Blackstone Near Deal for $1.1B Mortgage Book

Blackstone Group LP is close to agreeing on a deal valued at about 950 million euros ($1.1 billion) to sell a portfolio of Spanish mortgages to CarVal Investors LLC, people with knowledge of the transaction said.

CarVal’s bid topped offers from Goldman Sachs Group Inc. and Elliott Management Corp., the people said, asking not to be identified as the process is confidential. The portfolio of mortgages, which has a face value of 1.1 billion euros, was carved out of a 6.4 billion euros book of loans that Blackstone bought from Catalunya Banc SA in 2014 for about 3.6 billion euros, they said.

The loans Blackstone is selling are now performing and are among the best of those originally sold by Catalunya Banc. They’re held by multiple Blackstone managed funds, including Blackstone Real Estate Partners Europe IV LP, the people said.

Spokesmen for Blackstone and CarVal declined to comment.

Private equity firms including Blackstone and Cerberus Capital Management LP have bet heavily on the recovery in Spain, buying up properties and mortgages in the aftermath of the financial crisis that hit the country’s real estate market especially hard. The strategy has been lucrative as Spain’s property market has outperformed other southern European countries where banks have made far less progress in dealing with soured loans.

Blackstone has spent the past five years servicing most of the loans while taking control of some of the other properties to rent or sell. Carving out the best portion of the remaining loan book means potential buyers can secure cheap credit to finance the purchase, maximizing the price.

CarVal is currently investing for its CVI Credit Value Fund IV LP, which buys debt investments in Asia Pacific, Western Europe and the Americas. The fund, whose investors include parent company Cargill Inc., closed with $3 billion in 2018.

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