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Axis predicts a massive sale of NPL portfolios
24 April 2020 |

As a consequence of the impact caused by the global sanitary crisis, the real estate sector predicts a massive sale of NPLs (Non-Performing Loans) during the last quarter of 2020, according to Axis Corporate.

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José Masip, Partner for Real Estate, Axis Corporate

There are three factors which explain these operations. First, the change in terms of European regulations concerning the NPLs, which are expected to be implemented in 2021, and which will cause loans to be considered as non-performing even after being refinanced, whenever their revenues drop more than 1%, which will classify those loans as reasonably non-performing (fallidos prudenciales), and will keep them consuming capital resources. This will lead the banks to be even more interested in selling these assets, before January 2021.

Second, the funds, which faced with the impossibility of fulfilling all the goals included in their strategic business plans for this year, given the current shutdown, will want to sell their non-strategic assets to more specialised players or simply make up for the losses caused by the shutdown.

Lastly, the uncertainty the current situation has caused in terms of assessing the assets, which will cause a certain «confusion» in terms of establishing the prices of some real estate assets, which is already taking place in some countries. This situation will lead investors to be more prudent during the first months following the coronavirus.

According to José Masip, partner for Real Estate at Axis Corporate, «under this scenario, two ingredients come together before this uncertainty: the buyer, who faced with this shock setting may or may not see the market uncertainty as an opportunity and the seller, who may not be willing to change the asset’s price and try, according to his possibilities, to analyse the best option. «This means that this uncertainty may last until the Summer, and it is expected to improve from September».