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NPL & REO porfolios

Real Estate Advisory

NPL’s are loan failures of the financial institutions, non performing loans of their acronym in English and usually there are two categories: with real guarantees and without guarantees. As they are known in the market secured and un secured. The REO’s are the assets awarded after a foreclosure process. REO comes from the Spanish acronym Real Estate Owned.

These portfolios have been and continue to be the most demanded products and represent the largest transactions in Spanish Real estate Market.

There are three key factors to determining the correct value of these portfolios:

  • The value of the assets awarded or those which serve as collateral for loans, 
  • the time required for full ownership of assets and finally 
  • the costs to be incurred in order to have assets prepared for proper marketing and final selling.

Processes of acquisition

The processes of acquisition are competitive processes normally split in two phases: in the first one potential buyers present tenders, so called not binding offers, and if they are accepted it is passed to a second phase of analysis in depth that ends in a binding offer.

The keys are:

  • The correct combination of the desktop analyses
  • The database
  • The automatic valuations
  • The Backtesting, exceptionally for complex assets or for value checks.

The precision of the databases, the knowledge in detail of the different territories and the IT tools are very important to obtain in times, usually very short, a precise valuation of the portfolios. The risk of not arriving or passing is high, because in the first lose the opportunity to buy and the second will lose money in the operation.

If the non-binding offer progresses, a detailed and complete analysis second phase will be initiated where the first offer to acquire the portfolio is ratified or modified.

Gesvalt accompanies the client in both phases adjusting in each case to the needs of the same, providing an accurate, quick and effective advice.

Consultor Gesvalt
Carmen Millán
Real Estate Consultant
Portfolio Valuation Manager