Tag: property sales

Solvia Plans To Purchase Other RE Platforms

27 March 2015 – Expansión

The real estate platform expects to hire 200 people this year / Banco Sabadell is giving greater autonomy to its subsidiary, Solvia, which has taken a big step forward after being awarded the management of 42,900 assets by Sareb, worth €11,500 million.

Banco Sabadell wants to covert Solvia into a leading player in the Spanish real estate sector. The entity has proposed that it lead the consolidation process that the servicers in the market are expected to undergo (in the coming months and years). Servicers are the asset management platforms that were created in Spain following the burst of the real estate bubble and the restructuring of the financial sector. These companies were created as “bad banks”, in which entities placed the (distressed) assets that were accumulating on their balances sheets. In recent years, almost all of the financial institutions have opted to sell all or part of their platforms to specialist funds. Nevertheless, Sabadell has chosen to retain full ownership of Solvia and to promote its growth to the maximum.

“Solvia is the only servicer whose capital is held 100% locally; it is supported by a committed shareholder, a strong brand and an excellent system and team of professionals”, says Miguel Montes, CEO of Sabadell and the head of the real estate company.

As one of the winners of the contract to manage some of Sareb’s portfolio, Solvia now manages assets amounting to €34,000 million, with a portfolio of 135,000 units. Of this, €25,000 million relate exclusively to property and the remaining €9,000 million relate to loan portfolios.

Potential IPO

According to Montes, Solvia will grow through the purchase of new product portfolios and the acquisition of other platforms, since some of them have been left with small portfolios. “In Spain, there will be a consolidation (of the number of players) in the servicer market. Solvia will opt to purchase (some of its smaller competitors) to increase its size. We think that this is a business that is worth investing in”, he assures.

According to the director, if it grows in size, Solvia may consider an IPO. “Now is still not the right time to list the company on the stock exchange; before considering that, Solvia must establish itself as an independent multi-client servicer, but the stock exchange is not the only alternative, there are other options”, he says.

To accelerate growth and facilitate its ability to work with all kinds of external clients, Sabadell has decided to grant Solvia maximum independence, by providing the entity with the resources and structure necessary to operate autonomously. Thus, the company will depend increasingly less on the bank’s central services and will have its own management team. As such, it has launched a serious offensive to attract talent and recruit experienced professionals.

Solvia closed 2014 with a workforce of 240 people and this year expects to hire 200 more, to take its total number of employees to 440.

The real estate company recently hired Francisco Pérez – former director of the real estate developer Vertix – as the regional director in Cataluña. To strengthen its office in Madrid, it has hired Javier Román Palero from the fund Apollo.

The majority of the properties that Solvia manages following the award of Sareb’s portfolio, which in turn came from Ceiss, are located in the central region of Spain. Under project Ibero, Solvía also won the management of properties from Sareb that had previously belonged to Banco Gallego and Bankia. In total, 42,900 units with an original value of €11,500 million, although Sareb purchased them for €7,000 million. “We have completed the migration of the portfolio of assets that came from Ceiss and Banco Gallego; the migration of the properties from Bankia will be completed in May”, explains Montes.

To strengthen its autonomy, Solvia is expected to adopt a brand that differentiates it from Sabadell. In fact, at its regional headquarters in Barcelona, it already has a sign that does not include the letters “B” or “S” in the logo, which identify the bank.

Alicante

In parallel, Solvia has relocated some of its team to Alicante, where it has opened the registered headquarters of the property marketing platform. “In 2014, Solvia sold 16,200 units for €2,750 million. None of the banks sold as much as us”, highlights Montes.

In parallel to the sale of properties from the portfolio, Solvia’s other main business line is the direct development of newly built homes on land that it owns. “We have 1,400 homes under construction” – he says – “and we expect an annual production of one thousand newly-built homes”. According to the director, Solvia has already sold several entire developments. “The number of “off-plan” sales that we are recording is spectacular”, he notes.

Montes says that Solvia’s business is “strategic” for Sabadell, since it will allow the entity to harness the potential being offered by the change in the cycle of the Spanish real estate sector. “Instead of leaving it for someone else to do, we are willing to invest and work hard in this business to leverage the potential value of the real estate market”. He argues.

Solvia has also started to sell land, a market that was completely paralysed until now.

Original story: Expansión (by S. Saborit/S. Arancibia)

Translation: Carmel Drake

The Average Home In 2014: 97m2, Second Hand, With Sea Views

11 February 2015 – Cinco Días

Last year, home ownership was yet another symptom of the start of the recovery of the global economy. In fact, the largest investment made by households over the course of their lives can only be re-actived once the households themselves perceive that their income is going to be stable and steady over the medium term and (in the event that they need financing) when they have access to credit.

And those are, in the opinion of all of the experts, the two variables (employment and financing) that started operating again in 2014 after years of very tough crisis and apathy from scarce solvent demand. According to the figures published this morning by the National Institute of Statistics (Instituto Nacional de Estadísticas or INE), prepared using information from regional property records, last year, 319,389 homes were sold, i.e. 2.2% more than in 2013 and the first increase since 2010.

89.7% of the homes that were purchased were unsubsidised (free), compared with the remaining 10.3% that were subsidised (VPO). Sales of unsubsidised homes increased by 3.2%, whereas sales of subsidised homes continued their decline, dropping by 6.2% in 2014.

Another key finding to come out of the information is that sales of second hand homes increased their prominence gradually and at an unstoppable rate during the crisis. Thus, whilst the norm during the boom was to sell almost as many new homes as second hand homes, last year only 37.4% of the homes sold were new builds, compared with 62.6% that were “used”. And again, whilst sales of the former decreased by 16.9% in 2014, the volume of second hand homes sold last year increased by 18.4% over the previous year.

Size and type

In terms of the regions where the most house sales were recorded, INE quantifies it in two ways. Firstly, it extracts the data from the property registers of each autonomous region and then it measures the volume of transactions per 100,000 inhabitants.

Thus, the regions with the greatest activity were Valencia, with 1,182 house sales per 100,000 inhabitants, followed by the Balearic Islands, with 1,043 and the Canary Islands with 1,015. In absolute terms, the Balearic Islands, Navarra, the Canary Islands, the País Vasco and Madrid were the five autonomous regions that experienced the greatest increases in real estate sales.

With all of these statistics, plus those provided to Cinco Días by Tinsa, about the type and size of homes sold last year, we can conclude that the profile of the typical house would be: an unsubsidised, second hand apartment or multi-family home (which accounted for 67% of the market), with an average surface area of 97 square metres and, in many cases, with sea views; since the typical home would likely be located in one of the territories that recorded the highest transaction volumes.

The information provided by the appraiser also shows that this best selling home would have been sold for an average price of €136,212, which represents a cumulative depreciation of 38% with respect to the average prices paid for a typical home in 2007, the year in which property prices reached their peak. Tinsa estimates that the average mortgage taken out last year amounted to €100,782, which was 32.3% lower than the average amount borrowed during the boom years.

Original story: Cinco Días (by Raquel Díaz Guijarro)

Translation: Carmel Drake

The Five Largest Banks Sold 19% More Properties In 2014

10 February 2015 – Cinco Días

Banks are stepping on the gas in the race to reduce the weight of properties on their balance sheets. Last year, Santander, BBVA, CaixaBank, Sabadell and Popular sold 86,726 properties in total, an increase of 18.7% on the 73,000 units sold during the previous year. However, this boost in the rate of sales has not been reflected on the revenue side.

In fact, revenue from this activity grew by only 6.4% from €10,699 million in 2013 to €13,619 million last year, due, in large part, to the reductions in the sales prices being applied by these entities. The pressure being placed on real estate assets by the significant provisions imposed by the Government in 2012 has allowed these five large companies to sell off 230,000 properties in just three years.

CaixaBank holds the record for the number of transactions – in 2014, it sold 23,400 of its own properties or 35,870 if we include those owned by developers that it supports. Some of this success was based on its commitment to the rental market, which accounted for €1,132 million of the €2,512 million generated from its foreclosed assets (or €5,432 million if we include sales conducted by third parties), whereas it takes an average of four years to sell foreclosed assets.

Overall, Caixabank generated losses from this activity amounting to €1,148 million, an impact that the bank hopes to mitigate between 2015 and 2016. This drive should be helped by the Texan fund TPG, which now controls the entity’s real estate company Servihabitat.

Another one of the entities that recorded the best results in this field in 2014 was BBVA, which opted to retain control of Anida, its real estate platform, contrary to the general trend towards outsourcing. BBVA sold off 23,069 properties in total, including both its own properties and those owned by the developers it finances and whose homes it sold; in total, it recorded income of €1,932 million.

As a result, BBVA generated 18% more cash in 2014 than in the previous year. The company says that it has noted “more buoyant demand” in “an environment in which prices are slowly stabilising”. The entity, chaired by Francisco González, celebrates the fact that its losses in this area decreased to €876 million in 2014 from €1,252 million in 2013. And explains that this improvement is based on a lower volume of outstanding properties that need to be cleaned up and the “the launch onto the market of foreclosed assets with a smaller adverse effect”.

Banco Sabadell follows next in the ranking; it has also decided to retain control of its real estate company, Solvia, and is considering a potential IPO, as it observes a gradual improvement in the market. The entity sold 16,172 properties in 2014, both owned and third party properties, for which it generated turnvoer of €2,744 million; in both cases these figures represented a decrease of 12% on the significant number of sales it recorded in 2013.

Banco Santander, which recorded strong sales during the early years, reduced its clearance rate to 11,615 properties last year, however the higher value of the remaining assets allowed it to still generate revenues above the €2,000 million it achieved in 2013.

Finally, Banco Popular is one of the entities that seems to have benefitted most from the outsourcing of its real estate platform, Aliseda, which is now controlled by a consortium of funds comprising Kennedy Wilson and Värde Partners. The entity, chaired by Ángel Ron, increased its sales from 3,900 properties in 2013 to 8,600 units last year, and doubled the corresponding turnover, from €732 million in 2013 to €1,503 million in 2014.

“We would not be able to increase sales at this rate if the provisions were not sufficient”, reflected the bank’s CEO, Francisco Gómez at the most recent results presentation, where he stated that these provisions have enabled the entity to account for “the properties at market prices”. As a result, the number two at Popular hopes to “increase the value generated from real estate sales over the next few quarters”.

Original story: Cinco Días (by Juande Portillo)

Translation: Carmel Drake

Santander & BBVA Reduced Their Real Estate Stock In 2014

10 February 2015 – El Economista

In 2014, Santander’s real estate stock decreased by 1.8% and BBVA’s dropped by almost 5%.

Banco Santander and BBVA are beginning to shed some real estate weight. For the first time, the economic recovery has allowed the two large banks to reduce their portfolios of homes and land foreclosed from developers and individuals for the non-payment of debt.

The two largest financial groups in the country have managed to halt the entry of property onto their balance sheets and accelerate its exit, thanks to a boost in sales. Thus, the Cantabrian group has decreased the gross value of its real estate portfolio by 1.8% to €7,851 million. After accounting for provisions, which reflect current market prices, this value decreases to just over €3,500 million.

Meanwhile, the bank chaired by Francisco González has reduced its stock by 4.9% to €13,016 million. After applying the appropriate provisions, the value of its real estate portfolio amounts to €6,131 million.

Boost in sales

This decline in the assets of the two main entities has occurred at a time of stability in terms of prices, which seem to have bottomed out having decreased by 40% in the last seven years. This, coupled with the high provisions, which cover between 53% and 55% of the gross value of the assets, has allowed both entities to sell assets, above all, during the second half of last year, without incurring any additional losses.

The increase in the sale of properties and, even some land, also coincides with the war in the mortgage segment that was unleashed in 2014. The entities have launched campaigns to offer loans at the most attractive prices to enable borrowers to purchase homes, including from their own portfolios.

Different strategy

Santander and BBVA’s real estate strategies are different, but both are now starting to bear fruit, after years of burgeoning portfolios of foreclosed assets as developers and families found it impossible to pay their debts.

Santander, like many other Spanish banks, has transferred the management of these assets to Apollo. The Cantabrian group sold 85% of its real estate platform Altamira to the fund, and whereby achieved significant gains with which to strengthen its capital and transfer the management of the entire stock to a specialist company, which has also just been awarded the management of a portfolio by the bad bank or Sareb for the next few years.

BBVA’s plan is different. The entity, headquartered in Bilbao, has preferred to keep the management of all of its unproductive assets in-house, through its subsidiary Anida.

Although prices have now stabilised and the banks are now making some money on the majority of sales transactions after accounting for provisions, the real estate arms of both banks are still weighing down on their income statements. These divisions include not only foreclosed homes, but also loans granted to companies relating to the real estate sector. In the case of Santander, the real estate department recorded losses of almost €600 million in 2014, 8.2% less than in 2013. BBVA recorded losses of almost €800 million.

Both banks hope that these divisions will begin to generate some kind of positive yield within two years and they expect their respective stock balances to have disappeared or been reduced to an absolute minimum within five years. The decreases were more pronounced (in the double digits) in the case of loans to developers than properties due to the divestments performed in the wholesale market.

Original story: El Economista (by F. Tadeo)

Translation: Carmel Drake

Popular Predicts Record Property Sales Of €2,000m In 2015

26 January 2015 – Expansión

2015 / The entity and the funds Värde Partners and Kennedy Wilson are undertaking an active process to contact investors and whereby accelerate the sale of its portfolios of flats and land to improve profitability.

Top priority. The bank led by Ángel Ron is stepping down on the accelerator to remove property from its balance sheet, with the aim of returning to profitability. Popular has set itself a target of selling €2,000 million worth of property during 2015, which would represent an increase of 33% with respect to 2014. Thus revealed Francisco Sancha, CFO at Popular, in a recent meeting with analysts.

Popular already set a record by selling €1,500 million of real estate assets in 2014, which represented a twofold increase on its sales in 2013 and a 50% increase on its combined sales in 2013 and 2012. It closed last year exceeding its own initial sales expectations of €900 million.

The speed of Popular’s sales has a lot to do with the strategic agreement that the entity, led by Ángel Ron, signed with the investment funds Värde Partners and Kennedy Wilson in 2013. The funds acquired a majority stake in Popular’s Unidad de Negocio Especializado (UNE or Specialist Business Unit), which comprises its real estate subsidiary, Aliseda, and manages foreclosed assets and developers’ portfolios. Ownership of the properties and loans lies with the bank.

The architect of the agreement, which includes an extendible 10-year exclusivity period, was Sancha, the former director of the UNE. Its current head, the Director General of Subsidiaries, Rafael de Mena, predicts a “magnificent” 2015 in terms of the property sales. “We are definitely facing a change with respect to real estate management”, he explained to Expansión. “Aliseda is becoming an industrial service company, which combines knowledge of the local market with input from industry partners”, he says.

Network coordinator

To provide strong support to its initiative, Popular has appointed a sales coordinator for its commercial network, since its branches are the main channel for its property sales. It has also shortened the process for foreclosing assets in exchange for the payment of debt, to increase the volume of assets it has available for sale. “The portfolio has grown by 54%”, says the Director General of Subsidiaries, who is convinced that the bank has already incorporated best business practice into its processes.

But, he expects wholesale transactions to drive the boom in sales. “The bank has undertaken an active process of contacting investors”, says De Mena. He met with more than 70 during the course of last year. As a result of this intense work, the entity completed the sale of 500 subsidised homes to Blackstone for €80 million, against the clock, during the last few days of 2014. The sale of another portfolio in December took the amount of wholesale transactions to €160 million and the number of homes to 1,000. Thus, in total, Popular offloaded 7,700 homes in 2014, an increase of 128% on the previous year. Furthermore, the bank sold land amounting to €250 million to local developers, which represented an increase of 95%.

Digital initiative

The bank also wants to maximise its sales through the internet, which currently accounts for only 2% of transactions. It will launch a new website during the first half of the year and is preparing itself for a battery of commercial attacks through its Aliseda portal.

The entity will also benefit from the “tail winds” resulting from the improvement in the real estate market, according to De Mena “We closed 2014 with the feeling that the deepest and longest property crisis of the last four to hit Spain since the 1970s, was coming to an end” he says. Not only are property prices stabilising, supply is certain geographical areas is drying up, says the director, who senses “a recovery in property development in 2015, which will clearly intensify in 2016”.

Popular has a gross real estate exposure of €32,400 million, the highest of any entity in the Spanish banking sector in absolute terms. Accelerating its exit from property and progressing with its initiative to focus on lending to SMEs, in an environment of fierce competition, are both key to improving its profitability. Its return on equity (ROE) amounted to 2.45% at the end of the third quarter 2014.

Original story: Expansión (by Alicia Crespo)

Translation: Carmel Drake