Sale of the year announced by banking sector

 In Asset and Fund Management, Asset Management, Funds, News, Resorts

Portugal’s banking sector has announced the real estate sale of the year by selling off an entire portfolio of luxury hotels to the Davidson Kempner fund

The asset management entity has bought the Hilton Conrad Algarve, the Hilton Cascatas Golf (pictured) and the entire NAU hotels group for €900 million.
The windfall sale will certainly place Portugal’s real estate investment market on the road to another record year after recent record years since 2017 in which investments reached between €2.5Bn and €3.0Bn.
David Kempner the global equity and asset management company, is led by Anthony Yoseloff who serves as Executive Managing Board Member and Chief Investment Officer of what is the 9th largest hedge fund in the world.
David Kempner won the race after tough negotiations with a cartel of Portugal’s banks with which it will now be in exclusive negotiations after other big asset management funds Bain and Cerberus which also had presented firm proposals to buy the luxury hotels and resorts from ECS dropped out of the race. Their offers were insufficient compared to that of Davidson Kempner.
Founded in 2006, ECS is a leading private equity and restructuring firm focused on the Portuguese market. ECS, run by former Bank of Portugal governor António de Sousa with Fernando Esmeraldo currently manages three funds directly in Portugal. ECS investment activities are focused on expansion capital financing, management buy-ins, management buy-outs, buy-and-build and recapitalisations.
The deal, which is expected to be completed in the first half of 2022, also includes the La Vie shopping centres and other real estate assets in a transaction that according to Jornal Económico is around €900 million.
Both the banks and the investor are now to begin exclusive round-table talks from next year. On the table is a bank financing package of 60% of the total value of the purchase.
The actual banks which will have the greatest exposure to this collection of assts are Novobanco, BCP and Caixa Geral de Depósitos while Santander and Oitante (the latter a financial vehicle created to manage Banif assets that had not been bought up by Santander, also holds unit shares in ECS funds.
The operation is important for the financial institutions because it will help them to offload non-strategic assets — which are prejudicial to their capital ratios — off their balance books.
However, given they are financing 60% of the total value of the purchase, it is not clear what the real impact of the deal will be on the banks’ accounts. If the unit shares were sold for a value lower than what the banks had accounted for on their balance sheets, they will end up taking on additional losses.
This is not the first deal from Davidson Kempner in Portugal. In 2019, the US fund purchased Novobanco’s portfolio of loans ‘Nata 2’ in a deal which ended up being somewhat controversial because of the losses it created for the Resolution Fund.