Spain's Popular sells property management arm to U.S. funds

Reuters

By Sarah White

MADRID, Nov 25 (Reuters) - Spain's Banco Popular said on Monday it would sell its property management unit to twoU.S. investment firms in a deal which one source said was likelyto be worth around 800 million euros ($1.1 billion).

Weighed down by a collapse in the domestic real estatemarket, Spanish banks such as Popular have been making disposalsas they strengthen their capital ahead of a Europe-wide reviewof their assets next year.

Many are still reluctant to sell properties they own, eventhough housing prices have fallen around 40 percent since a 2007peak, because buyers such as funds only want them at very steepdiscounts.

But selling or contracting out the teams and platforms thatmanage the assets has given them a way to raise funds, whilehanding investors a business they can use to service otherportfolios of troubled debts they buy.

Popular said it was selling the business to U.S. investmentfirms Kennedy Wilson and Varde Partners. It said itwould retain a minority stake in the business, which servicessoured property loans and repossessed real estate, though theU.S. firms will take control.

The deal is potentially a bigger transaction than a similaragreement being negotiated by Santander. Populardeclined to comment on the value of the deal, saying only it hadreached an agreement in principle with the U.S. firms on a dealthat should be completed in coming weeks.

Like Santander, which has agreed to sell its real estatemanagement unit to Apollo Global Management, Popular isrelinquishing the management of the assets but the deal does notinclude the bank's properties, which remain on its books.

The price takes into account the commissions which Popularwould pay the funds for property sales.

Popular's real estate management unit, known as Aliseda, hasaround 15.8 billion euros of properties and loans undermanagement. Santander had 9.9 billion euros of these assets inSpain at the end of the third quarter.

Kennedy Wilson and Varde Partners have already bought asimilar business in Spain from nationalised Catalunya Banc.

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