Fitch: Banks Selling Foreclosed Homes With Discounts Of 67%

14 October 2015 – Expansión

Banks are now selling homes with an average discount of 67% of the value they had before they were foreclosed. This data, which relates to the first half of the year, represents a historical record, according to a report that Fitch will publish today, to which Expansión has had access.

“The depreciation of properties sold after they have been foreclosed is high, at around 67% of the initial valuation”, says the credit ratings agency.

Given this reality, Fitch believes that the recovery of the residential sector has not yet affected the market for houses sold by banks, and that “it is unlikely that it will benefit” from this improvement in the real estate market “in the short or medium term”, according to the report, prepared by its analysts Juan David García, Christian Gómez and Beatriz Gómez.

“Unsellable” homes

Fitch emphasises that there is still an enormous stock of “empty and unsellable” homes, above all “in areas that are expected to suffer from the structural imbalances in the Spanish economy for longer”.

“Given their poor locations and conditions, a considerable number of new homes have little hope of securing a buyer”, says the agency, which increases its estimate of the number of unsellable new homes to around “150,000”. That figure represents a quarter of the 600,000 unsold new residential properties in Spain.

Not surprisingly, the agency notes that the recovery in the housing market is happening “at two speeds”, in such a way that the trend will vary. “Whilst the properties in prime locations in city centres will enjoy a gradual recovery – influenced by the improvement in the economic environment and the recovery in credit –, those “problem” properties linked to mortgage foreclosure procedures and those located in peripheral areas with low levels of economic activity, will continue to see price adjustments and high losses” on their valuations.

Political risks

Fitch’s report also warns about the possible negative effect that the new legislation (against vacant homes owned by banks) may have on the value of those properties. Moreover, the associated (political) risk is on the increase”. The analysts cite the case of Cataluña by way of example, where the Generalitat has introduced a new annual fee for homes that have been unoccupied for more than two years without adequate justification.

On the other hand, the agency believes that this will result in “aggressive mortgage foreclosure strategies by creditors looking to get rid of problematic real estate assets from their balance sheets”. And that will also affect the banks, of course.

Finally, Fitch addresses the rising trend in mortgage lending, something that “is driving prices up”. “Mortgage lending is growing at an annualised rate of 20%”, says Fitch, whose analysts think that this increase will continue over the coming months.

The agency expects competition to intensify between lenders, but under no circumstances does it foresee a return to the figures recorded during the real estate boom.

Original story: Expansión (by Juanma Lamet)

Translation: Carmel Drake

Bankia Sold 4,135 Properties In H1 2015 For €262M

17 July 2015 – Expansión

Bankia sold 4,135 properties during the first six months of 2015, i.e. more than double the number it sold during the same period in 2014 (1,919). Half of the sales were made directly through branches and the other half were closed through intermediaries. These properties form part of Bankia’s stock and have nothing to do with the assets that the bank transferred to Sareb after receiving public aid.

The sales generated revenues of €262 million, up 82% on the year before. 92% of the sales relate to residential properties. The remaining 8% include the sale of retail premises, whose sales volumes increased 6-fold compared with the previous year.

At the end of the first quarter, Bankia had foreclosed properties on its balance sheet amounting to €4,213 million – this amount had barely changed since the end of 2014.

Original story: Expansión (by M. Romani)

Translation: Carmel Drake

CaixaBank Considers Selling 1,000 Homes To Overseas Funds

11 March 2015 – Expansión

‘Project Eurostars’ / The Catalan group is sounding out investors to assess their interest in the portfolio, which mainly comprises homes on Spanish coast.

The Spanish bank wants to widen the ‘drain’ through which it is offloading property from its balance sheet. As well as leveraging on the intense activity in their sales networks, financial institutions are looking to take advantage of the interest shown by overseas funds by packaging up batches of homes. One of the first groups to join this trend is CaixaBank, which has been sounding out the market in recent weeks regarding the sale of a portfolio of 1,000 homes known as Project Eurostars; Expansión has had access to the corresponding sales prospectus.

The group chaired by Isidro Fainé (pictured above) has handed over the management of this transaction, whose information was first distributed to funds at the end of February, to the real estate consultant JLL. According to the timeline proposed initially, investors should have submitted their non-binding offers yesterday and the process should close by the end of the month.

The Eurostars portfolio comprises 1,091 real estate assets, with an estimated combined value of €103 million. The majority of the portfolio is made up of 807 homes, primarily located on the Mediterranean coast, with an average value of €122,000. The portfolio also includes 250 parking spaces, 26 store-rooms and 5 shops.

The homes are concentrated in Barcelona, Tarragona, Valencia, Alicante, Granada, Cádiz, Navarra and Tenerife.

In the information that has been distributed, the advisor JLL highlights two key features that it hopes will appeal to foreign investors: the improvement in the real estate market, with an 18% increase in (the volume of) house sales between 2013 and 2014; together with “the positive economic outlook and increasing volume of investment”, with investors allocating €23,000 million to Spanish property in 2014.

The homes to be sold are currently held on the balance sheet of the Building Centre, a subsidiary of CaixaBank, after being foreclosed.

The group sold 13,794 properties in 2014, i.e. 27% more than in 2013 and the volume of foreclosed assets increased by 12%, to reach almost €15,000 million in gross terms.

Original story: Expansión (by Jorge Zuloaga)

Translation: Carmel Drake