NPL investment in Portugal will remain attractive in 2020

NPL investment in Portugal will remain attractive in 2020

This was the main theme at the conference "NPL Iberia – An international meeting of the iberian distressed debt market", organized by Smith Novak, which took place in Madrid on the 28th and 29th of November.

During the panel «Focus on Portugal», José Araújo, Real Estate Director at Millennium bcp, highlighted that the Portuguese market will keep attracting the investors’ interest since «there are still many and good opportunities for different segments and types of buildings», specifying «terrains in the suburbs for the middle class, warehouses for logistics or terrains for new services and offices».

Concerning the appearance of new portfolios, José Araújo believes that «considering the national banks high ratios (8.9% in June 2019, according to data from Deloitte), and their need to follow through with plans agreed upon with the authorities, it is certain that new more granular, smaller portfolios with less housing assets will appear».

Volkert Schmidt, Novo Banco RE’s CEO, stated that «this event showed once again the good moment the NPL and REO Iberian markets are going through. It was an opportunity for the sector’s main players (banks and investors), who will reinforce their presence in Portugal next year, to discuss – 2020 will once again be a good year which will help improve the banks’ NPL ratios».

The CEO notes that «there are currently increasingly less opportunistic investments, which shows that the sector is entering a period of greater maturity, which allows sellers to minimize their losses and buyers to maintain their returns».

Hugo Santos Ferreira, executive vice-president at APPII, stated that «the investors’ great appetite for this market remains. The banks’ ratio has been dropping with the sale of these assets and the banks continue their divestment work». The market is now showing more professionalism, which is positive and alongside the real estate market’s financialization, «has helped the big NPL portfolios to be placed on the market next to international investors in an easier fashion».

«The great challenges are well identified», says Hugo Santos Ferreira, naming municipal licensing or the «lack of a rental market» which, if it were more solid and dynamic, «would provide more confidence and would help the placement of many assets».

One of the issues highlighted during this discussion was the appearance of new NPL portfolios’ selling tools, which expedite the processes. Volkert Schmidt highlighted that «the development shown by service providers, in particular in terms of IT infrastructures and process improvement, allows for investors to be more precise and effective in their businesses. This allows them to increase the portfolios’ prices and minimise the credit institutions’ losses».

This debate panel also hosted Susana Bento, Senior Manager at Deloitte, Jorge Neta, Managing Associate at SPS Advogados, and Pedro Ferreira, Partner at Uría Menéndez, who moderated the discussion.

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