MADRID: Spain’s “bad bank” is about to start its biggest sale so far of land taken over from bailed-out lenders, as property prices in some of the countries worst hit by the eurozone crisis show signs of recovery.
The Sareb agency, set up to cleanse troubled Spanish banks of real estate holdings that went sour in the crisis, is taking advantage of growing interest from professional investors to catch up from a slow first six months of operations.
The government-backed vehicle, known by its Spanish acronym, aims to put a package of about 80 plots of developed land up for auction, according to a source familiar with the matter.
Sareb values the portfolio at around ¤350m ($477m), which will be the starting point for price talks, the source said, adding: “It is close to coming onto the market, likely in the coming days.”
Sareb declined to comment. But one private equity investor said: “It’s got the market excited in that they are going to set the floor on a lot of asset classes.”
Investors said Sareb, created as a condition of a ¤41bn rescue for Spanish banks with European money, was selling off its best assets first and may struggle to get rid of its poorer quality properties ever, especially undeveloped land. Nevertheless, the private equity investor praised its “Herculean effort” following Spain’s banking crisis, brought on by a 40 percent dive in property prices from a 2007 peak.
The planned sale includes land ready for construction in the Madrid area as well as in the northeastern region of Catalonia, Galicia in the northwest, and in coastal areas.
In recent weeks Sareb put at least seven portfolios on the market. These contain stakes in tourist resorts and a shopping centre, seven prime office buildings, over 2,000 homes and chunks of syndicated loans to property developers.
Investors’ interest in property is rising again across Europe as many countries emerge from recession. Ireland’s bad bank is speeding up sales of real estate loans, and in August house prices there rose at the fastest pace in six years.
Real estate companies have flocked back to the markets this year, with LEG Immobilien’s German stock exchange listing in January the biggest float in Europe for 2013 so far. British property agents Foxtons and housebuilder Crest Nicholson have also listed.
Sareb started life earlier this year with ¤51bn worth of assets transferred from state-rescued lenders such as Bankia, at varying discounts. It is 51 percent owned by private investors, aiming to reduce the burden on stretched state finances.
The private equity investor, who declined to be named, said sales so far had been small. “They’ve sold a lot more in a shorter time span than any other bad bank I’ve seen,” he said. “Still, there are a lot of assets there that they will never sell ... and will still be there in 15 years.”
Reuters
