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Spain's 'bad bank' sells 550 homes in three months

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(Globalpost/GlobalPost)

Spain's "bad bank", key to cleaning up the bad-loan ridden financial system, said Monday it has sold 550 homes since the end of February when it began its operations.

Spain set up the bank, SAREB, last year to absorb tens of billions of euros in bad assets that have been weighing on the balance sheets of the country's banks since the property market crashed in 2008.

But it only signed the contracts which allow it to manage the assets which were ceded to it by banks at the end of February.

"SAREB has sold since late February, when it signed contracts regarding the management of assets, and May a total of 550 homes," the bank said in a statement.

"In addition to the sales which have been closed in the last three months, SAREB has another 800 operations which are pending closing and has received preliminary offers on 2,200 other properties," it added.

SAREB took on 50.7 billion euros ($65.9 billion) of bad loans and severely devalued property which it bought at a steep discount.

Its property portfolio includes 55,700 homes, 15,000 undeveloped plots, about 30 hotels as well as 185,00 square metres (1,990,000 square feet) of office space and 150,000 square metres of retail space in shopping centres.

SAREB aims to raise 1.5 billion euros from sales this year and to liquidate all of its assets within 15 years.

"The company is taking the necessary steps to fullfil the mandate which was given it," SAREB president Belen Romana said in a statement.

The bank said it was renting out nearly 8,000 properties which accounted for one-quarter of its revenues.

SAREB was created as part of the terms of a 41 billion-euro European rescue of Spain's weakest banks last year.

Private investors own 55 percent of the bank with the remaining 45 percent held by Spain's state-backed Fund for Orderly Bank Restructuring, or FROB.

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http://www.globalpost.com/dispatch/news/afp/130603/spains-bad-bank-sells-550-homes-three-months