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Banking

Johnson Capital Forms Spanish Distressed Asset Venture


--Sarika Gangar

Johnson Capital International has joined forces with Madrid-based advisory MaC Group to work out the growing number of distressed commercial and residential real estate assets coming out of Spanish banks. The Johnson Capital unit entered the Spanish market a year and a half ago and is anticipating a leap in troubled assets, said Ron Lafever,managing director.

On the residential side, defaults are expected to double from mid-2008 levels to reach 4.5% by the end of next year. Johnson and MaC will provide asset management, due diligence and workout execution on distressedassets. The duo will also work with Alteba, a Spanish property and asset management firm, to help with property operations. "We have a combinationof a real estate investment bank, a Spanish banking consultancy and an assetand facilities management firm," Lafever said.

Johnson's participation will include running structured sealed bid auctions on distressed assets. "There will be a significant change in pricing, so the opportunity for high yields is there," Lafever said. Spain, as part of the European Union, offers greater transparency ininvestments than other foreign countries, he added. Auctions will consist mostly of residential mortgage-backed securities and residential and commercial whole loans. A secured website will be set up to facilitate these auctions.

Spain's market is suffering from ailments similar to the U.S. market. There has been over building on the residential side, decreasing demand and stalled property transactions. The country's problems are comparatively more intense because an inordinate amount of its overall economic activity depends on real estate and tourism--two deteriorating sectors. "The collapse is having a much bigger impact on the nation," Lafever said.

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