11th August 2017

Popular to sell majority stake in real estate asset portfolio to Blackstone

Banco Popular has approved the sale of a majority stake in its real estate portfolio to Blackstone Real Estate Partners Europe. The agreement was confirmed after the EU Directorate General for Competition approved the acquisition of Popular by Banco Santander with no restrictions.

The transaction will involve the creation of a company to which Banco Popular will transfer assets with an aggregate gross book value of approximately EUR30bn, as well as 100 per cent of the share capital of Banco Popular’s real estate management company, Aliseda.

The valuation attributed to the Spanish assets of the business (eg. properties, loans and tax assets, not including Aliseda) is approximately EUR10bn. This is consistent with the valuation and provisions made by Santander during the acquisition of Popular and does not, therefore, result in any material capital gain or loss for Santander or Popular. The final valuation is subject to change depending on the assets remaining within the business at closure and following the integration of Aliseda.

Blackstone will own a majority 51 per cent stake in the new company while also assuming management responsibilities, while Banco Popular will own the remaining 49 per cent stake. As a result, the aforementioned assets will no longer be consolidated on Banco Popular’s balance sheet.

Chairman of Santander Spain, Rodrigo Echenique, said: “We are very pleased to enter into this partnership with Blackstone. The agreement significantly reduces our real estate exposures and further strengthens our balance sheet, allowing us to focus all our efforts on supporting customers. It is an important step in the integration process and demonstrates the quality of our execution capabilities. The interest generated in this transaction among international investors is also a clear sign of confidence in the Spanish economy and we are grateful to all bidders who participated.”

Jon Gray, Global Head of Real Estate at Blackstone, said: “This significant investment reflects our continued confidence in the robust recovery of the Spanish economy. We are delighted to partner with Santander to maximise the long term value of the portfolio."

The deconsolidation of assets from the balance sheet will have a positive impact on Santander’s CET1 fully loaded capital ratio of 12 basis points. Moreover, five basis points of capital consumption, which resulted from the acquisition of 51 per cent of Aliseda by Banco Popular, will be released. The transaction, which is subject to regulatory approvals and the usual adjustments associated with transactions of this nature, is expected to close in the first quarter of 2018.