Lone Star Funds is reportedly close to buying a portfolio of Spanish residential property loans with a face value of €500 million at a discount close to 70 percent.
The Wall Street Journal said Lone Star was in talks to buy the mortgage loans from Spain’s second largest bank, Banco Bilbao Vizcaya Argentaria (BBVA), which created BBVA Real Estate in 2011 to manage some €30 billion of property assets.
Since then, the bank has been jettisoning business or selling stakes in units such as 64 percent of its Chilean pension operation, plus certain other businesses in Mexico, the US and Puerto Rica, in order to improve its balance sheet. Just today, the embattled lender said profits fell 44 percent to €1.68 billion in 2012 after taking provisions against soured property loans.
Lone Star was unavailable to comment at the time of going to press. However, it is known to be among a clutch of private equity firms spending more time in Spain examining property deals.
Juan Pepa, a Lone Star Europe dealmaker previously based in the firm’s London office, is now said to be covering Spain. Last year, Lone Star opened an office in Madrid for Hudson Advisors, its captive asset management company that carries out due diligence, analysis, asset management, and other work for the company.
Opportunistic investors have grown steadily more interested in the country especially after it announced details for the creation of a ‘bad bank’ called the Asset Management Company for Assets Arising from Bank Restructuring (Sareb). Banks are to transfer tens of billions worth of property assets to be worked out over time. However, in December, Reuters reported that BBVA had decided not to participate in joining peers in investing around €2.5 billion in Sareb, where former ING Real Estate Finance professional, Walter de Luna, has been drafted in to become director general.