SAREB selling €400m residential NPLs in pilot scheme

SAREB, Spain’s ‘bad bank’, is selling a pool of non-performing residential loans with a face value of around €400 million in a pilot scheme.

Investors can bid for selected assets, rather than the total pool of NPLs, though a sales channel, in which 30 institutional investors have been invited to participate as potential bidders, a spokesman from SAREB told Real Estate Capital.

“If the initiative is well received, the idea is to open the channel to approved and local investors, who may have an interest in this type of assets,” the spokesman said.

The sale process, currently in its initial phase, will accept non-binding offers from investors until 11 October. This will follow a second phase for binding offers, and a due diligence phase expected to close by the end of this year or early in 2018.

The NPLs are secured by residential properties across Spain, mainly in Madrid, Barcelona, Malaga and Cadiz, plus Galicia and Valencia.

“This is an example of how owners of NPLs in Spain are starting to be more flexible when selling portfolios, to reach a new segment of investors, besides the traditional big NPLs buyers,” said a source who asked to remain unnamed.

With large NPLs buyers such as Apollo, Blackstone and Cerberus having considerable exposure to Spain’s distressed assets, new players with less capacity to buy big portfolios “are welcoming this flexible approach to buy NPLs”, the source said.

“New demand has come from mid-size funds, which can carry out smaller transactions ranging from €40 million to up to €200 million, which is a reasonable size, but nothing to do with some huge transactions we have seen before,” the source added.

Spain and Portugal are set to feature prominently in the European real estate loan sales market during the second half of 2017, as investment banking firm Evercore reported €44.1 billion of live sales in Iberia at the mid-year point.

The largest pipeline features Spanish non-core property loans and lender-owned real estate, with sales relating to assets boasting a combined face value of €31.5 billion ongoing, reflecting 61 percent of the European total.

In August, Blackstone agreed to buy a 51 percent stake in the property portfolio of Santander’s Banco Popular, with an original value of around €18 billion – as well as non-performing loans carrying a €12 billion face value.