US private equity group Lone Star has taken control of the bulk of Spanish lender CaixaBank's real estate business worth around €7 bn.
Under the deal, CaixaBank has agreed to transfer its entire real estate business including the Servihabitat Servicios Inmobiliarios unit for a gross asset value of €12.8 bn to a new company. Following the transfer Lone Star, through its Fund X and Fund V, will take an 80% share of the business which is currently valued at €7 bn.
CaixaBank will retain 20% of the platform, in a structure echoing Cerberus' purchase last year of an 80% in lender BBVA's residential property business.
Gonzalo Gortázar, CEO of CaixaBank, said that with the operation the lender will be able to secure its strategic targets in terms of non-performing asset reduction several years ahead of schedule. 'The operation ensures that CaixaBank has one of the healthiest balance sheets in the Spanish banking industry,' he noted.
Closing of the operation will mean deconsolidation of the real estate business from CaixaBank's balance sheet.
The operation follows CaixaBank's buyback in early June of a 51% share in the Servihabitat Servicios Inmobiliarios from TPG for €176.5 mln. TPG had bought the controlling interest in the real estate platform in September 2013 from CaixaBank for €185 mln.
As part of the operation, Servihabitat will continue to provide real estate services to CaixaBank Group during a five-year period, under a new services agreement.
The operation is expected to close in the final quarter of 2018 or the first quarter of 2019. CBRE advised Lone Star on the purchase.
According to the bank's latest available financial results, CaixaBank's non-core real estate business posted a loss of €1.125 bn in 2016. It largely includes foreclosed assets, homes and plots of land as well as a smaller proportion of commercial properties.
Lone Star has long been in active in Spain. In 2014 the US private equity heavyweight bought residential developer Neinor Homes from a Spanish bank for some €900 mln. Last year the firm listed Neinor's shares on the Spanish continuous market in the largest-ever IPO for a European residential developer at the time.
Priced at €16.46 per share, the oversubscribed IPO gave Neinor a market capitalisation of €1.3 bn.