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Banco Bilbao (BBVA) Sells 80% Property Business to Cerberus

Zacks

Banco Bilbao Vizcaya Argentaria BBVA has agreed to sell 80% of its Spanish real estate business to a subsidiary of Cerberus Capital Management, a U.S. private equity firm, for €4 billion through a joint venture deal. The deal, which is likely to be closed by second half of 2018, values BBVA’s business at approximately €5 billion.

Per the CEO of BBVA, Carlos Torres Vila, “This transaction is extremely important, because it significantly reduces our exposure to a non core business, and it allows us to strengthen our transformation process.” Also, once the deal is completed after getting the necessary approvals, the bank will have lesser exposure to real estate as compared to other Spanish financial institutions.

A joint venture, which will be formed for this purpose, will have a gross book value of €13 billion containing about 78,000 property assets owned by BBVA. Per the deal, 80% of the stake will be owned by Cerberus. However, the transaction amount will be determined based on the ultimate volume of real estate assets that are transferred to the joint venture as some sales could be carried out before the transaction is closed.

According to John Snow, Chairman of Cerberus, “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.”

Spanish economy is one of the fastest growing European economies. With its property prices rising sharply, U.S. funds are trying to take advantage. Blackstone Group BLK also decided to buy Banco Santander’s SAN Spanish property portfolio for €5 billion in August.

Shares of BBVA have gained 40.1% over the past 12 months outperforming 23% growth recorded by the industry.


Currently, the stock carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

A better-ranked stock from the same space is KB Financial Group KB. It has witnessed an upward earnings estimate revision of 11.1% for 2017, over the last 60 days. The company’s share price has risen 53.1% over the past 12 months. The stock carries a Zacks Rank of 1.

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