The Management Company for Assets Arising from the Banking Sector Reorganisation (Sareb) booked revenues of EUR3.923 million last year, 1% up on the previous year. In 2016, the first full year in which the company has worked with the four servicers awarded with the management contract (Altamira, Haya, Servihabitat and Solvia), the number of asset sales rose 25% versus 2015. In total, 14,000 units were sold (residential, land and commercial).
This improved revenue allowed the company to repay EUR2,170 million of the debt issued to pay for the transferred assets, which is guaranteed by the State. Since it was first created, Sareb has repaid almost EUR10,000 million of debt.
The developer loan portfolio was the company's main source of income in 2016, the management of which booked EUR2,846 million. Almost three quarters of this income came from loan cancellations and sales, collaboration initiatives with developers via Sales Growth Plans (PDVs) and the sale of properties acting as collateral for loans transferred to the company.
Throughout 2016, Sareb managed 10,500 proposals related to cleaning up its credit portfolio, 16% more than last year.
With regards to the real estate business, last year Sareb registered revenues totalling EUR1,050 million, thanks to the marketing drive set in motion by the four servicers during their first full year in operation, and thanks to the marketing campaigns implemented for new-builds, existing housing, coastal properties, land, etc. In fact, revenues achieved by these campaigns jumped 85%, to EUR220 million.
The number of rented homes also climbed 20% to 4,558 units.
The changes applied to Sareb's accounting framework in compliance with Royal Legislative Decree 4/2016 allowed the company to reflect its portfolio's unrealised capital losses in its books, which stood at EUR3,389 million last year. This portfolio includes some assets that were acquired for above their current market value and that have little possibility of seeing any value uplift in the future, as is the case for example with the unsecured loans.
During 2016, and in line with its liquidating objectives, Sareb increased its number of asset sales incurring capital losses, meaning that although its margins were positive, they were lower than in 2015. More specifically, the gross margin came in at EUR664 million, 46% down y-o-y.
The drop in the gross margin heavily impacted the financial result for the year, which came in at -EUR663 million. Results were also affected by the high costs linked to the portfolio; EUR197 million in payments made to cover municipal taxes and levies and EUR90 million to cover service charges and maintenance costs linked to the properties. In four years Sareb's expenses for these two items have reached EUR833 million.
At year-end, and following the latest changes made to the accounting regulations, Sareb's equity stood at EUR4,049 million. For the Executive Chairman of Sareb, Jaime Echegoyen, "the company has enough financial strength to continue divesting assets until the end of its mandate in 2027".
Picture after 4 years
In the four years since its creation, Sareb has registered total revenues of EUR16,864 million, it has reduced its portfolio by EUR10,806 million (21.3%), and has repaid EUR9,856 million of debt (19.4%). Furthermore, it has paid EUR2,800 million in interest to the institutions that received government funding.
In parallel to its mandate, Sareb has also developed a social housing initiative with public authorities, assigning 4,000 apartments to be let as affordable housing. To date, they have signed agreements with eleven autonomous regions and five city councils, including Madrid and Barcelona, allowing around 8,000 people to benefit from this initiative.
New income streams
Since its creation, Sareb has been working on enhancing the value of its assets in order to achieve higher returns. Over the course of 2016, the company has worked with the real estate sector via joint investments, starting 13 new developments across Spain, and completing other developments that were initially transferred to Sareb unfinished.
Looking ahead, Sareb has decided to further expand this strategy with a plan that will allow an average of 1,500 homes to be put on the market each year until the end of its mandate, by developing new land and completing unfinished developments.
In order to fulfil its mandate, Sareb is also committed to exploring all the new technological sales marketing methods available. In this regard, it is working on a new online loan sales platform, which will be aimed exclusively at professional investors.
This initiative, the initial phase of which will be available as of June, aims to promote and provide quality information for Sareb's financial assets, which account for almost 70% of its portfolio.
Sareb's Executive Chairman, Jaime Echegoyen stated that "innovation must form part of the company's day-to-day business. We must explore all the channels available to us in order to reach as many potential purchasers as possible and close deals in a more efficient and transparent manner".
Financial information (EUR million)
|Total Revenue ||3,886||3,923||1|
|Gross margin financial assets ||1,029||515||-50|
|Gross margin real estate assets ||208||149||-28|
|Total gross margin ||1,237||664||46|
|Amortisations and other ||-51||-85||67|
|Financial costs ||-709||-558||-21|
|Financial result for the year ||-103||-663|||
Portfolio performance (EUR million)
Debt performance (EUR million)
Geographical breakdown of own property sales 2016
(% sales volume)