Spain’s BBVA sells 80% of real estate business

MADRID: Spain’s BBVA said it had agreed to sell 80% of its real estate business to US fund Cerberus for four billion euros (US$5bil), one of the largest such deals as investor enthusiasm for Spanish property returns.

The real estate assets included in the package have a gross book value of some 13 billion euros, Spain’s second largest bank said in a statement to the market regulator.

The deal is the largest since Santander sold control of property worth 10 billion euros to US investor Blackstone Group in August.

A burst property bubble in 2008 sent Spain’s economy in to a tailspin that lasted nearly five years, put millions out of work, sent public debt soaring and prompted a more-than 40-billion-euro bailout for its banks.

The economy returned to growth in 2013 and has outperformed the rest of Europe since then, helping restart residential construction as house prices turn around and prompting foreign investors to return to the market.

BBVA said it would retain control of 20% of the real estate portfolio, which it said would be exclusively managed by Cerberus’s Haya Real Estate.

The deal is expected to be closed in the second half of 2018 and while it wasn’t seen having a significant impact on the bank’s profits it would have a slightly positive impact on the fully loaded core tier 1 capital ratio (CET1), it said.

On Tuesday, Bank Of Nova Scotia agreed to buy BBVA’s stake in BBVA Chile for US$2.2bil.