UPDATE 1-Spain's Reyal Urbis nears bankruptcy after talks fail-sources

Fri Feb 15, 2013 1:32pm EST

(Adds details of assets, shareholders)

By Tomás Cobos and Carlos Ruano

MADRID Feb 15 (Reuters) - Creditors of Spanish property developer Reyal Urbis rejected the company's 3.6 billion euro ($4.8 billion) debt restructuring proposal, two sources familiar with the talks said, pushing it a step closer bankruptcy.

Reyal Urbis, battered by the sharp downturn in Spain's property sector, had until Feb. 23 to reach an accord with its lenders or begin bankruptcy proceedings, a deadline set by the courts.

Although last-minute talks are still possible, the sources said on Friday the company's lenders and Spain's so-called bad bank, where some of the loans are parked, were not eager to refinance Reyal, making bankruptcy the most likely option.

Reyal Urbis, 70 percent owned by real estate and construction magnate Rafael Santamaria Trigo, said in October if it could not reach an agreement with its creditor banks it might need to seek creditor protection.

Several attempts to reach the company for comment were unsuccessful.

The company's creditors include Santander, BBVA , Bankia and Banco Popular. Bankia and Banco Popular declined to comment, while no-one at the other banks was immediately available.

"The proposal included a request to free up a series of mortgaged assets which the company could sell for short-term liquidity, but there was no agreement," one of the sources with direct knowledge of negotiations said.

"A majority of the banks and (Spain's bad bank) SAREB have already set aside provisions for the loans, so they have little interest in kicking the can down the road," the source added.

The fallout from a burst property bubble, after a decade-long housing boom, has left Spain with more than half a million unsold new homes and scores of property groups going to the wall as house prices languish 40 percent below their 2007 peak.

Reyal Urbis's assets were worth 4.2 billion euros at end-June, compared with debt of 4.3 billion, the company said.

At the end of 2011, Reyal Urbis owned some 888 finished homes, 8 million square metres of land for development and 237,000 square metres of commercial property, including offices, shopping centres, industrial property and hotels.

In the third quarter of 2011, the last quarterly statement on the company's website, it reported rental income of 20.4 million euros, mostly from its commercial properties.

According to Reuters data, the developer held land worth 3.3 billion euros at the end of 2011, of which it had provisioned for losses of some 633 million euros.

Spanish banks have been forced to write down the value of undeveloped land by as much as 80 percent since the property crash, as the government forced a restructuring on the financial sector.

Shareholders in Reyal Urbis include corporate financial bank EBN Banco de Negocios, with 4.76 percent, and two Spanish savings banks, each with 4.3 percent stakes. ($1 = 0.7495 euros) (Additional reporting by Fiona Ortiz; Writing by Paul Day; Editing by Elaine Hardcastle and David Holmes)