Spanish bad bank inks Colonial loan sale

Spanish bad bank Sareb has finalised its second loan disposal with the sale of 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, are part of Sareb's 'Operation Bermuda' aimed at reducing the company's exposure to the Spanish listed property sector.

In a statement, Sareb said the operation 'consolidates the wholesale channel as an efficient and cost effective way to tackle the divestment process in which the company is involved'.

Law firm Ashurst acted for the vendor Burlington Loan Management, a subsidiary of Davidson Kempner Capital. Cuatrecasas and Gonçalves Pereira advised Sareb.

The Colonial loan sale is the second loan disposal to be carried out by Sareb since the start of its activities in February this year. In May, the bad bank divested syndicated loans granted to Metrovacesa for some €35 mln.

In early August, Sareb completed its first real estate sale with the disposal of a 51% stake in a €100 mln housing package to HIG Capital’s Bayside Capital arm. The Bankia-repossessed portfolio, valued at €100 mln, included 939 housing units located in Valencia, Andalucía, Murcia, Canarias and Madrid.

The transaction was structured as a new vehicle - a Fondo de Activos Bancarios (FAB) - which will operate as a joint venture between Sareb and HIG. FAB is a special low-tax vehicle introduced by the Spanish government in 2012 to encourage international institutional investors to buy Sareb's assets.

Sareb's director of real estate assets, Juan Barba, said the sale 'allows us to be optimistic with regard to the portfolios that we plan to take to the wholesale market in the second half of the year, which will also entail the creation of investment vehicles'.

Miami-based private equity investor HIG Capital has over €10 bn of assets under management with a large office in Spain led by Jaime Bergel.

Sareb was set up in 2012 following the transfer of some €50 bn of toxic real estate assets owned by nine major local lenders. The new entity bought the bad assets - in large part loans backed by residential real estate - for an average discount of 55%, and financed the operation with treasury bonds.

So far, Sareb has sold over 1,800 housing units.