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US hedge fund to take on Eurohypo’s distress in Spain

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German lender to sell €400m loan portfolio to joint venture for €150m, as it continues winding-down

Eurohypo is in talks to sell one of its largest Spanish loan exposures to a US hedge fund and a Spanish property company for €150m.

The German property lender is in the process of being wound down and is in talks to sell loans secured on six assets to a joint venture between Anchorage Capital Group and listed Spanish developer Alza Real Estate.
It is understood that the parties are trying to complete the sale, Project Copernicus, before the end of the year.

If successful, the portfolio of one of Spain’s most acquisitive families will change hands, and Eurohypo will exit one of its most troublesome situations.

Eurohypo

Source: Flickr User: ImNotQuiteJack

It would also be a rare example of a US investor taking the plunge to invest in the distressed Spanish market.

A price of €150m for the portfolio would represent a significant discount to the €400m face value of the debt.

The debt is understood to be secured against six assets, four in Madrid and two in Barcelona, mostly bought at the top of the market in 2006. The intention was to redevelop or refurbish the mainly secondary assets to improve the income. They include Paseo de la Castellana 157 in Madrid, bought for €64m in 2006.

Monteverde fell into bankruptcy in 2010, and Eurohypo has tried to recoup the maximum possible since. It started by selling Monteverde’s London assets, including 6 Bevis Marks, which is now being developed by a joint venture between Axa Real Estate Investment Managers and MGPA.

Anchorage Capital, which describes itself as a specialist in investing in distressed and illiquid situations, is not well known in the property world. Earlier this year it provided an €85m loan to German DIY chain Praktiker to help stabilise the business and its property portfolio.

Anchorage is understood to be providing most of the equity for the purchase, while Alza, which is listed in Madrid, would provide the expertise.

There have been relatively few loan portfolio deals in Spain in the past year, because wider economic woes have maintained the gulf between buyers’ and sellers’ expectations.

Eurohypo is understood to have withdrawn the sale of another €400m loan portfolio, Project Sol, last week because of the low level of bids.

All parties declined to comment.

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