Commerzbank has hired investment bank Lazard to sell the entire real estate loan portfolio owned in Spain by Hypothekenbank Frankfurt (formerly Eurohypo), its specialist property lending business.
Commerzbank has hired investment bank Lazard to sell the entire real estate loan portfolio owned in Spain by Hypothekenbank Frankfurt (formerly Eurohypo), its specialist property lending business.
The sale - which is likely to be one of the largest Continental European loan disposals this year - involves around €3.3 bn of performing loans and another €1.7 bn of non-performing assets, for a total of some €5.34 bn at end-September 2013.
Lazard and Commerzbank declined to comment on the sale.
However, a Commerzbank spokesperson told PropertyEU that the group is planning to offload assets owned by Hypothekenbank Frankfurt across Europe. 'In compliance with the European Commission requirement to wind down Hypothekenbank Frankfurt (formerly Eurohypo), we are looking to sell all of Hypothekenbank's assets over time and our main goal is to preserve capital,' he said.
Hypothekenbank’s commercial real estate loan book was worth €33 bn at end September last year, down from €47 bn at end-December 2012. Germany accounts for nearly half of the debt package.
Last year, Commerzbank clinched Europe's largest loan sale with the disposal of its UK loan book with a face value of some €5 bn to Wells Fargo and Lone Star for an average single-digit discount.
In Spain the company has aborted the sale of a €370 mln portfolio known as Project Sol after receiving bids it deemed too low. The package was securitised against six shopping malls and two land bank portfolios.
According to market watchers, Commerzbank is likely to package the Spanish loans in sub-portfolios which could be of interest to a higher number of investors. 'The €1 bn mark is a hurdle for many investors, particularly in Spain. I think very few companies have the appetite and the financial capability to close billion-euro deals,' commented Roger Cooke, former head of Cushman & Wakefield in Spain.
According to those who track the market, it may be an interesting challenge to combine the sale of performing and non performing loans. The former generally appeals more to financial buyers whereas the latter is more hands on at real estate asset level. 'Only a certain number of buyers are really resourced to handle both,' a source said.
Likely bidders for the Spanish loans include a range of international private equity firms seeking to re-enter the market at a time when prices have hit rock bottom. Sareb, Spain's bad bank, was able to close a number of debt sales last year including a package of syndicated loans with a €245 mln face value to a unit of US hedge fund Davidson Kempner Capital.
The credit facilities, which have Inmobiliaria Colonial as borrower, were part of Sareb's 'Operation Bermuda' aimed at reducing the company's exposure to the Spanish listed property sector.
Sareb is also believed to be selling another €437 mln of loans taken by Realia Business to Fortress Investment Group for a discount of roughly 50% to their face value.