BBVA Agrees to Sell 80% of Spain Real-Estate Business to Cerberus for About EUR4 Billion -- Update

By Marc Bisbal Arias Features Dow Jones Newswires

Banco Bilbao Vizcaya Argentaria SA (BBVA.MC) said Wednesday that it has reached an agreement to sell 80% of its Spain real-estate business to a subsidiary of Cerberus Capital Management LP for about 4 billion euros ($4.74 billion).

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The deal, which values BBVA's business at around EUR5 billion, is expected to close by the second half of 2018.

A joint venture will be created, to which the real-estate business of BBVA in Spain will be transferred. The Spanish bank said that it will sell 80% of the shares in the joint venture to Cerberus at the closing date of the transaction for approximately EUR4 billion.

The final price could be subject to change as it will be determined by the volume of real estate assets, or REOs, effectively contributed, BBVA said.

The transaction is subject approval from the relevant authorities.

The unit comprises foreclosed REOs with a gross book value of around EUR13 billion, as well as the necessary assets and employees to manage the business in an autonomous manner, BBVA said.

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The two entities had started talks regarding the potential sale in September.

BBVA has also signed an agreement with Haya Real Estate SLU--a real-estate service company owned by Cerberus--in order for it to provide services to the real estate portfolio held by BBVA once the transaction has been executed, the bank said.

It is estimated that the impact of the transaction will not significantly impact BBVA's attributable profit, a key measure of capital strength for banks, which is expected to be slightly positive, BBVA said.

Write to Marc Bisbal Arias at marc.bisbalarias@dowjones.com

Corrections & Amplifications

Story corrected at 3:42 a.m. Original misspelled the name of Cerberus in the headline and misstated in the final paragraph that the transaction isn't expected to have a significant impact on common equity tier 1 ratio versus attributable profit.

BBVA Agrees to Sell 80% of Spain Real Estate Business to Cerberus. It is estimated that the impact of the transaction will not significantly impact BBVA's attributable profit. "BBVA Agrees to Sell 80% of Spain Real Estate Business to Cerebus for About EUR4 Bln," at 0738 GMT, misspelled the name of Cerberus in the headline and misstated in the final paragraph that the transaction isn't expected to have a significant impact on common equity tier 1 ratio. It should have been attributable profit, not common equity tier 1 ratio.

Banco Bilbao Vizcaya Argentaria SA (BBVA.MC) said Wednesday that it has reached an agreement to sell 80% of its Spain real-estate business to a subsidiary of Cerberus Capital Management LP for about 4 billion euros ($4.74 billion).

The deal, which values BBVA's business at around EUR5 billion, is expected to close by the second half of 2018.

A joint venture will be created, to which the real-estate business of BBVA in Spain will be transferred. The Spanish bank said that it will sell 80% of the shares in the joint venture to Cerberus at the closing date of the transaction for about EUR4 billion.

The final price could be subject to change as it will be determined by the volume of real estate assets, or REOs, transferred, which could vary due to any sales carried out prior to the closing of the transaction, among other reasons, BBVA said.

The transaction is subject approval from the relevant authorities.

The unit comprises about 78,000 REOs with a gross book value of about EUR13 billion, as well as the necessary assets and employees to manage it. Most of the assets are located in Catalonia, Madrid and Valencia, BBVA said.

Chief Executive Carlos Torres Vila said that the transaction is extremely important because it significantly reduces BBVA's exposure to a non-core business, allowing the bank to strengthen its transformation process.

The two entities started talks regarding the potential sale in September.

It is estimated that the transaction won't significantly impact BBVA's attributable profit, but the impact should be slightly positive for its fully-loaded common equity tier 1 ratio, a key measure of capital strength for banks.

"This important transaction shows our commitment to offering tailored solutions for our partners and underscores our confidence in Spain's continued growth, where we plan to make significant additional investments," Cerberus Chairman John Snow said.

BBVA has also signed an agreement with Haya Real Estate SLU--a real-estate service company owned by Cerberus--for Haya to provide services to the real estate portfolio held by BBVA once the transaction has been executed, the bank said.

Write to Marc Bisbal Arias at marc.bisbalarias@dowjones.com

(END) Dow Jones Newswires

November 29, 2017 04:24 ET (09:24 GMT)