US investor Bain Capital has emerged as the buyer of a non-performing loan portfolio with an on-balance sheet gross asset value of €1.45 bn in Greece's first major property-backed sale by a local bank
Greece’s largest lender Piraeus Bank has agreed to sell the assets for over 20% of the nominal value.
PropertyEU reported back in February that Piraeus had shortlisted Apollo Global Management, Bain Capital, Davidson Kempner Capital Management, and Kildare Partners for the second round of bidding of its €1.5 bn Project Amoeba non-performing loan portfolio.
'This is the first commercial real-estate backed NPE (non-performing exposures ed.) sale taking place in our country and one which Piraeus prepared and executed methodically. It sets the mark and materially contributes in the creation of the secured NPE market in Greece,' commented Christos Megalou, Piraeus Bank’s Chief Executive Officer.
He added: 'The transaction underlines our strong determination to continue de-risking our balance sheet and implementing our capital-enhancing plan, in line with our strategic initiative, Agenda 2020. We are greatly encouraged by Bain's direct investment in Greece, which we read as a strong vote of confidence in the prospects of the newly established NPE market, the recovering real estate prices and the Greek economy overall.'
The transaction is subject to customary conditions, regulatory and other approvals by the respective authorities in Greece, including the consent of the Hellenic Financial Stability Fund. Following closing of the deal, Piraeus will have no control over the servicing of the portfolio.
'We are delighted to continue to strengthen our position in Greek non-performing credit, a market with circa €100 bn of NPEs,' said Alon Avner, a managing director and head of Bain Capital Credit’s European business.
'This investment demonstrates our interest in the market as we are excited to play a part in Greece’s recovery. After having acquired similarly complex portfolios across Europe, this transaction showcases our expertise in executing deals of this magnitude,' added Fabio Longo, a managing director and head of Bain Capital Credit’s European non-performing loan & real estate business.
UBS is the exclusive financial advisor of Piraeus for the transaction. Bain Capital was supported by loan servicing specialist Mount Street in executing the deal.
The disposal – Greece’s first major property-backed sale by a local bank – involves a mixed bag of secured and unsecured loans with a face value of €1.5 bn, according to experts. The secured portion of the portfolio is backed by €467 mln worth of commercial, residential and industrial real estate across 1,350 largely vacant assets and is in addition to around €200 mln of unsecured loans, for a total representing 40% of the loans’ face value.
Other bad loan packages
Piraeus is not the only Greek bank trying to offload bad loans. Earlier this month, PropertyEU reported that Alpha Bank is seeking a buyer for its €1 bn Project Jupiter NPL portfolio.
According to well-informed market sources, the package includes a substantial proportion of hotel properties in an attempt by the landlord to attract international investors. The portfolio is also said to include a number of retail assets as well as hundreds of smaller properties for various uses.
The debt portfolio is expected to sell for around 20 cents on the dollar, according to those who track the market.
Similarly, lender Eurobank is understood to be in negotiations to sell its property arm, Eurobank Property Services, with interested parties said to include Apollo's Altamira Asset Management and London-based Mount Street.
As bids have come in at much lower levels than expected, it is not yet clear whether the sale will go ahead as planned or whether Eurobank will consider a different course of action.
The company is active in the South-Eastern European countries of Romania, Bulgaria and Serbia as a property and asset manager, advisor and investment manager.
The June issue of PropertyEU features a special report on Greece and its real estate market. Read more here