BBVA offloads majority of property assets to Cerberus for €4bnHeat Profit
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BBVA has sold the bulk of its Spanish real estate business to US private equity group Cerberus for €4bn, part of a growing trend of international money coming back into the country’s once-troubled housing sector.
The Spanish bank’s 78,000 real estate assets, with a gross book value of about €13bn, will be transferred into a joint venture. The business will be 80 per cent owned by Cerberus, according to an announcement on Wednesday.
Carlos Torres Vila, chief executive of BBVA, said that “this transaction is extremely important, because it significantly reduces our exposure to a non-core business, and it allows us to strengthen our transformation process”.
BBVA is to retain control of 20 per cent of the property portfolio, which it said would be managed by Cerberus’s Haya Real Estate.
The deal comes as part of a wider trend of US funds buying into the Spanish property Market in an effort to capitalise on the country’s strong economic recovery and the rebound in its real estate and construction sectors.
The Spanish economy is set to grow 3.1 per cent this year, the fastest of the large eurozone economies. This follows five years of negative growth between 2009 and 2013 in part due to a collapse in the country’s housing Market.
Home prices fell 35.2 per cent from 2007 to 2015, according to property site Idealista.
But as the economy has bounced back, so have property prices. Prices are up 3 per cent this year, after a 2 per cent rise last year, according to Idealista.
Spain still has half a million unsold new homes, many in surreal near-empty cities, but home construction has started again in big cities such as Madrid and much of the southern coast. This is where the Market recovery has been strongest.
John Snow, chairman of Cerberus, said the deal was a bet on continued economic growth in Spain.
“This important transaction . . . underscores our confidence in Spain’s continued growth, where we plan to make significant additional Investments,” he said.
Cerberus is one of the many international funds Investing in the Spanish recovery.
US private equity group Blackstone in August agreed to buy a majority stake in the Spanish property portfolio of failed lender Banco Popular for €5bn. The deal makes Blackstone one of the largest Investors in Spanish real estate.
The previous month UniCredit finalised a sale of loans to Pimco and Fortress, while Bain Capital Credit bought €1bn of loans in Portugal and Spain.