Private equity firms have spent €3.5bn this year buying real estate loan servicing businesses from Spanish banks ahead of an anticipated surge in loan sales.
Last month Kennedy Wilson and Apollo bought platforms, from Banco Popular and Santander respectively, both with a price above €750m.
The demand indicates that these cash-rich players are hoping to snap up distressed real estate opportunities in Spain over the coming months.
“As Spanish banks look to raise capital without selling their distressed assets, an obvious target for the large US investors is to buy their servicing arms,” said Federico Montero, a partner in Cushman & Wakefield Corporate Finance’s debt advisory team.
Apollo, Varde, Kennedy Wilson, Cerberus and TPG have all jumped on the bandwagon this year, with six platform trades totalling around €3.5bn being undertaken.
“US investors are clearly ready to take full advantage of the wealth of opportunities expected to come from Spain in 2014, with these platforms enabling them to maximise recoveries,” Montero said.
The feeling is that Spain is at, or near, the bottom of the cycle and the flow of deals is increasing. Spain’s bad bank, Sareb, has marketed several portfolios of assets.
“If you want to be in the market, and especially in Spain, you need to have market information,” said a market observer.
“You don’t get public information on transaction prices there; it’s through your servicing platform that you know about real values, because your team knows about this.”
He added: “A lot of the deals will be residential loans – [Sareb’s] Project Bull, for example, included 1,000 units. To maximise value you need to sell as soon as possible at the highest value possible, and for this you need a team that knows the assets.”
La Caixa’s sale of 51% of its servicing platform to TPG in September comprised about 16,000 mainly residential assets.