(Adds JPMorgan no comment, writes through, adds Catalunya Banc
* Lone Star, JP Morgan to buy loan portfolio - sources
* Sale price between 3.7 bln and 3.9 bln euros - sources
By Alexander Hübner and Sarah White
FRANKFURT/MADRID, May 20 Germany's Commerzbank
is finalising the sale of Spanish property loans to
U.S. investors for up to 3.9 billion euros ($5.4 billion),
sources said, in what would be one of the biggest deals of its
kind since Spain's 2008 real estate crash.
JPMorgan and private equity firm Lone Star have been
picked as the winning bidders for the portfolio - in a deal
codenamed "Project Octopus" - the three sources close to the
matter said on Tuesday, adding that the deal had yet to be
"The main parts of the agreement are already done ... the
final closing will be in the coming weeks," one of the sources
Commerzbank, Lone Star and JPMorgan declined to comment.
The portfolio is one of the largest sold in the wake of
Spain's real estate market collapse in 2008. House prices have
fallen around 40 percent since then, hurting banks exposed to
the sector and pushing some Spanish lenders into state bailouts.
Foreign investors have flocked to Spain in search of real
estate bargains, but many banks were initially reluctant to sell
at big discounts, and large portfolio auctions have been rare.
In the past year, however, more deals have emerged as
Spanish banks, and some in other countries, have booked hefty
provisions against losses and are in a stronger position to sell
loan portfolios at discounts.
Investors such as Blackstone and Cerberus Capital
Management have also started buying real estate management
divisions from banks, to help them manage the loans and housing.
Commerzbank, Germany's second-biggest lender, is taking
advantage of the renewed appetite for the Spanish real estate
market as it cleans up its finances, but it will still have to
sell the package at a discount, the sources said.
The sale price is between 3.7 billion euros and 3.9 billion
euros, two of the financial sources told Reuters.
The loans had a face value of between 4 billion and 4.5
billion euros when Commerzbank took them on, sources have
The sale of the "Octopus" portfolio should pave the way for
more disposals of packages of loans and properties, bankers in
Madrid said, adding that some deals had been held up because
investors were focusing on this one.
The Commerzbank package was particularly attractive for
buyers as it includes loans backed by commercial buildings such
as hotels and shopping centres, rather than the residential
mortgages banks usually try to shift. The loans include ones to
the luxury Ritz hotel in Madrid, for example.
That helped it draw offers from banks as well as funds, and
JPMorgan was up against bidders including Deutsche Bank
. Banks were attracted by the performing loans in the
portfolio, sources have said.
The package is made up of about 1 billion euros in
non-performing debt, while the remainder is about 3.3 billion
euros in performing loans.
One of the sources said that Lone Star would also be taking
on a team of roughly 25 people from Commerzbank as part of the
deal, to help manage the loans.
Spanish newspaper Expansion reported earlier on Tuesday that
a deal was in the offing, citing a sale price of 3.5 billion
Meanwhile, Spain's rescued Catalunya Banc, which the state
is set to start auctioning off this week, is in the market with
a 7-billion-euro package of mortgages, split between soured
loans and performing ones.
The government is looking at ways to help smooth that sale
with state funds, sources have said.
($1 = 0.7289 Euros)
(Additional reporting by Robert Hetz in Madrid; Writing by
Jonathan Gould; Editing by Pravin Char)