Sareb is Selling 33 Homes Per Day but still has 55,000 Properties on its Books

12 September 2018 – Expansión

Sareb managed to sell 5,926 properties during the first half of 2018, up by 7% YoY, for a total sum of €552.7 million. In other words, 33 units per day. Of the total, 86% of the properties were homes and garages, 9% were plots of land and 5% were commercial premises.

For the last four years, the bad bank has been helping delinquent property developers to market the properties that they placed as collateral for their loans to allow them to use those funds to settle their debts. Through that channel, it has sold another 4,692 units.

If this pace continues during the second half of 2018, the entity will exceed the sales figure registered in 2017 when 18,925 units were sold and a new record was set.

The bad bank was created with 107,000 properties and during its first five years of life, it has managed to divest 68,300 units. Nevertheless, we must bear in mind that Sareb has executed the guarantee for some of the 90,000 loans that it also took on when it started out and so that has led to an increase in the number of properties on its balance sheet.

Currently, the bad bank still has 55,000 homes and 34,000 garages and storerooms left to liquidate. Sareb is the largest owner of residential homes in Spain and the largest landowner in several autonomous regions, such as Castilla-La Mancha.

During the first half of this year, Sareb recorded revenues of €2.8 million in a special land sale campaign and another €13 million from the sale of other plots. It put 500 units on the market in each case. The managers are looking for a partner to build developments on the land.

Contracts under review

The senior management team at the bad bank is considering tearing up the expensive and exclusive contracts that the entity has with four specialists (Haya, Solvia, Altamira and Servihabitat), which cost it more than €200 million per year, equivalent to 35% of its operating costs.

Sareb lost €565 million last year and since its creation, has generated cumulative losses of €1.315 billion. In reality, the operating result is now positive. Nevertheless, the financial charges are so high – it had to take out a swap to cover itself in the event of an interest rate rise – that they completely determine its income statement.

The senior management team updated Sareb’s business plan in February, which forced the shareholders to recognise new write-downs. The review resulted in the recognition of a loss equivalent to 73% of the initial investment, which amounted to €4.8 billion.

Recently, the entity’s President, Jaime Echegoyen (pictured above) went further and warned that he thinks the shareholders will “struggle” to recover their investments.

Sareb has ten years left to liquidate all of its real estate stock. In reality, it is committed to returning the €37 billion in bonds secured by the State that it used to pay for the assets of the rescued savings banks.

The largest shareholder, the FROB, with 45.9% of the share capital, lost €950 million last year due primarily to the impairment of Sareb’s accounts due to its poor performance. The banks have also been forced to make significant adjustments. Sabadell, which has published its data, confirmed that its investment has generated an accounting loss of €321 million in five years.

The Minister for the Economy, Nadia Calviño, said yesterday, during her speech at a breakfast meeting organised by the New Economy Forum, that “for the time being, the Government is supporting Sareb’s strategic plan”. Nevertheless, she reminded listeners that the Administration is an important partner that participates actively in decision-making, “but it is not the only one”. 54% of the entity’s share capital is private.

Original story: Expansión (by Raquel Lander)

Translation: Carmel Drake

Argia’s Bankruptcy Leads to Oviedo’s Largest Ever Land Auction

10 December 2017 – El Comercio

The bankruptcy of the property developer owned by the businessman Blas Herrero, Argia Inversiones Inmobiliarias, and the lack of interest in most of its assets from its banker, Liberbank, have made way for the city’s largest-ever auction of private land. In total, 159 lots worth more than €30 million will go under the hammer, ranging from buildable estates in Cerdeño, to buildable land in Prados de la Fuente, to around fifty finished homes also in Prados de la Fuente.

In reality, the investments are very recent. Herrero did not seek to obtain any returns from the land and housing sectors in Spain until 2005 when he took control of Inverural Capital and turned it into Argia Inversiones Inmobiliarias. After a few years of activity, the company stopped filing its annual accounts – in 2009 – and went off the radar.

In Oviedo, the firm had promoted one of the largest plots of land in Prados de la Fuente, under the commercial name Galana Residencial. The work on that group of buildings…did not go well…The first buyers reported problems with the finishes, as well as humidity in the garages and the poor quality of the padel court.

Eight years after the homes were handed over, 51 apartments in different parts of the development are now going on the market, with appraisal values ranging from €155,484 for a first floor 3-bedroom property to €250,000 for homes that are bigger and higher up (…).

House prices in the city of Oviedo in Q3 2017 amounted to €1,264/m2, according to the appraisal company Tinsa. In YoY terms, they rose by 1.5%, but the number of transactions was still very low and, in 2016, prices fell by 0.8% in YoY terms. Since the middle of 2008, each homeowner in Oviedo has lost 37% of his/her property value, on average (…).

Volatility and low returns are two of the factors that have ended up causing the Asturian businessman Blas Herrero to surrender his real estate ambitions just ten years after launching them and after more than five years of unremarkable activity. In 2015, Argia Inversiones Inmobiliarias filed for voluntary creditors’ bankruptcy. The liquidation plan…was approved in January.

A peaceful end is anticipated with the voluntary auction that is due to be held on 20 December. The 159 lots, which will be bid for independently, include some mortgage charges in favour of Liberbank, who has most at stake in terms of the success of these disposals (…).

Prices and lots

The data is not encouraging. In the last year – between July 2016 and June this year – 633 homes were sold across the whole of Asturias (…). The figures indicate that the crisis is still on-going. A decade ago, the General Council of Notaries recorded three times as many real estate transactions per year. Moreover, some of the lots are far from the reach of most (…). Specifically, three plots from the special plan are together worth €10.5 million (…).

Original story: El Comercio (by Gonzalo Díaz-Rubín)

Translation: Carmel Drake

Solvia: Spain Is Still A Country Of Homeowners

3 May 2017 – Solvia Magazine

Despite the growing demand for rental housing, Spain’s National Institute of Statistics reports that the majority of Spanish households live in properties that they own.

The latest data relating to the type of households in Spain, published by Spain’s National Institute of Statistics (INE), are revealing: despite the growing increase in demand for rental housing, above all in the large cities such as Madrid and Barcelona, the majority of Spain’s households, specifically 77.5%, live in properties that they own (based on data for 2016). And of that proportion, 48.7% did so in homes without any mortgage payments pending.

The study also highlights that the house ownership trend varies by nationality. Whilst 59.4% of households with at least one foreign member live in rental properties, only 11.8% of families comprising all Spaniards opted for that arrangement in 2016.

On the other hand, the average size of the 18,406,100 households censored in Spain in 2016 amounted to 2.50 people and the most frequently occurring household type was that occupied by a couple with children, which accounted for 33.8% of the total.

Nevertheless, the study warns that increasingly more people are living by themselves in Spain. In 2016, that figure amounted to 4,638,300 people, which represents 25.2% of the total number households. The reasons for this trend are the gradual ageing of the population, which leads to many older people living alone in their homes. The trend is also boosted by homes inhabited by so-called “singles”.

Original story: Solvia Magazine

Translation: Carmel Drake

Blackstone To Offer Debt Forgiveness On Spanish Mortgages

1 July 2015 – Bloomberg

Blackstone Group LP is seeking to restructure some of the €6.4 billion Spanish home loans it bought at a discount to help borrowers meet repayments, according to three people with knowledge of the matter.

The world’s largest private equity firm is offering to cut outstanding debt or allow homeowners to hand back the keys and walk away from loans, said two of the people, who asked not to be identified because the matter is private. Blackstone holds the mortgages of 40,000 homeowners in Spain after buying the debt for €3.6 billion from struggling savings bank CatalunyaCaixa.

Blackstone can avoid the time and expense of repossessing homes by helping borrowers find ways to continue paying their mortgages, something that is more difficult for Spanish banks because of provisioning requirements and central bank regulations. Avoiding evictions may also mute political claims that private investors are coming to Spain to take people’s homes away.

“If you are struggling to pay your mortgage, you are undoubtedly better off having Blackstone as your creditor than a traditional Spanish bank,” said Juan Villen, Head of Mortgage Services at property website Idealista.com. “Blackstone can be much more flexible.”

Andrew Dowler, a London-based spokesman for Blackstone, declined to comment when called by Bloomberg News.

Loan Portfolio

The subject of Spaniards losing their homes is a hot-button political issue, with power in the Madrid and Barcelona town halls swinging to parties that pledged to ban evictions during municipal elections in May. The Platform Against Evictions activist group organized demonstrations outside Blackstone’s offices in New York, London, Madrid and Barcelona in March, and posted a video on its website accusing the firm of intending to evict “en masse.”

Anticipa, Blackstone’s mortgage servicing unit, took over the management of the loan portfolio two months ago, with about 75 percent of the debt classified as under-performing or non-performing, according to the people. It will take about seven years to restructure the debt, they said.

Spanish home prices have fallen by more than 42% since the peak in 2007, according to Tinsa, Spain’s largest homes appraiser. That has left about a fifth of borrowers in negative equity, according to Villen. Lenders in the country foreclosed on more than 70,000 properties in 2014, with Andalusia, Catalunya and Valencia hit the hardest, according to the National Statistics Institute, which began compiling data at that start of that year.

Post Keys

Blackstone’s plan to allow homeowners to post the keys and walk away from their debts, a legal process known as “dation in payment”, is seen as a significant step by analysts.

“Unlike in the U.S. and other European countries, Spanish law stipulates a bank can foreclose on a home and still pursue the borrower for the rest of his life if the value of the loan is higher than the price that the bank forecloses at,” Villen said. “The offer of “dation in payment” is a refreshing way of approaching borrowers that are in negative equity.”

The private equity company will only foreclose on “strategic defaulters” who can pay but refuse to, while homeowners at risk of social exclusion, which represent about 3% of Blackstone’s portfolio, will be allowed to remain in their property paying subsidized rents, the people said.

Original story: Bloomberg (by Sharon R. Smyth)

Edited by: Carmel Drake

Who Bought Homes In 2014?

15 January 2015 – Expansión

Latest official data show that house sales increased during the last few months of 2014 and that the real estate sector is showing real signs of recovery. Who is behind this recovery? What was the profile of the typical home buyer in 2014?

The real estate portal, fotocasa.es, has conducted a survey, which reveals the main characteristics of the people that took the plunge and bought a home in 2014. Details below:

  1. Most finance their purchase with a mortgage

62% of the Spaniards who bought property in 2014 financed their purchase through a mortgage. Notably, 32% paid in cash and another 6% said that they were able to afford to buy their property thanks to other forms of financing (inheritance and gifts).

  1. Aged between 35 and 44 years old

By age group, the fotocasa.es survey shows that the most active buyers fell into the 35 to 44 year-old age group (38%), followed by those aged between 25 and 34 years old (26%) and those aged between 45 and 54 years old (24%).

Lagging somewhat behind, 9% of purchasers were aged between 55 and 65 years old, 2% were over 65 and 1% were under 18.

  1. Bought with their partner

In terms of marital status, the survey reveals that 56% of the Spaniards who purchased a house in 2014 were married, versus 35% who were single and making the purchase by themselves, and 7% who were divorced or separated (2% did not respond to this question).

  1. Have jobs, a determining factor

In terms of employment status, 88% of Spaniards who bought a home last year are currently employed. Clearly, having a source of income that is more or less stable, is a key condition for taking the plunge into the property market.

In fact, only 6% of the people that made a purchase last year were unemployed and on benefit, and a further 6% were unemployed and not receiving any benefits.

The survey also highlights that of the 88% of Spaniards that bought a house and are employed, “15% work in the public sector, 9% work in education and training, another 9% work in IT and telecommunications, and 7% work in healthcare”.

  1. Invest €246,000 in a flat, on average

The fotocasa.es study also reflects the average amount that Spaniards spent last year when purchasing their homes.

Overall, homeowners that bought a flat invested an average of €246,000; those who purchased an apartment paid €142,000 on average; and those opted for terrace and semi-detached houses spent an average of €333,000.

In addition, the analysis shows that there are significant differences in the amount invested according to the age of buyers. Spaniards aged between 45 and 55 invested the most in their homes in 2014, specifically €205,984 on average, followed by those aged between 35 and 44, who spent €189,609, and young people aged between 25 and 34, who last year invested €175,456 on average buying a home.

  1. Primary place of residence

In terms of the use of the houses purchased, the report by fotocasa.es reveals that 67% of homes were purchased to be the buyers’ primary residence; followed by 16% that were bought for investment purposes, with a view to accessing the equity in the future; and 15% who bought property as a second home (2% did not specify).

Original story: Expansión (by B. Amigot)

Translation: Carmel Drake