Commerzbank Said to Sell $5.5 Billion Spain Loans by June 30

Feb 20, 2014 9:02 am ET

(Updates with Acuna’s comment in fourth paragraph.)

Feb. 20 (Bloomberg) -- Commerzbank AG plans to sell more than 4 billion euros ($5.5 billion) of loans linked to Spanish real estate by June 30, two people with knowledge of the situation said.

The Frankfurt-based bank set a March 2 deadline for buyers to submit indicative bids for the remaining property loans in Spain, named “Project Octopus,” said the people, who asked not to be identified because the information is private. Nils Happich, a spokesman for Commerzbank, declined to comment.

Commerzbank, Germany’s second-largest bank, is winding down its real estate financing arm and shipping loans to focus on business and consumer banking after it received an 18.2 billion- euro bailout in 2009 from the German government, which now owns a 17 percent stake. Commerzbank’s shares have more than doubled in value since July on speculation that the bank is getting a grip on its finances after five capital increases in four years.

“There will be a lot of demand for the loans as there’s a lot of pressure on the large distressed investors to do this kind of deal,” said Fernando Acuna, founder of real estate advisory firm Aura REE. “This is probably the only large commercial real estate loan book which will trade in Spain during this cycle.”

U.S. Buyers

The bank sold 5 billion euros of U.K. property loans to Wells Fargo & Co. and Lone Star Funds in July at a 3.5 percent discount to book value.

Commerzbank’s commercial-property loans in Spain, which are both performing and nonperforming, totaled 4.8 billion euros at the end of December, according to its fourth-quarter results. Commerzbank said it sold 710 million euros of the loans Feb. 6.

The bank was little changed at 12.77 euros at 3:02 p.m. in Frankfurt. The Bloomberg Europe Banks & Financial Services Index fell 0.8 percent to 110.82. Commerzbank shares are expected to trade at 12.48 euros in 12 months, according to the average estimate of 27 analysts on Bloomberg.

Sales of commercial-property loans and real estate-owned sales totaled 30.3 billion euros in Europe last year, according to a Feb. 5 report by Cushman & Wakefield Inc. Spain represented 4.5 billion euros of transactions, second only to the U.K. and Germany.

Investment in European property debt is set to rise to 40 billion euros this year as funds such as Apollo Global Management LLC and Cerberus Capital Management LP buy loans cheaply and financing for purchasing them becomes more readily available, Cushman & Wakefield said.

--Editors: Mark Bentley, Andrew Blackman