the confidence that investors have in Sareb and in the recovery of Spain's real-estate market," she stated. For its Director of Real-estate Assets, Juan Barba, Project Bull's success "allows us to be optimistic with regards to the portfolios we plan to put on to the wholesale market over the second half of the year, which will also involve creating investment vehicles".
In selecting the bid submitted by H.I.G Capital, Sareb took into account the proposed business plan to manage the properties, which would provide it with a greater potential for return on investment.
Chris Zlatarev, from Bayside Capital, commented: "We are pleased to have been able to partner with Sareb on this portfolio. This transaction demonstrates H.I.G.'s commitment to investing in Spain and growing our Real Estate and NPL business." H.I.G. Capital is one of the world's leading private equity firms, with over €10bn of capital under management and significant presence in Spain, led by Jaime Bergel, who heads its Madrid office.
This is the first Sareb real-estate asset portfolio to be put on the wholesale market. Sareb was set up at the end of last year to divest the portfolio of loans and real-estate assets transferred by banks, which had received government funding.
The Project Bull portfolio is comprised of residential developments, more specifically 939 homes located in: Andalusia (275), Canary Islands (129), Cantabria (5), Catalonia (38), Community of Valencia (343), Balearic Islands (19), Madrid (86), and Murcia (44). The portfolio also includes 750 ancillary premises (parking spaces and storage rooms) and one retail unit.
The transaction has been structured via the creation of a Bank Asset Fund (FAB), a hitherto unknown investment vehicle in Spain, into which the real estate assets in the Project Bull portfolio will be transferred. Sareb will retain a 49% share in the FAB, whilst H.I.G Capital will own 51%.
The properties in the hands of the FAB will be managed by an independent servicer selected by H.I.G, Monthisa, a Spanish company with more than thirty years of real estate management experience.
Bank Asset Funds, a key instrument for Sareb
The sale of the Project Bull portfolio will create the first Bank Asset Fund (FAB). This is a financial vehicle devised exclusively for Sareb, and which provides favourable tax regime to investors, especially non-residents, who are exempt from corporation tax. The FAB itself is subject to 1% corporation tax.
FABs, which will operate as a joint venture, must be managed by a regulated securitised asset management company, as well as be registered with the National Securities Market Commission (CNMV, Comisión Nacional del Mercado de Valores). This product is aimed exclusively at institutional investors who are able to list on structured markets.
It is an extremely flexible vehicle for the investor, which can be adapted to its specific needs, according to the type of asset or investment required. One of the main benefits for Sareb is that it is a liquid and transparent vehicle, managed by a specialist organization. In addition, by participating in the FAB, Sareb ensures that it will profit from the future appreciation of the real estate or financial assets transferred to the fund.