Starwood, Sankaty buy €800m Spanish loan package from Bankia

Sankaty Advisors, an independently managed credit affiliate of Bain Capital, has joined forces with Starwood Capital to acquire a portfolio of secured and unsecured loans from BFA-Bankia Group, Spain's largest nationalised lender.

The portfolio - which has a par value of €800 mln - is made up of two distinct types of loans: those secured against hotel assets in Spain, with a concentration in resort locations; and syndicated and bilateral loans secured against Spanish small-and-medium enterprises, with a mix of collateral including real estate.

The package - the largest of its kind to be sold in Spain - is securitised against some 30 hotels including the five-star Gran Hotel Atlantis Bahía Real in Fuerteventura and 60 commercial properties.

50% discount
Sankaty Advisors and Starwood Capital are believed to be paying €400 mln for the assets, representing a 50% discount to face value.

'We are delighted to be making this portfolio investment in Spain and to further enhance our track record of investing in corporates, operating businesses and real estate in Europe,' said Alon Avner, a managing director and head of Sankaty's European business, which has bought €2.2 bn in loan portfolios from European banks over the last three years.

He added: 'We view this as one of the most attractive loan portfolios on Bankia's book, and we are pleased to leverage our scale, flexibility and expertise to support and provide liquidity to these companies operating in challenging market conditions.'

'We are excited about the opportunity to purchase a loan portfolio that includes a significant number of high-quality hotel properties as underlying collateral,' commented Peter Denton, senior vice president at Starwood Capital Group.

Michael Madigan, director of CBRE Capital Advisors, commented: 'Spain continues to hold great potential for investors looking to create value. The country risk has improved tremendously, yet we're still ahead of the major upswing in real estate fundamentals. Therefore, investors are still able to take positions in one of Europe's most populous and dynamic countries, at great discounts.'

Post-acquisition servicing
Copernicus, a Spanish financial services company, assisted Sankaty and Starwood Capital Group in transaction due diligence. Copernicus will also act as the Spanish servicer for the portfolio post-acquisition with Hatfield Philips International providing servicer interaction support. J&A Garrigues acted as legal advisor for Sankaty and Starwood Capital Group. Other valuation, financial and tax advisers included Hatfield Philips International, CBRE, Aura REE, Hellenic Lloyd's, KPMG and PwC.

The portfolio is the latest to be put on the market by Bankia. The Spanish lender is also reportedly in talks to sell 38 properties in Spain to Goldman Sachs for about €300 mln.

According to Spanish website El Confidential, Goldman Sachs has emerged ahead of Blackstone and Cerberus in the bid to acquire the Lake portfolio, which consists of 27 apartment blocks and 11 office properties largely located in Madrid and Barcelona. They include the 26,500 m2 Isozaki del Paseo office scheme in Barcelona.

JP Morgan and CBRE are advising Bankia on the disposal.

Goldman Sachs has already been active in Spain with the €200 mln acquisition of a package of 3,000 residential units in Madrid, a deal carried out in a joint venture with local asset manager Azora.