Sunday 25 September 2016

Bank of America does deal for Spain hotel-backed loans

Sharon Smyth

Published 28/05/2015 | 02:30

Bank of America is buying a string of assets tied to Spain's Bankia
Bank of America is buying a string of assets tied to Spain's Bankia

Bank of America. is in final talks to buy loans with a nominal value of about €400m from Bankia, backed by hotels in Spain.

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The loan package, called Castle, will probably be sold for less than the nominal value of the borrowings, said the people, who asked not to be identified because the information isn't public. They declined to elaborate on the size of the discount.

A spokesman for Bankia, Spain's fourth-largest bank, declined to comment. An external spokeswoman for Bank of America in Madrid wasn't immediately able to comment.

As in Ireland in recent years, investors are targeting hotels in Spain as the economy recovers and the euro's slide against a basket of currencies that include the pound encourages more foreigners to visit the country. A record 65 million tourists came to Spain last year, with the largest share, 15 million, coming from the UK. In the first two months of 2015, spending by visitors rose an annual 8pc to €6.6bn.

European banks and asset managers plan to sell or restructure €70bn of riskier real estate as they try to clean up their balance sheets. The region's lenders, asset managers and bad banks such as Spain's Sareb - the Spanish version of Nama -sold €12bn of loans tied to property in the first three months, Cushman & Wakefield estimates.

Meanwhile Sareb, Spain's bad bank, is preparing to sell loans backed by real estate assets in seven golf resorts in the Murcia region..

The face value of the debt is €563.4m, according to a document, which was sent to investors by N+1. The investment bank is advising Sareb on the sale. The portfolio, known as Project Birdie, includes three 18-hole golf resorts, two hotels, 2,146 homes and land.

Sareb, set up by Spain during its debt crisis in 2012, is offloading assets transferred from Spain's ailing savings banks. Investment in Spanish property assets excluding debt jumped to €10.4bn last year from €4.9bn in 2013, according to data compiled by CBRE, as the country's economy revived.

The deadline for binding offers for the portfolio is July 9 and Sareb aims to close the sale of the end of the month. Spokesmen for Sareb and N+1 declined to comment.

These deals are the latest signs that Spain is becoming increasingly attractive to investors.

While Ireland has been hugely popular for investors from overseas, dealmakers are increasingly moving from here to Spain and Italy, even amid concerns about ongoing enforcement rights in both juristictions. (Bloomberg)

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