GES real estate fund liquidated

The liquidation of a real estate fund which was set up to finance a massive real estate development in Porto from the failed Grupo Espírito Santo has netted a further €8.5 million for a principal creditor.

But this amount is short change considering the €58 million lent by the now wound up bank BES which collapsed in 2014 and from which the creditor, Novobanco, was created that same year, half of the money of which is now considered lost.
The winding up of the fund Invesfundo III has given back some €25.5 million to BES successor Novo Banco which has been used to fill a financial black hole.
It is difficult now to see how the bank will recover the €58 million that BES lent to Invesfundo III to develop a mega real estate project in Gaia, Porto around a decade ago.
Even so, all is not lost. The winding up of the GES fund is continuing to bear some fruit from the sale of tracts of land where the development was supposed to have been built.
And in what is good news for Novobanco, the fund’s insolvency receiver is paying a further €8.5 million to the bank.
This payment will therefore increase the total amount recovered by the bank to €25.5 million in the winding up process of Invesfundo III, meaning the bank has already now filled 43% of the black hole left by Invesfundo created by BES in the first decade of 2000 for real estate investment.
Invesfundo III (there are nine funds in all) was set up in 2006 with the goal of advancing a real estate project in Vila Nova de Gaia, Douro Atlantic Garden, developed by Espírito Santo Property and financed 100% by BES.
The project was announced in 2013 but never got off the drawing board, mostly because within a year BES collapsed, leaving the toxic assets in a ‘bad’ BES bank, while assets considered salvageable were transferred to the new ‘good’ bank Novobanco. Except the new bank was so undercapitalised from day one that these salvageable assets were more of a hinderance than a help.
With the winding up of BES ordered in 2014, the real estate fund was dragged into the bank’s overall insolvency process in 2019.
Since then, the insolvency receiver has been selling off the real estate assets in the fund and handing the revenues to the creditors, one of the main ones being Novobanco, the Portuguese tax authorities, and the GES real estate fund management entity Gesfimo, all claiming a total of €200,000.
So far, a total of 32 assets have been liquidated bringing in €25.6 million. Another four are awaiting contracts of purchase and sale to be signed, with the total amount of monies recovered from this amounting to €874,000, with €5.3 million still owing. In all Novobanco still has to receive half of the €58 million lent by BES, leaving €25 million owing to Novobanco.