Banks readying sale of further €45bn legacy European NPL portfolios led by Italian and Spanish lenders

Almost €45bn in legacy live and planned European non-performing loan (NPL) portfolios are expected to come to market in the coming months, driven by accelerated de-leveraging by Italian and Spanish banks, according to Evercore.
There is approximately €28.8bn in live NPL deals currently up for sale across 35 portfolios from 23 vendors over six European countries, according to data complied by Evercore’s real estate portfolio solutions (REPS) team. Virtually the entire current live NPL pipeline – 99% – are secured by real estate within Southern Europe, with Italy and Spain accounting for c.€13.2bn and €8.5bn of portfolios, respectively.

Banks readying sale of further €45bn legacy European NPL portfolios led by Italian and Spanish lenders
By James Wallace – Wednesday, October 03, 2018 14:30

Almost €45bn in legacy live and planned European non-performing loan (NPL) portfolios are expected to come to market in the coming months, driven by accelerated de-leveraging by Italian and Spanish banks, according to Evercore.
There is approximately €28.8bn in live NPL deals currently up for sale across 35 portfolios from 23 vendors over six European countries, according to data complied by Evercore’s real estate portfolio solutions (REPS) team. Virtually the entire current live NPL pipeline – 99% – are secured by real estate within Southern Europe, with Italy and Spain accounting for c.€13.2bn and €8.5bn of portfolios, respectively.

The vast bulk of the planned NPLs – 91% – are secured by real estate in Italy and Spain, with c.€7.9bn and c.€5.7bn, respectively. Evercore states that Italy’s banks “are now looking to address the high proportion of unlikely-to-pay loans (UTPs) on their balance sheets”. In addition, small NPL deals backed by real estate in Greece and Portugal are also on the horizon.

Q3 activity: €32.5bn sold driven by four mega deals

European banks and asset management agencies (AMAs) sold €32.5bn in nominally-valued real estate-backed NPLs in the third quarter, according to Evercore, driven by four mega deals accounting for €17.7bn, or 54.5% of the quarterly tally.

The NPL portfolios tracked include both real estate loan portfolios and real estate owned (REO) portfolio transactions.

Cerberus, Apollo and Lone Star were the quarter’s biggest winners. In total, there were 10 sales with a face value of greater than €1bn completing, continuing the trend in favour of mega deals.

“Despite this, just one of these deals features in the top five sales list for the year so far (Project Coliseum), with the remaining four all taking place in the first half of the year,” Evercore reported in its European Distressed Real Estate Market report for Q3 2018.

Major NPL sales in Q3 included:

c.€10.0bn Project Coliseum & Challenger: Cerberus acquired both portfolios, comprised of c.€6.6bn of REOs and c.€3.4bn of real estate NPLs, from Banco Sabadell;
c.€2.8bn Project Helix: Apollo acquired the landmark first secured Cypriot NPL portfolio sale by Bank of Cyprus;
c.€2.8bn Project Apple: Cerberus won the Santander REO portfolio; and
c. €2.1bn Project Glas: Lone Star won the residential mortgages portfolio.
2018 YTD: Cerberus narrowly edges ahead of Lone Star on NPL wins by volume

Cerberus is narrowly ahead of Lone Star in NPL portfolio wins, with €15.9bn compared to €14.9bn, as measured by aggregate nominal value.

While this does not reflect net price paid and underlying real estate value acquired, these two dominant European NPL buyers are substantially ahead of the remaining back.

Cerberus has six separate portfolios, including four backed by Spanish NPLs – projects Apple, Coliseum, Challenger and Agora – which carried a combined face value of €13.4bn. In addition, Cerberus won two Irish NPLs – projects Redwood and Scariff – for a combined face value of €2.5bn

In distant third place is Barclays and PIMCO, with their joint acquisition of the €6.1bn Bradford & Bingley residential mortgage portfolio sold by UKAR earlier this year.

Source: Costar.co.uk

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