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25 May 2017 – El Confidencial
A major new operation is brewing in the property appraisal sector in Spain. The private equity firms Charme Capital Partners and Miura Private Equity are about to close the purchase (to acquire a majority stake) of the appraisal companies Valtecnic and Ibertasa, according to sources close to the operation. Some finishing touches still need to be completed, such as obtaining approval from the Bank of Spain.
Charme and Miura are joining forces to acquire these two real estate services firms, which will continue to operate independently in the domestic market. In other words, the investment funds will co-invest in and take control of both companies, but will not merge them. In addition, the management teams of the two appraisal companies will continue at the helm as well as in their roles as minority shareholders.
Last year, Charme came very close to acquiring Tinsa, the largest company in the property appraisal sector in Spain, but that firm ended up being purchased by another private equity firm, Cinven, which paid Advent €300 million. Meanwhile, Miura invested in Group BC through its first fund until the end of 2015 – that company is dedicated to the outsourcing of services from financial institutions (mortgage advisory, recoveries…).
These operations represent the indirect entry of private equity firms into the real estate sector and their clear commitment to an upwards cycle. According to data from the Spanish Association of Value Analysis (AEV), the number of property appraisals grew by 13% during the first quarter of 2017, to 228,879 in total, worth €75,620 million, up by 3.1% with respect to the same period a year earlier. (…).
The number of appraisal companies has been cut in half
The appraisal sector was hit hard by the burst of the real estate bubble although, like in the property development sector, to the extent that the mortgage activity is resuming, so the volume of appraisals is also showing signs of recovery. Nevertheless, the crisis took a serious toll and led to the disappearance of lots of companies. Whilst in 2011, there were 58 appraisal companies, by the end of 2016, that figure had fallen to 37.
Nevertheless, in recent years, several companies, above all in the real estate consultancy sector, have broken into this market with their own appraisal businesses. Such was the case of CBRE Valuation Advisory, Aguirre Newman Valoraciones and UVE Valoraciones in 2011. More recently, another consultancy firm, JLL, obtained approval from the Bank of Spain for its appraisal business, which operates under the JLL brand.
Valuations
On the other hand, like in the property development sector, the activity of the appraisal companies has not been without controversy, especially for the role that they played in the real estate bubble. The appraisal companies have been repeatedly accused of producing inflated appraisal values at the height of the boom and of continuing to do so even in the face of a depressed market.
In addition, concerns regarding the transparency and independence of these entities caused the Bank of Spain to force the banks and savings banks to disassociate themselves from the appraisal companies in terms of ownership. That decision resulted in the disappearance of several players, such as Tabimed (Banco Sabadell) and TVG (Abanca). Others changed activity, such as Sivasa (Banco Santander), whilst others still, such as Tasamadrid (Bankia), were sold.
Original story: El Confidencial (by E. Sanz)
Translation: Carmel Drake
