Dutch state launches sale of €5.5b Propertize bad bank

The Dutch state has launched the sale process for Propertize, the €5.5 bn bad bank containing real estate and loans taken over from failed lender SNS Real Estate.

Financial advisory firm Lazard and transaction advisory group Alvarez & Marsal are spearheading the privatisation process. They kicked off the marketing via a notice in the Financial Times on Wednesday morning.

Propertize has a portfolio of Dutch and international commercial real estate loans and owned real estate with a gross value of €5.5 bn. 'However, the company is strongly positioned to act as a servicing platform for add-on or third party portfolios given its experience and strong track record. It acts as an independent and fully stand-alone entity, run by an experienced team,' the notice said.

Click here for more information on Propertize's website

The intention is to sell 100% of the shares in Propertize through a 'transparent and competitive auction process' to a single buyer or consortium of buyers.

The deadline for submitting initial expressions of interest to Lazard is noon Central European Time (CET)on 21 December. The sales process is expected to begin in the first week of 2016.

Financial results
Propertize achieved good results during the first nine months of 2015, according to Lazard. The wind-down of the loan and real estate portfolio in the nine months to end-September amounted to €997 mln, compared to €471 mln in the same period last year. As a result, total net exposure decreased to €3.9 bn on 30 September 2015, down from €4.9 bn at end-2014. The net result also improved to €33 mln from a loss of €114 mln at end-September 2014.

Nationalisation
Dutch bank-insurer SNS Reaal was nationalised on 1 February 2013 after running into financial problems caused by its property finance business, SNS Real Estate. In total, the bailout of the bank cost the Dutch taxpayer €4.8 bn.

SNS Reaal's shares were transferred to NL Financial Investments (NLFI), which subsequently established Propertize to run down its €4.8 bn real estate assets and loan portfolio over an 8-10 year term. Last year the Dutch government started considering a sale of Propertize to benefit from rising interest from the private equity sector. Lazard was appointed to study the feasibility of a sale, and then to manage the process.