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npl-reo Assets News: Spanish Real Estate Intelligence

Alpha Bank management had a teleconference with investors – What is the plan for the Galaxy project
Alpha bank management team had a teleconference yesterday with investors. The teleconference was organized by JP Morgan, and the main topics of discussion were the impact of the pandemic and the progress of the Galaxy project. The bank management message was encouraging and strong. JP Morgan on the other hand believes that the crisis caused by the pandemic will certainly have an impact on the plan progress of Alpha Bank and the all the Greek banks, but the decisive moves of the European and Greek authorities (the ECB's package and the government fiscal measures) will reduce the negative impact, possibly with a V-type recovery in the Greek economy. The new guidance by the Alpha Bank management for 2020 suggests a relatively limited impact on pre-forecast operating profits, but the main uncertainty is the cost of risk. In the bank's portfolio of loans, the total exposure to crisis-affected enterprises and SMEs amounts to €4.4 bn (9% of gross loans), of which €1.5 bn are in the hospitality sector. The Galaxy project remains the focus of the bank's strategy, but it may slightly change. The management stressed that the first phase of the project was successful, attracting strong investment interest and hopes that the ongoing preparatory work will allow a faster execution of the project when market conditions normalize. For now the basic scenario remains that the transaction will resume in the second half of the year. The management commented that the bank could consider a possible review or change of the size of the €12 bn of securitization, e.g. with the execution of parts of the portfolio this year and the rest next year. Original Source: Capital Adaptation/Summary: Kiki Athanasiadis  
 
Piraeus Bank pushes the implementation of its NPL reduction plan
Piraeus Bank seems determined to continue implementing the plan to reduce its non-performing exposures, despite the sharp decline in interest due to the coronavirus, with scant, for the time being, results. The spread of the pandemic in Europe found Piraeus, as well as other domestic banks, in the middle of the implementation of a program to reduce its non-performing exposures, in order to consolidate its balance sheet. In the above context, two tender procedures were in progress: the first in cooperation with Eurobank concerned the sale of the loans of the Kypriotis hotel group and the second, the first three portfolios of the Trinity project. On top of those, three more were added for the loans of MIG, the businessman I. Avrantini (NEL) as well as the sale of a loan with a pledged hotel in Serbia. The sale of the loans of the MIG group, with a nominal value of €548.8 m and a slightly higher total demand, is the most important process, as the loans are secured by all shares of Vivartia and Attica Group, held by MIG. Piraeus decided in early March to start the tender, surprising the market, which considered it reasonable to postpone the process, so as not to be affected by the drastic deterioration of the investment climate. The submission of a single binding offer by the Irish Comer Group, which is said to be subject to price hurdles linked to the impact of the pandemic and its measures on the economic activity of the MIG group, confirmed the estimates of the market. Since March 23 until today, Piraeus has not taken an official position on the tender, while Comer's offer was not discussed at the Board of Directors of the Bank, which took place last Friday, March 27. Therefore, it is not clear whether the bank will consider the offer as a basis for discussion and enter into a period of exclusive negotiations with Comer or will declare the tender barren. In the latter case, the bank must, in the light of the prevailing conditions, request the supervisor's tolerance for the timing of a new tender. The second tender procedure concerns the sale of a series of non-performing business loans, a total claim of €760 m and a net book value of €119 m (project Trinity). These are reported or pending loans from contractors, hoteliers, publishing companies, etc. For the first three portfolios of the Trinity project, Piraeus has been in negotiations with PIMCO since last month, after the submission of binding offers. Recently, non-binding offers were submitted for Trinity 4. At the same time, a tender procedure is underway for the sale of the non-performing loans of the businessman Ioannis Avrantinis, with a total report of €137 m and an accounting value of €16 m. These loans are secured by shares of companies that control wind farms (operating or licensed) with a capacity of about 30 MW. The outbreak of the pandemic has found Piraeus and Eurobank to discuss with HIG Capital the signing of a binding agreement for the sale of loans of the Kypriotis hotel group, after a "painful" tender as the collapse of Thomas Cook. Piraeus' total demand for the above loan amounts to €69 m euros and the net book value amounts to €41 m. The discussions have been frozen until the visibility for the next day of tourism is improved. Finally, Piraeus is ready to start a tender process for the sale of a loan, which is secured by a hotel in Belgrade (project Danube), while the completion of the transfer to the Czech APS of the Iris portfolio is still pending. These are mainly unsecured loans with a total claim of 1.8 billion euros and a net book value of 76 million euros at group level. Original Source: Euro2day Adaptation/Translation: Kiki Athanasiadis
 
Banks and funds renegotiate almost closed NPL deals
Due to the coronavirus, funds and servicers investing in the NPL portfolios of the Greek banks are now asking for the renegotiation of the terms, a step before the contract signing. Some also ask for smaller-scale adjustments to already signed contracts. The coronavirus pandemic found the domestic banks amid an ambitious NPE reserve program through securitization and portfolio sales. The tender procedures that were in early stages (Alpha Bank - securitisation of the Galaxy portfolio and the sale of 80% of Cepal) or in the planning process (NBG - the securitisation of the Frontier portfolio and Piraeus bank – the securitisation of the Phoenix portfolio) have been postponed or will be postponed as the intensity of the pandemic leaves no room for other options. At the same time due to the pandemic the signing of agreements for mature procedures, such as project Neptune of Alpha Bank, project Icon of NBG and project Trinity of Piraeus Bank are is delayed. Preferred investors have either already asked for a renegotiation of the price of their binding offers, or are reconsidering their stance, suspending negotiations to sign a purchase agreement. The funds seek either a reduction of the price by up to 30% or to pay part of it, provided that pre-agreed earn-out schemes are achieved. This way, they are asking the banks to take part of the risk . The binding offers were submitted in a promising environment. The economy was recovering, even at a slower pace than in the previous recession, real estate prices with long-term or short-term leases rose sharply, and auctions were due to intensify. Most of the above parameters have been cancelled due to the pandemic, or in the best case scenario, they are questionable. The funds say that one of the reasons why Standard & Poor's has downgraded the prospects of domestic banks is the delay in the recovery of the real estate market, due to the pandemic and its restrictive measures. Therefore, the funds estimate that the achievement of budgeted receipts will go back for at least 12 months, a development that reduces the expected return. Hence, one of the first steps of the renegotiation is to pay part of the price, if certain performance is achieved. Original source: Euro2day Adaptation/Summary: Kiki Athanasiadis