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German bad bank FMS has confirmed it is launching the sale of Project Gaudì, its first European CRE loan portfolio, as reported by PropertyEU last month.

A spokesman for FMS confirmed that the portfolio is on the market but declined to provide further details. However, PropertyEU reported in January that the lender had mandated C&W’s corporate finance team to sell its entire remaining Spanish and Portuguese commercial real estate loan books, with a combined face value of €755 mln.

The Project Gaudi package comprises 18 loans secured by 15 assets including the €400 mln Hotel Arts in Barcelona, a five-star hotel in Cascais, five shopping centres, four business parks in Madrid and Barcelona, a portfolio of 17 self-storage assets; and a number of residential and industrial development sites.

The portfolio previously belonged to Hypo Real Estate – now known as pbb Deutsche Pfandbriefbank – and was transferred to FMS Wertmanagement in 2010 together with some €27 bn of Hypo Real Estate assets, following the lender’s collapse in 2009.

Stiff competition
Competition for the portfolio is likely to be intense, according to Marcus Lemli, head of European investment at Savills: ‘It’s the sort of thing that everyone is looking at. There is a lot of opportunistic money looking at Spain, so interest will be huge.’

Cerberus, Oaktree and Orion have reportedly bid for the portfolio, with offers at around 40% of face value.

C&W declined to comment.

The FMS still has just under €10 bn of real estate assets to divest, most of which are loans, the spokesman said. The aim is to divest them by 2020, having sold around €3.3 bn of assets last year. The spokesman declined to comment on upcoming sales this year.

For banks seeking to offload loan portfolios, now is ‘as good a time as any to sell’, according to Dirk Richolt, head of real estate finance at CBRE in Frankfurt: ‘The market is very favourable at the moment. Margins and interest rates are low. Five-year swap rates are now only a quarter of where they were in January last year.’

Hypothekenbank Frankfurt
Hypothekenbank Frankfurt, formerly Eurohypo, the real estate lending arm of Commerzbank - which was also bailed out by the German government in 2009 - is also expected to offload some loan portfolios this year as part of its winding-down process.

It is expected to bring to market a large German portfolio as well as a big pan-European portfolio, according to those who track the market. A spokesman for Commerzbank declined to comment on potential sales but said: ‘We observe the markets permanently and try to take advantage of opportunities if they occur.’

While many US and UK banks are already coming to the end of such disposal programmes, Germany is only just getting started. Subsequently, of the €70 bn in potential loan sales this year, as much as 20% could come out of Germany, according to Frank Nickel, chairman of corporate finance for the EMEA region at C&W. ‘I would predict that Germany would account for between 10% and 20% of the €70 bn forecast for this year,’ he said.