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Spain's Second Largest Bankruptcy Roils Real-Estate Market, Leaves Tepper Potentially Scuppered?

Tyler Durden's picture





 

It's no shock that the Spanish housing market is horrible but hope has been, following the government's nationalization of various banks and creation of the 'bad bank' to soak up all the toxic crap those banks had on their books, that a recovery could blossom. It appears not - not at all. Not only are bad loans rising at record rates with house prices remaining down over 40% but now Reyal Urbis has filed for insolvency making it the nation's second largest bankruptcy as dozens of smaller firms have failed.

What makes this so important is the fact that the banks were unwilling to refinance the debt - seemingly comfortable with liquidation - summed up perfectly: "Many loans were refinanced one or two years ago, in the hope that things would get better, but it has not been the case and there is now more realism about the situation. Why would you extend a new loan today?"

Reuters reports further that the hard line taken with Reyal Urbis could be a taste of things to come as the firm leaves EUR3.6bn of debt and a property portfolio valued at a magical EUR 4.2bn - which we suggests the banks do not agree, and while the nation's bad bank is a major creditor, so it appears, is Tepper's Appaloosa holding a majestic EUR450mm in debt.

 

Perhaps helps to explain his recent BWIC on European banks..

 

Via Reuters,

Spanish real estate firm Reyal Urbis has filed for insolvency, the second biggest casualty of the country's property market crash and a sign banks and the government may turn their backs on more indebted companies.

 

Dozens of property firm have already collapsed in Spain, where house prices have fallen around 40 percent from their 2007 peak. But until recently Spanish banks have refinanced billions of euros of debt in the hope of an economic upturn.

 

Liquidations are now more likely, bankers say, as prices continue to slide in a protracted recession and lenders, after a government-led clean-up, have set aside money to cover losses.

 

...

 

Sources at three bank creditors told Reuters the hard line taken with Reyal Urbis could be a taste of things to come.

 

...

 

"Many loans were refinanced one or two years ago, in the hope that things would get better, but it has not been the case and there is now more realism about the situation. Why would you extend a new loan today?"

 

...

 

As well as Sareb, which is owed 785 million euros, the company's creditors include Spain's biggest banks - Santander , owed 550 million euros; BBVA, owed 120 million; and Banco Popular owed 220 million.

 

Barclays sold 450 million euros of its debt to U.S. hedge fund Appaloosa, while Royal Bank of Scotland is owed 300 million euros

 

Reyal Urbis, which valued its property portfolio at 4.2 billion euros in June 2012, said it would continue to operate as permitted by Spanish insolvency laws. Its insolvency petition now goes to court and its fate will be in the hands of a judge, who will decide whether to appoint independent administrators.

 

...

 

"Sareb holds some of the debt but has said it is not in the business of refinancing so it will be interesting to see what they do. On top of that, any liquidation wouldn't impact lenders as harshly as it would have two or three years ago," the source said, referring to the funds set aside by banks to cover losses.

 

At the end of 2011, Reyal Urbis owned some 888 finished homes in a country where over 3 million homes lie empty. The company also had 8 million square metres of land for development and 237,000 square metres of commercial property, including offices, shopping centres, industrial property and hotels.

 

"The high amount of land and low level of income producing property in the portfolio is clearly contributing to the pressure Reyal Urbis is under," said Roger Cooke, managing director at property consultant Cushman & Wakefield in Spain.

 

Land and work in progress accounted for about 65 percent of its portfolio at the end of 2011, according to the company's last annual report.

 


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Tue, 02/19/2013 - 18:03 | Link to Comment Dr. Engali
Dr. Engali's picture

Instead of balls to the wall Tepper got a set of balls to the chin.

Tue, 02/19/2013 - 18:14 | Link to Comment Village Smithy
Village Smithy's picture

Hope he's a tea drinker.

Tue, 02/19/2013 - 18:21 | Link to Comment Boris Alatovkrap
Boris Alatovkrap's picture

Or alien ballchinian.

Tue, 02/19/2013 - 18:25 | Link to Comment kaiserhoff
kaiserhoff's picture

Relax everyone.  This is why Ben tied all the banks together..., so that when one sinks.... oh wait.

Tue, 02/19/2013 - 18:27 | Link to Comment Boris Alatovkrap
Boris Alatovkrap's picture

Doh!

Tue, 02/19/2013 - 18:31 | Link to Comment DJ Happy Ending
DJ Happy Ending's picture

Homos

Tue, 02/19/2013 - 18:29 | Link to Comment walküre
walküre's picture

Spain is where the action starts. Greece was foreplay.

Tue, 02/19/2013 - 19:03 | Link to Comment dtwn
dtwn's picture

+1 This.  Spain is the bigger domino that will be the true tipping point, unleashing a cascade of serial fucked-ed-ness.  The UK has exposure to Spain through Santander.  I believe Santander is the bank to watch in Spain.

Tue, 02/19/2013 - 19:01 | Link to Comment azzhatter
azzhatter's picture

David "Teatepper"

Wed, 02/20/2013 - 10:13 | Link to Comment FEDbuster
FEDbuster's picture

"Hey Ben this is Dave Tepper. You know the guy who said buy stocks "balls to the wall" on CNBC.  You still buying bonds?  Have I got a bond for you...."

Tue, 02/19/2013 - 18:16 | Link to Comment wee-weed up
wee-weed up's picture

Were they still attached?

Tue, 02/19/2013 - 18:28 | Link to Comment Boris Alatovkrap
Boris Alatovkrap's picture

Boy King Obama still is waiting to drop.

Tue, 02/19/2013 - 19:38 | Link to Comment nmewn
nmewn's picture

lol.

Tue, 02/19/2013 - 19:35 | Link to Comment whatsinaname
whatsinaname's picture

What goes around come around ?

Tue, 02/19/2013 - 18:05 | Link to Comment The big unzip
The big unzip's picture

Everything is still O.K., unless its not.

Tue, 02/19/2013 - 18:06 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

+ 1 Yes

That is why everyone should be preparing starting yesterday.

Tue, 02/19/2013 - 18:17 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

"Bernanke was god of earth for five years" will be written on his tombstone.

Tue, 02/19/2013 - 18:23 | Link to Comment Boris Alatovkrap
Boris Alatovkrap's picture

No, is Satan pretend to be God. Failure of proportional epic.

Tue, 02/19/2013 - 18:30 | Link to Comment kaiserhoff
kaiserhoff's picture

Ve haf message for you, Boris, from womanski vat lofs you chin viskers.

Trouble is, ve don't know if it's in Rooskie or Klingon.

Tue, 02/19/2013 - 18:41 | Link to Comment Boris Alatovkrap
Boris Alatovkrap's picture

Ruski...

Tue, 02/19/2013 - 18:46 | Link to Comment kaiserhoff
kaiserhoff's picture

Must be rooster.  Methinks she vants to be your Dixie Chicken.

Damn Google transmangleration machine...

Wed, 02/20/2013 - 11:55 | Link to Comment Boris Alatovkrap
Boris Alatovkrap's picture

When Boris is paste Kaiser's prose in Google Translate, is get only gibberish. Please elevate and to re-post.

Tue, 02/19/2013 - 18:06 | Link to Comment Piranhanoia
Piranhanoia's picture

It can't be insolvent.  It will mean the other Spanish banks are, and Italy, and France, and Germany, and Denmark, Norway, UK, Japan,  US....

Please move slowly to the lifeboats.  Women and Children first,  then Red Indians, and spacemen, and a Flemish Merchant of the 15th century......

Tue, 02/19/2013 - 18:14 | Link to Comment Bunga Bunga
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Geesh, we are all in central planning now, forget about market rules. 

Tue, 02/19/2013 - 18:24 | Link to Comment Boris Alatovkrap
Boris Alatovkrap's picture

When only tool is hammer, everything is look like nail. But when only tool is hand drill, beware, everything is get screwed.

Tue, 02/19/2013 - 18:45 | Link to Comment Bunga Bunga
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When only tools around are hammer and sickle, you know where you ended up.

Wed, 02/20/2013 - 11:59 | Link to Comment Boris Alatovkrap
Boris Alatovkrap's picture

Why is Soviet choose for Hammer and Sickle? Some is believe falsity for "Industry and Agriculture", but is truth told, mean citizen is subject to pounding by state, or, if refuse, is cut off like shaft of wheat. In Amerika, if Bernanke is hammer, DHS & ATF is sickle, no?

Tue, 02/19/2013 - 18:08 | Link to Comment ParkAveFlasher
ParkAveFlasher's picture

Shit just got REYAL.

Tue, 02/19/2013 - 18:38 | Link to Comment lasvegaspersona
lasvegaspersona's picture

!!!!!!  RUN !!!!!

Tue, 02/19/2013 - 18:15 | Link to Comment Whiner
Whiner's picture

That "eight million sq meters of undeveloped land" ought to liquidate out quickly at a nice price leaving the Lender a profits bonanza in the 888 residential properties. The timely sales of future commercial properties will be gravey on top of the icing! Is it too late to buy stock in the Bank?

Tue, 02/19/2013 - 18:15 | Link to Comment buzzsaw99
buzzsaw99's picture

jooz never looz. a 747 could fly into the side of his building and he would make a profit.

Tue, 02/19/2013 - 18:58 | Link to Comment Al Huxley
Al Huxley's picture

Actually, 767, but point taken.

Tue, 02/19/2013 - 18:57 | Link to Comment Yen Cross
Yen Cross's picture

  I'm sure "Super Mario", is all over this one. heavy<sarc>  Fuck off you pussy euro libtards! You know I speak the truth! I like most Europeans, but you cock smuggling Euro Trash/ Dollar swapping assholes can suck my "Chocolate Starfish"!

  Here is a good read . The bank that broke Spain - FT.com  old news but informative...

Tue, 02/19/2013 - 21:29 | Link to Comment donsluck
donsluck's picture

I'm glad to read your diatribe. I've been thinking that the EU is STRONGER than the US because their central bank does not belong to any one country and has only one mandate. In fact, it may end up taking over from the US as the "safe harbor".

Tue, 02/19/2013 - 18:18 | Link to Comment q99x2
q99x2's picture

People from Pittsburgh are special. Tepper is no exception. Pittsburghers call in to Coast to Coast am more than any other callers. The original zombie movie Night of the Living Dead was filmed 6 miles from where I grew up. They speak with thier own dialect. In the 70's a small town 20 miles North of Pittsburgh had the largest drug use per capita rating of any other US city second only to Anarbor Michigen. I predict Pittsburgh will one day rise up and conquer the world. As gateway to the West the Carnegies, Mellons, Fricks and others had their fortunes centered in Pittsburgh. I am still the proud owner of a Terrible Towel. Carefoolest what thou Sayest about the People from Pittsburgh. I have to admit though, it is a good place to be from. Beautiful place to visit in the Spring and Fall.

Tue, 02/19/2013 - 18:42 | Link to Comment lasvegaspersona
lasvegaspersona's picture

everywhere is beautiful to visit in the Spring and Fall

fuck the Midwest from the coast to the Rockies (well to within 50 miles of the Rockies) From there to the California border you have gods country, at the border you must give up you soul to proceed...but the scenery is nice...

Tue, 02/19/2013 - 18:21 | Link to Comment MFLTucson
MFLTucson's picture

Now we know why the US stock market made an all time high today!  this is a fuckin con game and the world is watching the most courrpt finacial circus on the planet in full view!

Tue, 02/19/2013 - 18:22 | Link to Comment Cursive
Cursive's picture

I'm so jaded at this point that I'm trying I'm thinking Tepper will sell it to the Fed or something.  I know that sounds stupid, but SPX 1530....

Tue, 02/19/2013 - 18:22 | Link to Comment youngman
youngman's picture

"Many loans were refinanced one or two years ago, in the hope that things would get better, but it has not been the case and there is now more realism about the situation. Why would you extend a new loan today?"

 

Do you think they are starting to get it.......na...no way...

Tue, 02/19/2013 - 18:24 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

UE will rise because of this.  So what is their rate now?  40% unemployed?

Well, as long as equities are higher, right Greenspan?

Tue, 02/19/2013 - 18:24 | Link to Comment Blond Viking
Blond Viking's picture

Newspapers and sites like ZH give us the big picture. But sometimes a snapshot (like the photo from the Greek central bank) can say much more than so many analyses. The text below is one of those snapshots. Originally published as a reader comment on Swedish financial daily di.se, I thought it was so good I saved it and translated it into English for wider distribution. This is what a Scandinavian living on the Costa del Sol has to say:

 

“The banks are on the verge of bankruptcy. They don’t have any money left. They have tens of thousands of flats and construction projects estimated at fantasy amounts on their balance sheets.

 

A lot of these objects are impossible to sell and have a negative value since demolition is the only option. The rest may have a maximum market value of 20% of the book value.

 

The banks cannot sell since this would force them to lower their prices and the whole house of cards comes tumbling down.

 

I have a flat on the Costa del Sol, in a complex where the banks own roughly 80%. Those who bought their flats desperately want to sell, since the whole area is decaying. The banks do not pay the maintenance fees, and have not done so since 2008, in the hope of shifting these accumulated costs onto future buyers. Private buyers who once paid cash and are trying sell have lowered their prices to EUR 30-50,000, but nothing much is happening. The banks have their flats for sale for the same price as in 2007, app. EUR 200,000, otherwise their balance sheets will crash. Those who bought with mortgages have long since stopped paying the banks and have abandoned their flats. Many of those who have left did not even empty their pantries and fridges, so the places are full of vermin and cockroaches.

 

During the golden years a lot of people from South America came to Spain, got jobs, bought houses and flats with mortgages of 110%, no problem. They were the first to abandon their houses and flats and left Spain. Subsequently many other foreigners and Spaniards have abandoned their overleveraged houses and properties.

 

Up until 2007, thousands of very poor quality houses and flats were built along the coasts. The aim was to build as much as possible in as short a time as possible, sell fast and make a pile of cash. Now, after a couple of years, it turns out that some of these buildings were constructed on foundations that shift and/or move, so the houses are falling apart all on their own. I have seen examples of people who have paid their life savings for their dream house and after a couple of years they are banned by the authorities from going anywhere near them. It is too dangerous since they have ten-inch cracks and are falling apart.

 

The banks have also lent money to thousands of houses that were constructed without building permits, where local authorities demand demolition. These negative value properties also have fantasy valuations in the banks’ books.

 

The banks have lent money to practically anything, with incompetent bank employees granting loans of 150% of a fictitious, out-of-proportion value (since all prices would continue to rise in all eternity and the envelope with the 5% kickback does wonders). Building permits and things like that could just be ignored. Faked building permits could always be bought from local civil servants, if necessary.

 

The Spanish real estate market is an utter morass, a complete disaster that few people realise the full scope of. Reality is scary, with banks and a building trade that have acted in hair-raising ways. The real deficits in the banks are gigantic, of Biblical proportions!

 

And the banks have desperately hoped that the market would turn around and a miracle would happen. But miracles don’t happen often and now reality has caught up.

 

So the Spanish state, which is bankrupt, is going to refinance a bankrupt banking system with money from northern Europe’s tax payers via the ECB?

 

Somebody has to put a stop to this!”

 

 

 

Tue, 02/19/2013 - 18:34 | Link to Comment kliguy38
kliguy38's picture

seems like a bargain to me. Cockroaches at bargain basement prices. I guess International House Hunters better start looking in the cabinets a little closer. Could be more entertaining.

Tue, 02/19/2013 - 19:00 | Link to Comment Miss Expectations
Miss Expectations's picture

"I have seen examples of people who have paid their life savings for their dream house and after a couple of years they are banned by the authorities from going anywhere near them. It is too dangerous since they have ten-inch cracks and are falling apart."

If you want to you can compare the falling of our empire(s) to that of Rome.  But, some of the ancient aqueducts are still in use and you can still walk the Via Appia.  So, there's that.

Tue, 02/19/2013 - 19:03 | Link to Comment Al Huxley
Al Huxley's picture

Yes, but the thing your missing is that this is what all the fucking central bank printing is all about - making banks whole after their shitty investments in overpriced real estate go bust.  Well, that and making governments whole when they spend more than they make.  Either way, our central banker overloads have our backs, we can all rest easy knowing our fate is in their capable and caring hands.  Our good shepards will look out for us, we can all go back to watchin' the TV.

Tue, 02/19/2013 - 19:26 | Link to Comment Village Smithy
Village Smithy's picture

Thanks for that.

Tue, 02/19/2013 - 22:27 | Link to Comment Smuckers
Smuckers's picture

Raid, roachez!

 

Tue, 02/19/2013 - 18:26 | Link to Comment Rustysilver
Rustysilver's picture

q99x2,

Must places are good to be from. It's the places that you want to be at right now that are at premium.

Tue, 02/19/2013 - 18:31 | Link to Comment falak pema
falak pema's picture

capitalism at its best; natural selection. One down. A hundred to go.

Tue, 02/19/2013 - 18:58 | Link to Comment lasvegaspersona
lasvegaspersona's picture

pema pema pema

new rules...the new DNA in capitalism allows all connected entities to live forever.  glory glory glory

Tue, 02/19/2013 - 18:59 | Link to Comment Bunga Bunga
Bunga Bunga's picture

Real selection would be hanged banksters, but tax payers will save their fat asses again.

Tue, 02/19/2013 - 19:34 | Link to Comment orangegeek
orangegeek's picture

socialism at its best - spending OPM until there is no more - they always run out.

 

and now all that's left is the collapse and utter misery.  so much for their utopia.

Wed, 02/20/2013 - 00:45 | Link to Comment Curiously_Crazy
Curiously_Crazy's picture

it saddens me that the word 'socialism' has been so ingrained to be negative in the people of the US's mind.

USA - Highest cost of medical care on the planet, yet infant mortality rates are between Lithuania and Belarus. Preventable deaths are also the highest in the western world. How's that private health system working out? incidentally all Obamacare does is *force* people to buy - you guessed it - private health insurance. In what you would call socialist countries we get a choice between private (about $50 a month and when my mum got breast cancer she didn't pay a dime for treatment, meds, nothing) or goverment through medicare (free but there may be slight waiting lists and you will have to share a room with another person)

"With the exception of Mexico, Turkey, and the United States, all OECD countries had achieved universal or near-universal (at least 98.4% insured) coverage of their populations by 1990." A 2010 report observed that lack of health insurance causes roughly 48,000 unnecessary deaths every year in the United States.[2] In 2007, 62.1% of filers for bankruptcies claimed high medical expenses."

 

Lets look at GDP per capita (USA is 14) top 10:

1  Luxembourg 115,809 2011 2  Qatar 98,144 2011 3  Norway 97,607 2011 4  Switzerland 83,073 2011 5  Australia 66,371 2011 6  United Arab Emirates 63,626 2011 7  Denmark 59,709 2011 8  Sweden 57,638 2011 9  Canada 50,496 2011 10  Netherlands 50,216

2011

Wed, 02/20/2013 - 08:35 | Link to Comment GCT
GCT's picture

CC the USA has not had a private medical system for a long long time.  Insurance, drug companies and the medical profession took over the medical system a long time ago.  Our government enabled it and backed it up.

Wed, 02/20/2013 - 09:32 | Link to Comment Curiously_Crazy
Curiously_Crazy's picture

To be blunt. In other word fascism.

There are dozens of countries around the world that the US is inferior to and they resort to giving them nasty names like 'socialist' (gov loves the the boogey man of socialism even though so many countries are doing better than the US. We always hear about "running out of other peoples money" well fucking wake the fuck up USA... you are printing your own money and exporting the inflation to others. Talk about hypocritical ). On top of that US Still has shitty health care, shitty standard of living and shitty prospects. Yay USA #1

Wed, 02/20/2013 - 09:36 | Link to Comment bunnyswanson
bunnyswanson's picture

Be Somebody.  Before 9-11, this country was a magnet to anyone in other countries who wished to advance in their chosen profession.  It's changed, no doubt about it.  But this has to do with global financial industry and nothing to do with the actual country it self narrowed minded idiot.  Because it's happening in every other 1st world nation, and you know it, I crown you a fucking trouble maker, an antagonist and you and your friends should be cornholed because we have enough on our minds without your cattle prodding bullshit.  Fuck off asshole.

Tue, 02/19/2013 - 18:42 | Link to Comment css1971
css1971's picture

Was looking at used tractors the other day. The market is swamped by Spanish liquidations.

Tue, 02/19/2013 - 19:00 | Link to Comment lasvegaspersona
lasvegaspersona's picture

I'm waiting for front end loader/back hoe combos to come down in price. Here in the states the prices still reflect our 'strong and dynamic' economy.

Wed, 02/20/2013 - 11:01 | Link to Comment TruthHunter
TruthHunter's picture

"I'm waiting for front end loader/back hoe combos to come down in price. Here in the states the prices still reflect our 'strong and dynamic' economy."

If you looked a little deeper" I think you'd find it represents exports to Latin America

Tue, 02/19/2013 - 20:20 | Link to Comment Seasmoke
Seasmoke's picture

i am still amazed that anyone, anywhere, is paying anything on their mortgage !!!!

Tue, 02/19/2013 - 20:24 | Link to Comment billsykes
billsykes's picture

Its all garbage, stucco, tape and Styrofoam. I blame communism, fiat money and Bauhaus architecture for the eye sore that is modern building.

Big box strip malls, spec homes and all aluminum & glass condos should be shoved into the nearest fault line. 

Those architects that conceived this shit should have their eyes gouged out of their heads. Shouldn't there be aesthetic guidelines that cities impose on new buildings? 

Tue, 02/19/2013 - 21:20 | Link to Comment Clycntct
Clycntct's picture

"Shouldn't there be aesthetic guidelines that cities impose on new buildings? "

Is that before or after they make up the fake money to do it?

Tue, 02/19/2013 - 21:17 | Link to Comment trendybull459
trendybull459's picture

do I allowed to buy real estate in Spain or their banks keeping morgages in jail like americans,how it was in russian Chehov "Dead souls",applied for today in morgage/banking industy industry,just build your ballance sheet with shares of companies which is bancrupted,put their pick value on and demand to be rich accordinly!Like banks and Goverments?

follow us:

http://trendybull777.blog.com/2013/02/20/special-rubrics-from-around-worldvery-catchy/

 

Tue, 02/19/2013 - 21:53 | Link to Comment Richard Whitney
Richard Whitney's picture

Depends on what Tepper paid for the 450 million Euros of debt.

Wed, 02/20/2013 - 01:02 | Link to Comment Kiwi Pete
Kiwi Pete's picture

Unless it was zero he'll probably be taking a loss. Or his clients will!

Wed, 02/20/2013 - 00:40 | Link to Comment Notarocketscientist
Notarocketscientist's picture

I remember the CNBS anchor Ross Westgate about 3 years ago mentioning on air that he had just returned from Spain having bought a holiday home clearly believing the market had bottomed.  He was pleased as could be.

Well Ross, at least you confirm that the CNBS personalities do actually drink the Kool Aid (as opposed to being hypocritical lying bastards).

I suggest you refer to yourselves as 'Personalities' as in Paris Hilton is a personality - and not as journalists.

Because referring to you DONKEYS as journalists would be a total joke.

Wed, 02/20/2013 - 01:22 | Link to Comment Bunga Bunga
Bunga Bunga's picture

Spain is getting dirt cheap and Chinese or Russians get a Green Card only when they buy an appartment there. Who can beat that?

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