Banco Bilbao Vizcaya Argentaria BBVA has agreed to sell 80% of its Spanish real estate business to a subsidiary of Cerberus Capital Management, a U.S. private equity firm, for €4 billion through a joint venture deal. The deal, which is likely to be closed by second half of 2018, values BBVA's business at approximately €5 billion.
Per the CEO of BBVA, Carlos Torres Vila, "This transaction is extremely important, because it significantly reduces our exposure to a non core business, and it allows us to strengthen our transformation process." Also, once the deal is completed after getting the necessary approvals, the bank will have lesser exposure to real estate as compared to other Spanish financial institutions.
A joint venture, which will be formed for this purpose, will have a gross book value of €13 billion containing about 78,000 property assets owned by BBVA. Per the deal, 80% of the stake will be owned by Cerberus. However, the transaction amount will be determined based on the ultimate volume of real estate assets that are transferred to the joint venture as some sales could be carried out before the transaction is closed.
According to John Snow, Chairman of Cerberus, "This important transaction shows our commitment to offering tailored solutions for our partners and underscores our confidence in Spain's continued growth, where we plan to make significant additional investments."
Spanish economy is one of the fastest growing European economies. With its property prices rising sharply, U.S. funds are trying to take advantage. Blackstone Group BLK
also decided to buy Banco Santander's SAN
Spanish property portfolio for €5 billion in August.
Shares of BBVA have gained 40.1% over the past 12 months outperforming 23% growth recorded by the industry
Currently, the stock carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .
A better-ranked stock from the same space is KB Financial Group KB . It has witnessed an upward earnings estimate revision of 11.1% for 2017, over the last 60 days. The company's share price has risen 53.1% over the past 12 months. The stock carries a Zacks Rank of 1.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Banco Santander, S.A. (SAN): Free Stock Analysis Report KB Financial Group Inc (KB): Free Stock Analysis Report Banco Bilbao Viscaya Argentaria S.A. (BBVA): Free Stock Analysis Report BlackRock, Inc. (BLK): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research