Blackstone has emerged as the winner in the race to buy a 51% stake in failed Spanish bank Banco Popular’s €30 bn portfolio of distressed loans and real estate assets.
The deal, confirmed late on Tuesday, follows the approval on the same day by European Competition authorities of Banco Santander’s acquisition on 7 June of Banco Popular. At the time of the rescue takeover, Santander said it planned to sell off Popular's bad assets at a discount of up to 40% over a period of three years.
Tuesday's deal follows a competitive bidding process involving three US companies: Blackstone, Apollo and Lone Star. PropertyEU reported in early August that Blackstone had entered into exclusive talks with Santander on acquiring a majority stake in the portfolio. Banco Popular said Blackstone was selected as the successful bidder after submitting ‘the best offer in terms of both its value and management plan’.
JLL acted as both real estate and financial advisor to the buyer.
Assets and management platform
Under the agreement, Banco Popular will transfer assets with an aggregate gross book value of around €30 bn, as well as 100% of the share capital of Banco Popular’s real estate management company Aliseda, to a new company.
The Spanish assets of the business – defined as properties, loans and tax assets, but not including Aliseda – are valued at around €10 bn. Santander said this is consistent with the valuation and provisions made during the acquisition of Popular and does not, therefore, result in any material capital gain or loss for either bank.
Blackstone will own a majority 51% stake in the new company while also assuming management responsibilities. Banco Popular will own the remaining 49% stake.
Rodrigo Echenique, chairman of Santander Spain, said: ‘We are very pleased to enter into this partnership with Blackstone. The agreement significantly reduces our real estate exposures and further strengthens our balance sheet, allowing us to focus all our efforts on supporting customers...The interest generated in this transaction among international investors is also a clear sign of confidence in the Spanish economy and we are grateful to all bidders who participated.’
Jon Gray, global head of real estate at Blackstone, commented: ‘This significant investment reflects our continued confidence in the robust recovery of the Spanish economy. We are delighted to partner with Santander to maximise the long-term value of the portfolio.'
Second major loan deal in Spain
The Popular transaction marks Blackstone’s second jumbo non-performing loan deal in Spain in three years. In 2014 the private equity group paid around €3.6 bn to buy Catalunya Caixa’s Hercules portfolio of largely residential mortgages which had a face value of €6.4 bn.
Europe’s banks still have €537 bn of sour loans and non-core property, according to Evercore's Real Estate Portfolio Solutions team.
