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


By Sarah White

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

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

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

But selling or contracting out the teams and platforms that manage the assets has given them a way to raise funds, while handing investors a business they can use to service other portfolios of troubled debts they buy.

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

The deal is potentially a bigger transaction than a similar agreement being negotiated by Santander. Popular declined to comment on the value of the deal, saying only it had reached an agreement in principle with the U.S. firms on a deal that should be completed in coming weeks.

Like Santander, which has agreed to sell its real estate management unit to Apollo Global Management, Popular is relinquishing the management of the assets but the deal does not include the bank's properties, which remain on its books.

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

Popular's real estate management unit, known as Aliseda, has around 15.8 billion euros of properties and loans under management. Santander had 9.9 billion euros of these assets in Spain at the end of the third quarter.

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