Sorgente aims at NPLs with the fund Perugino

28 December, Requadro

The fund Perugino is operational. It was created by Sorgente sgr to invest in loans, performing and non-performing, mainly brought by the underwriters. The fund acquires and manages bad loans of banking nature within the threshold of 50% of its assets, as well as performing credits (solvent), both unsecured (not backed by real estate) and secured (backed by mortgage).

The fund has the objective of collecting 50 million euro and it sees among its investors mostly cooperative banks. With a seven years horizon, which may be extended, the fund addresses banks and other financial companies. Its portfolio is currently composed of non-performing loans for a nominal value of about 45 million euro, corresponding to approximately 1,300 obligations, 10% of which are secured and 90% unsecured.

Perugino is the second fund dedicated to credits by Sorgente sgr after Pinturicchio, both products are capable of providing investors with higher returns with a low risk. “Investing in bank debts – declared Giovanni Cerrone, Sorgente sgr general director – shows the potential of the current market, which is nowadays very interesting. Besides, it has an ethical and social function for the most vulnerable Italian families. Buying credits at a much lower price than their nominal value, in fact, allows making more sustainable repayment plans. This makes possible regain trust in the future, thanks to repayment strategies compatible with the needs of the financially struggling social categories”.

Source: Requadro

Translator: Cristina Ambrosi

Mortgages, the truce is not over

29 December, Il Sole 24 Ore

It will be another good year for Italians that chose the floating rate mortgage, representing two-thirds of the mortgages, even though the fixed rate has been the most popular option in the last three years. Thanks to the ECB that will continue introducing liquidity in the markets, even though a slower pace than in the past, the Euribor, the rate determining the interest rates on mortgages, won’t increase.

We’ll have to wait till the second part of 2019, or even the year after, for a new rise of the interest rates in the eurozone (the first after summer 2011), according to the analysts. For this reason, there are no significant increases of the interbank rates coming up, as they haven’t changed in the last two and a half years and they still have paradoxically the negative sign since then. The market expects to be back to the positive sign in two years and to surpass the threshold of 1% not earlier than 2023.

Therefore, rates will stay well below the average. The payment issues that are still concerning many families, as proved by the over 150 thousand suspension requests received by Abi since March 2015 (more than 2 thousand in 2017), won’t be due to the instability of the rates, rather due to reasons connected with household budgeting and the consequences on the long recession.

For those who’ll have to choose a mortgage in 2018, the rates condition will be rather good, similar to the conditions of 2017. Considered that the Euribor should stay with a negative sign, the levels of Eurirs, used to determine the fixed rate, might increase, as the ECB is going to close the plan for the purchase of government securities. The choice of the instrument will depend on the offers (and strategies) of the banks. Just like 2017, year of the absolute preference of the fixed rate.

We’ll have to consider, however, the decrease of new mortgages, not necessarily due to the debts of banks. In fact, the last year saw a good number of subrogations (basically replacing an already existing product with a new one at better conditions), even though their issuance slowed down over the last months. The reason is very simple: as families see the range of new products agreed at rates close to zero and a competitive spread widening, the chances to improve their current situation reduce.

“The mortgages issued in the last two years are hardly replaceable, and the weight of the subrogations will be heavier in the long term”, confirms Roberto Anedda, marketing director for Mutuionline.it, adding also that in the near future, “the products underwritten for the purchase of a house will have a more relevant role in the future”. But house prices have significantly reduced without giving a new impulse to sales. In fact, many prefer to wait for prices to drop further, favoured also by mortgages destined to stay convenient on the long term: a big paradox.

Source: Il Sole 24 Ore

Translator: Cristina Ambrosi

Property market from 2007 to 2017: what happened to the sector year after year

28 December, Idealista

The end of the year is time for reviews, also for real estate. Over the last ten years, real estate has gone through deep transformations due to a crisis that concerned all the aspects: credit, prices, sales. Let’s see what happened, year after year, in the last decade, according to the analysis by Tecnocasa.

Since the second part of the Nineties, the Italian property market had registered a phase of expansion. The factor for this positive cycle is related to the low interest rates on mortgages, the introduction of the euro that generated a more pronounced tendency to debt, and the consequent growth of demand on houses. We must also add the volatility that concerned the financial markets. All these elements combined contributed increasing the sales volumes with a pick in 2006 of nearly 845 thousand transactions and a growth of values that lasted till 2007, the year the market reported a countertrend.

The descending phase of the real estate cycle started in the second semester of 2007 when for the first time, prices of properties have registered a contraction.

2007: the mortgage credit destined to families for the purchase of houses registers a standstill for the first time, due to the crisis of the sub-prime mortgages market that makes banks very cautious in granting loans and the rise of interest rates. All this reflects in the property market that reports a reduction of the purchasing power, with the consequent first reductions of volumes (-4.6%) and of property prices (-1.0%).

2008-2009: The credit crunch continues, some categories of potential buyers can’t access to credit anymore (immigrants, singles, workers on temporary contracts), the times to sell properties get longer, the offer of the market grows and consequently prices and transactions drop further. In 2008 transactions report a reduction of 15% compared to the previous year. It’s the first significant fall.

2010: transactions stabilize thanks to banks relumining the issuance of mortgages, government’s regulations to help accessing credit, and the rise of the demand from families. However, there is still the tendency of banks to be cautious. Transactions are 611,878.

2011: the economic situation of the country shows negative signs, unemployment rises, trust from businesses and families diminishes, along with the intention of buying a house. The credit market sees again a deep fall in the issuance of mortgages causing a reduction of transactions and lower prices in the real estate market.

2012: a horrible year for Italian real estate. The year registers the biggest contraction of prices (-10.2% in just one year) and the volumes start to plummet (-25.8% compared to 2011) due to the lack of trust, a very negative economic situation, and the increased cost of mortgages that makes more difficult accessing to credit. We must also add the heavy taxation, impacting especially the second houses, that causes a surplus on the real estate offer.

2013: the market reaches its lowest point with 403,124 transactions, and it goes back to the levels of the Eighties, prices are still falling (-8.7%). The credit market starts seeing the first signs of recovery of the demand for loans from families, which return being hopeful, despite the not so brilliant trends of consumptions and of the job market.

2014: mortgages restart, the demand for credit from families rise and the ECB introduces additional cash in the financial markets through the Quantitative Easing. Trust from companies and consumers returns. These elements cause the demand for properties to increase, even though such demand has become more selective than in the past. Transactions increase while prices are not rising yet.

2015: the demand continues growing, the time to sell gets shorter, the sign that the market is going towards a new phase. All this doesn’t reflect, however, in prices that continue to decrease even though less than in the past, going towards stability. The situation is favoured by the increased demand in the credit market and by very low interest rates (negative index for floating rates). The low interest rates and the very convenient house prices are a mix that triggers the recovery of the market.

2016: sales make a leap and reach 18.9%, supported by the recovery of the credit market. In fact, the issuances of mortgages grow by 20.6% in 2016. Prices go towards stability and close the year with a reduction of -1.6%.

2017: the market is getting out of the real estate crisis. The demand for properties recovers, investments are back, the selling times reduce to 140 days. The credit market continues giving positive signs even though the volumes are aligned with the previous years. On the property market, a growth in sales (between 550 thousand and 570 thousand) and steady prices are expected for the year-end. Values will recover in 2018.

Source: Idealista

Translator: Cristina Ambrosi

International investments to relaunch real estate development

28 December, Linkedin

The recent news coming from the Italian market are definitely interesting, especially for what concerns the international capitals invested in urban development and requalification operations. Not only assets acquisitions, especially core assets. It’s true that most of these operations take place in Milan, but the fact that the big capitals are investing again to create new products is certainly remarkable. The latest news concerns the joint venture between Varde and Borio Mangiarotti for the implementation of a project for a value of about 250 million euro in the western part of Milan (12 metro stops from Duomo). Then, there are also the project by LendLease on the former Expo area, for which the company is awaiting the results of the Stam trial, and the recovery operation of Santa Giulia. A mighty commitment in terms of requalification for both areas, of strategic importance for Milan.

Then, there is Hines, which is investing in the residential segment, or better, in the “living” segment, offering diversified and specific living solutions. Blackstone continues investing (in the meantime, the company has started disinvesting some assets), Barings, and so on. 2017 will close the corporate market with values close to 10 billion euro, while we’re waiting for the numbers for 2018. The various segments, however, have changed their weights within the real estate offer: logistics is rising thanks to the growth of e-commerce, retail is going down, confirming the same values of 2016. Funds, Italian as well as international, have seen very important acquisitions, such as that by DeA Capital RE SGR for the Edison headquarter in Milan, the single deal of the year, with 272 million euro, along with the operation in Rome for the Scarpellini assets. Always in Rome, the stadium project is finally starting, even though without the office part as initially planned. Moreover, some operations that were on hold are about to restart. From this point of view, it’ unlikely 2018 will be worse than 2017. On the overall, even though the market spins around Milan, 2018 might be the year of the consolidation of real estate at a national level, with a better development approach. Finally, we’ve started seeing new constructions for more houses, a new residential offer that Italy needed so badly.

The political uncertainty, with the elections coming on March as well as the regional elections in Lombardy, is a big factor to determine the trends of the market. According to some, the result will be another Government with a weak majority subject to the President of the Republic and, consequently, to Brussels. Let’s just hope that at least 60% of the Italians will vote, otherwise, this will be another sign of a divided country, with a part of people that don’t trust politicians anymore.

Source: Linkedin

Translator: Cristina Ambrosi

Intesa Sanpaolo will absorb Banco di Napoli

28 December, Finanza Report

Intesa Sanpaolo will absorb Banco di Napoli. It was decided yesterday by the Board of Directors and the decision will make history. If it’s true that Intesa already owned 100% of the bank from Naples, after the merger at the end of 2006 between Banca Intesa and Sanpaolo Imi, that bought Banco di Napoli in 2002, now the bank will lose its autonomy, even though the brand will stay.

The decision is due to the need of optimizing the activities in the new strategic plan up to 2021, that will be presented in February. Some important details from the plan have already started emerging, such as the reorganization of the asset management and insurance divisions, as well as the cost cuts with the staff reduction, even though they will be all voluntary redundancies.

The Board of Directors approved yesterday the operation that will be implemented between November 2018 and February 2019, ending a company history started in 1539, the year when the bank was established, one of the oldest banks in Italy.

Based on the current plan, it was also decided to incorporate Cassa dei risparmi di Forlì e della Romagna, with the approval of this latter. The operation is subordinated to the acquisition by Intesa of a quota of the remaining 10.74% from  Cassa dei Risparmi di Forlì for 46 million euro.

In the meanwhile, the ECB has communicated today to the bank led by Carlo Messina the requirements in terms of assets. Nothing surprising, as it was anticipated by Intesa itself in the past weeks. Following the results of the Srep process, the ECB set a minimum Cet 1 parameter of 8.145% for 2018, while the bank on 30th September reported a Cet 1 equal to 13%. The standard requirement is 9.33%, against a pro-forma parameter of the bank equal to 13.4%.

The capital in excess of Intesa makes possible “looking with positivity at the future potential impacts on capitalisation due to the new regulation”, commented Messina, stressing the bank’s “leadership position among the main European banks with a Cet 1 ratio exceeding by four percentage points the Srep requirement for 2018, meaning a minimum capitalisation over 12 billion euro”.

Source: Finanza Report

Translator: Cristina Ambrosi

Property funds, another flop. Poste evaluating an intervention for those who lost 25%

27 December, La Repubblica

Another day of losses at the Stock Exchange for four property funds. In comparison with the Irs disaster – Invest Real Security one year ago -, this time is better. In two cases, it wasn’t bad at all. Despite the good results of these products, the funds, now arrived at the end of their duration – for whose settlement we’ll have to wait a couple of months – are quite a disappointment, and they haven’t been understandably very popular in the past few years.

This time also, there is a common element with Invest Real Security (that at the time closed with a loss of 60%): the worst-performing fund of the group, Europa Immobiliare 1 (Vegagest) was mainly distributed by Poste Italiane in 2004, with Massimo Sarmi as Ceo at the time: the instruments were placed on the counter to be perceived as “safe” by customers since people normally associate the post office with reliability. Well, this fund will be completely liquidated in a few months and, according to the estimations that must be confirmed by the fund manager (properties sold in the last weeks, the liquidity of the fund, the closure fees and commissions), Europa Immobiliare is expected to close with a loss around one quarter of its value. The company itself stated that the returns should be comprised between -2.89% and -2.68% yearly.

Another poor performance by Poste Italiane. Matteo Del Fante, just like his predecessor Francesco Caio, seems intentioned in finding a solution for the investors, but it’s still too early to do something since we must wait till the settlement to have the definitive figures. It’s unlikely, however, that also in this case Poste Italiane will come to investors’ aid. Moreover, the company is preparing to deal with the Obelisco case (Investire Immobiliare), another fund allocated by Poste and currently with an exposure of 80%.

Losses, even if in a lighter form, for Delta Immobiliare (Dea Capital real estate), allocated in 2006. In comparison with the minimum points of 23 euro per stock (in 2012), the value recovery at the end of the fund’s duration (85) has been amazing but not sufficient to avoid closing with an exposure in the financial statement for those who subscribed to the fund at the moment of listing on the Stock Exchange. In this case, one of the factors for the bad results has been the specialization of the fund, namely touristic properties, that have been badly impacted by the recession, along with the drop of value of the properties (a common element to all the four funds). The choice of diversifying with a cinema has slightly improved the situation. Whereas the other fund managed by Dea Capital – Beta – and the fund Tecla from Prelios have registered good performances. In both cases, the funds since the listing in 2004 have registered earnings over 40%. But they suffer from the same weaknesses common to all funds: the little liquidity, the necessity to sell the assets at the end of the duration with the consequent risk of being exposed to the risk of selling out, the potential interest conflicts during the initial phase of the input of the properties. It’s not by chance that the Beta fund has sold the last properties cutting dramatically the price: the last four assets have been sold with a discount of approximately 35% compared to the book value on 30th June, while the sale of the property in Latina has been concluded at a price 40% lower than the one estimated six months ago. Siiq haven’t had much more success so far either, being the only alternative to list real estate assets without using funds.

Source: La Repubblica

Translator: Cristina Ambrosi

Houses devalued by taxes: prices down by 4%

29 December, Il Giornale

Taxation continues killing real estate. Over 2017, in fact, house prices in Italy have registered a decrease of 4%, meaning an average price of 1.819 euro per Sq m, according to Idealista. 85 cities over the 103 surveyed have reported drops in values of two digits, such as Benevento with -18.6% and Varese with -10.1%. Big cities haven’t been spared, as shown by the negative variations of Rome (-4.3%), Milan and Naples (both -3.8%). The reason is taxation: along with the 21.2 billion for Imu and Tasi paid by Italians in 2016, there are also the 5.6 billion euro for Irpef on property and the 2.1 billion for flat tax on rents. If we consider the other miscellaneous taxes for over 9 billion euro for property transfers, the total taxation will exceed 35 billion. It’s clear that such a massive taxation can contribute devaluating real estate assets, considering that a house which is not the first residence and that is not for rental represents a significant cost for families. Government also withdraws a significant percentage from rents, if these are not of the residential type.

“Real estate cannot be saved by the garden benefit”, twits the president of Confedilizia, Giorgio Spaziani Testa, commenting on the year end press conference of the PM Gentiloni concerning “the failed institution of the flat tax for commercial rents, as requested by the majority and the opposition”. According to Vincenzo De Tommaso, from the research centre of Idealista, “the negative trend of house prices started in 2007 is due to the offer surplus”. In 2018, he adds, “there will be a more homogeneous recovery with prices moderately growing in medium and large cities”.

Among the few positive exceptions of 2017, there are some excellent performances registered by Trieste (+6.2%) and Sondrio (+3.8%). The art cities Venice (4,362 euro per Sq m) and Florence (3,434 euro per Sq m) are still the most expensive.

Source: Il Giornale

Translator: Cristina Ambrosi

The resurgence of real estate also in the hinterland of Milan. +30% in one year

27 December, Il Giorno

Gabriele Flore defines himself “a trench soldier”. He speaks through metaphors and he started his job “as a joke, just to give it a try. Then it became my life”. He’s been working as a real estate agent for 24 years, first in Trezzano, when he was 20, then, since 1999 in Opera. Here, he saw the transformations of the property market. Since the early Nineties “when it was hard to sell even just one tiny apartment, then the recession years, and now, the recovery”, tells Gabriele who started selling houses riding a bike and now he’s the leader in the territory. A person with a deep knowledge of the sector, in conclusion, who says that “2018 will be the year of the resurgence of real estate”.

In 2017, “just like farmers, we’d planted seeds to collect later. It was a year of great recovery, especially in the last semester, with a rising of sales of over 30% – explains Flore – and it looks like the growth will continue also in 2018. 2017 was a launching pad. It’s as though we repainted a beautiful house and put all the finishing touches and now it’s time to furnish it”. What are the reasons for this boom? One reason is given by Claudio Coppa, who decided to buy a house “thanks to the softer approach of banks that have finally started issuing mortgages at more accessible rates. I had to wait a lot, it would have been impossible a couple of years ago. Now banks offer better and more accessible solutions”.

Flore confirms this version and he also adds to the factors “the role of real estate agent as a broker and not only as a sales agent. Now you need to be certified and pass exams. You need to be a real professional. People are more knowledgeable, you can’t improvise. And a good professional is a synonym of trust”. Egidio De Giovanni agrees that this is the expression of a very widespread phenomenon: the rise of domotics. Everything, doors, windows, alarms, lights and temperature are controlled through the smartphone. “I was assisted by an expert. I wanted to be up-to-date. They will build a new neighbourhood in Opera with one hundred apartments for four buildings. Living here is convenient: we’re close to Milan, surrounded by green, with many services nearby”. Flore too bets on the property boom in Opera: “The city is near Milan, close to the station, with public transport available, and more importantly, it’s a very quiet place. People want this: a spacious house, with big bedrooms, like in the Seventies, but featuring technology, solar panels and an innovative control equipment. 2018 will be a breakthrough for Opera”.

Source: Il Giorno

Translator: Cristina Ambrosi

Investments in luxury properties: Milan is seventh and ahead of Dubai

28 December, Corriere della Sera

Among the cities beloved by Italian millionaires, Milan is at seventh place, according to the portal LuxuryEstate.com analysing the sales in 2017 for the luxury houses segment. The first place goes to Miami, with most of the luxury properties bought by millionaires. It’s followed by New York, London, Los Angeles, Lisbon and Barcelona. Milan is seventh with penthouses valued on average 1.3 million, even though the actual expense is “only” 900 thousand euro, the cheapest in absolute and only a third of the most expensive property in Los Angeles (2.5 million euro on average). The chart is closed by Dubai, Ibiza and Rio de Janeiro.

According to the experts, also international buyers are aiming at the luxury houses in Milan. The reason is in the still convenient prices, with a good growth potential in the long term. “In Milan, we expect more exclusive properties in the new real estate projects and in all the neighbourhoods – explains Enzo Albanese from Sigest – Arab buyers are looking at Porta Nuova, while British are looking for big houses with garden, French prefer the San Siro area”. In the new residential complex in Via Lamarmora, reservations are already at 50% and there is the project for six exclusive detached houses surrounded by green, already requested by Italians working in finance moving back from London. In the Litta residential complex, close to Corso Magenta, an apartment has been recently sold for 5.3 million to a Russian investor and another one for 4 million to a French buyer. At the same price, a luxury penthouse was sold in Via Carducci.

Source: Corriere della Sera

Translator: Cristina Ambrosi

The American Värde investing 250 million in Milan

27 December, Il Sole 24 Ore

After Porta Nuova and the ex-Expo area, just to name a few projects, Milan confirms its status of city capable of attracting foreign investments for big urban regeneration projects. The last one in order of time is “Park West”, for the requalification of 400 thousand Sq m in the south-western suburbs of the city, close to the Bisceglie metro station.

The American Fund Värde Partnership has signed a joint venture agreement with the Milan-based company Borio Mangiarotti, owner of the land, for the implementation of a maxi-project aimed at creating a 24-hectares park (assigned to the French landscape architect Michel Desvigne) and a developable area of 120 thousand Sq m for mixed use (houses, offices, and commercial spaces). The masterplan is signed by the firm Mario Cucinelli Architects.

“Milan is going through a flourishing phase – notes the Ceo of Borio Mangiarotti, Edoardo De Albertis -. This alliance shows how innovative partnerships in an attractive city such as Milan can be interesting for international investors”.

The research of a financial partner started at the beginning of 2017 and was coordinated by Vitale & Co Real Estate, obtaining seven manifestations of interest, all from abroad. At the end of the process, Värde was selected, a long-term partner of Borio Mangiarotti for other urban requalification projects concerning suburbs. Among these, there is also the development of the nearby Via Parri, where 750 residential units have already been built on municipal agreement, as well as a park and several services. Then, there is the development and reorganization of the area in Via Silva and of some other vacant public buildings financed by Cdp.

The Park West operation, which has been recently closed thanks to the legal support from the firm Gianni Origoni Grippo Cappelli & Partners, sees the investment of about 250 million euro for the creation of a special purpose company that Värde will own for 90%, while the remaining quota will be held by Borio Mangiarotti, that will take care of the development phase of the project.

The agreement shows the interest of foreign capitals in Milan, as well as the interest of the American fund for Italy, with the acquisition in April of the group Boscolo Hotels. It’s remarkable that the fund decided to invest in the project even before the first stone was set. After some initial delay, the operation is now ready to start. In fact, the area has been already set for construction, while in the next weeks the administrative procedures will be completed, and the reclamation operations will start. “If everything goes according to the plan, – says De Albertis – we’ll be able to start the construction site in 2019 and the new neighbourhood will be ready in five or six years”.

The masterplan is signed by Cucinella Architects and sees the creation of a park as big as Parco Sempione, the implementation of over one thousand free and regulated residences, 30 thousand Sq m of offices and 10 thousand Sq m for commercial services.

Source: Il Sole 24 Ore

Translator: Cristina Ambrosi