BBVA sells bulk of property assets to Cerberus

Spanish bank retains a 20% stake in the real estate book, including €2.8bn of developer loans.

Spanish bank BBVA has sold an 80 percent stake in its domestic real estate business to US private equity firm Cerberus for €4 billion.

The transaction, in which BBVA has formed a joint venture with Cerberus, sees the bank retain non-performing loans while off-loading most of its non-core real estate assets.

BBVA’s remaining non-core property exposure now consists mainly of €2.8 billion in loans to developers and some holdings in real estate companies, the bank told Real Estate Capital.

The overall portfolio comprises around 78,000 real estate assets with a gross book value of around €13 billion, BBVA said. By type of asset, completed properties comprise 59 percent of the portfolio while land accounts for 36 percent and properties under construction account for 5 percent. The real estate assets are mostly located in Catalonia, Madrid and Valencia.

BBVA said the whole portfolio was valued at €5 billion, reflecting a 61.5 percent discount on the gross book value.

The transaction “underscores our confidence in Spain’s continued growth, where we plan to make significant additional investments”, said John Snow, chairman of Cerberus.

Once all regulatory authorisations are granted and the transaction is completed – expected in the second half of 2018 – BBVA will have the lowest relative real estate exposure among the main Spanish financial institutions.

The deal is the largest since US private equity group Blackstone bought in August a majority stake in the property portfolio of Santander’s Banco Popular.

For a purchase price understood to be about €5 billion, Blackstone acquired a 51 percent stake in a portfolio of bank-owned properties with an original value of around €18 billion – as well as non-performing loans carrying a €12 billion face value.

The acquisition equalled the total investment in Spain’s commercial real estate sector in H1 2017, which stood at $5.9 billion, according to JLL.