Santander Is Said to Seek $5.7 Billion for Popular Assets

(Bloomberg) -- Banco Santander SA is asking about 5 billion euros ($5.7 billion) for a majority stake in 30 billion euros of real estate loans and assets it inherited when it bought Banco Popular Espanol SA, according to three people with knowledge of the matter.

Santander has shortlisted Blackstone Group LP, Apollo Global Management LLC and Lone Star Funds to submit bids for 51 percent of the assets by the last week of July, the people said, asking not to be identified because the information is private. The bank will keep the remainder and form a joint venture to manage the holdings with the winning bidder, the people said.

The successful bidder will also acquire a 51 percent stake in Aliseda, the former property management company of Popular that Santander bought from Varde Partners LP and Kennedy Wilson Holdings Inc. last week, the people said.

Spokesmen for Santander, Blackstone, Apollo and Lone Star declined to comment.

Real-Estate Recovery

Santander Chairman Ana Botin has said her plan to turn around Popular includes selling at least half of its real estate assets in the next 18 months. Popular’s troubles reached a crisis point in June as the scale of its real estate losses scared away would-be buyers and its plunging share price made raising capital impossible.

“It’s too early to tell whether the bank is asking too much or too little as we don’t yet know which particular assets are going to be rolled into the stake that is being sold,” said Fernando Rodriguez de Acuna Martinez, general director of Madrid-based real-estate consultancy R.R. de Acuna & Asociados. “Popular has a lot of everything and there is a big difference in values between say land, offices and non-performing loans.”

Rents in Madrid rose 13 percent in the first quarter compared with a year earlier and are now the highest since 2011, according to broker Savills Plc. Yields are stable, with wider commercial property investment deals in the city more than doubling in the period to 826 million euros. Spain’s housing market will continue to recover this year with values rising on average by 2.5 percent, Banco Bilbao Vizcaya Argentaria SA said in April. The land market is also seeing more interest after values in urban areas increased 5.3 percent last year, the bank said.

Spain’s biggest bank paid 1 euro for Popular in a sale brokered by European regulators after it suffered a run on deposits. Santander said it would raise 7 billion euros in capital and dispose of Popular’s non-performing assets over three years. Those include 29.8 billion euros of property assets and soured real estate loans, according to a presentation on its website.

To contact the reporter on this story: Sharon Smyth in London at ssmyth2@bloomberg.net.

To contact the editors responsible for this story: Neil Callanan at ncallanan@bloomberg.net, Cindy Roberts, Paul Armstrong