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Echegoyen: The Tender Process For Managing Sareb’s Portfolio Will Turn the Market Around

20/08/2014 – Expansion

Sareb will bring to a close in a few weeks the tendering process for the management of its portfolio of 50,000 million euros, a process which has captured the interest of international investors and which, according to its Chief Executive, Jaime Echegoyen, “can turn the market around”.

In declarations to EFE, Echegoyen points out that “it is reasonable to think that in the future there will be a process of concentration among the platforms” of companies and servicers specialising in the provision of services to third parties – and “only the larger ones will be left. The management of Sareb can give them the leadership they are seeking”.

For Echegoyen, “the tendering process marks a milestone not only because of the size of the portfolio, probably the largest of its kind ever assigned in Spain, but also because of the criteria of rigour and integrity which have been imposed on it.”

The asset management company arising from the restructuring of the banking sector – Sareb – has also contracted an external auditor to verify that each phase of the process is carried out in a rigorous manner and with maximum transparency.

The management of Sareb’s portfolio, made up of loans to property developers and foreclosed properties, is currently in the hands of the nine rescued entities, but their contracts expire in December and the company has decided to open a tendering process to find new managers for its assets.

“We are looking to choose the three or four suppliers with the greatest capacity for managing our assets in a professional and efficient way. And now is the right time to do it, because professional and specialists operators which practically did not exist in Spain two years ago have arrived in the market,” Echegoyen has told Efe.

The Chief Executive is referring to the mass-arrival in Spain of large investment funds which have purchased property platforms from the banks, such as Apolo (which bought Altamira, from Santander), Värde Partners-Kennedy Wilson (Aliseda, from Popular), Blackstone (CatalunyaCaixa Inmobiliaria), TPG (ServiHabitat from CaixaBank), Cerberus (Bankia Habitat) and Centerbridge (Aktua, from Banesto, and the subsidiary of BMN).

The tendering process, which has been baptised “Ibero”, is in its final phase and the nomination is expected at the end of next September or the beginning of October.

According to market sources, the eight groups which have bided in the non-binding phase are Aktua, Altamira, Anticipa, Servihabitat, CEISS, Haya, Novagalicia and Solvia.

Sareb activity

Echegoyen has stressed the activity carried out by Sareb in the last 18 months, with more than 17,000 properties sold to individuals and 17 portfolios handed over to large investors, primarily foreign ones, with which it has had more than 800 meetings.

“In a very short space of time Sareb has gone from being a paragraph in the Official Sate Bulletin to being a fully operating company, which is attracting foreign investment and is playing a key role in the reactivation and recovery of the Spanish real estate sector,” he explained.

The company was incorporated at the end of 2012 to manage and liquidate the loans to property developers and the foreclosed properties coming from the nine banks which were bailed out. Sareb acquired these packets with an issuing of debt for 50,000 million euros by means of State bonds.

“Returning the debt is the main commitment which we have with the company and we are fulfilling it. In our first year, although we were not operative from the beginning, we managed to pay 1,200 million euros in interests and return 2,000 million in debt. In 2014 we have already returned a further 1,600 million,” Echegoyen has told Efe.

In his opinion, “Sareb has played a key role in changing international investors’ perception of the Spanish economy. At the end of 2012 and the beginning of 2013 no transaction was completed, because there was no confidence in its recoverability. When Sareb sold its first portfolio, everything began to change.”

Jaime Echegoyen joined Sareb in early 2014, after a long carreer in the financial sector, where he was Chief Executive of Bankinter and, later, Barclays Spain.

His joining Sareb coincided with a new proposal for the entity’s business model, to not only sell the purchased assets but also to manage them in order to create value.

The Chief Executive gives as an example the completion of halted construction works, more than 100 developments this year, or strengthening rental homes – a business which, he said, would allow Sareb to make developments profitable before putting them on sale.

Original article: Expansión (after: EFE)

Translation: AURA REE