Spain Sareb Said to Sell Debt to Fortress at 46% Discount

Spain’s bad bank will sell 437 million euros ($592 million) of loans taken by Realia Business SA (RLIA) to Fortress Investment Group LLC (FIG) for 46 percent less than their face value, two people with knowledge of the matter said.

In addition to the New York-based private-equity firm, at least eight funds expressed interest in buying the debt from the Madrid-based bank known as Sareb, one of the people said. Both asked not to be identified because the information is private.

The government set up Sareb last year to absorb 50.8 billion euros in real estate assets from lenders including the Bankia group that took state aid after the Spanish property market slumped. Sareb has raised 1.7 billion euros this year, beating its target of 1.5 billion euros, Deputy Economy Minister Fernando Jimenez Latorre said at a conference in Madrid last month.

Realia, Spain’s second-largest publicly traded real estate company by market value, reported a nine-month net loss of 17.3 million euros and net financial debt of 2.2 billion euros. Last month, the Bankia group and Fomento de Construcciones y Contratas SA, which together own about 58 percent of Realia, hired Goldman Sachs Group Inc. to seek buyers for their stakes.

Realia rose as much as 2.2 percent in Madrid trading and was up little changed at 91 cents as of 11:52 a.m. The stock has climbed 21 percent this year, giving the company a market value of 251 million euros.

A spokeswoman for Sareb declined to comment. A spokesman for Fortress, based in New York, also wouldn’t comment.

To contact the reporter on this story: Sharon Smyth in Madrid at ssmyth2@bloomberg.net

To contact the editor responsible for this story: Andrew Blackman at ablackman@bloomberg.net

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