29/09/2014 – Expansion
A 40-year old economy professor lives in an empty home repossessed by one of the Spanish banks. He does not pay any rent or bills. Him, and many more like him have been squattering banking foreclosures in protest against massive evictions and upsurge in empty dwellings in the last years. Now, the Blackstone Group’s acquistions in Spain are at the gunpoint. In July, the U.S. private equity fund purchased 40.000 mortgages in Barcelona.
For the squatters, arrival of Blackstone means a ‘great opportunity to legitimate their fight against speculation’.
Housing prices in Spain rose 0.8% in the second quarter of 2014, representing the first year-on-year incrase since 2008. The rebound is a sign of the value stabilization after an over 35% slump registered in the last six years. However, Spanish banks still have to tackle huge amounts of defaulting loans, whose delinquency hit a record high of 13.6% in December 2013, the Bank of Spain informs.
Blackstone believes that the Spanish economy will improve and the company will be able to collect the debt better than its issuer, Catalunya Banc SA, the bank bailed-out with €12 billion taken from public funds in 2011.
Blackstone paid €3.6 billion for the €6.4 billion worth of mortgages backed by dwellings in Catalonia at a governmental auction, also attended by Oaktree Capital Management and Apollo Global Management.
The U.S. fund is carrying out talks on sale of a part of the soured portfolio. If Blackstone does not manage to collect the mortgage debt, it will rent or sell the houses.
What is more, foreclosure of such properties will not be an easy task due to the moratorium on evictions established by the Government of Spain in November 2012, to remain in force by May 2015. The law includes low-income families and single-parent families with two children or more that earn less than €1.598 monthly. Blackstone accepted it while buying the NPL portfolio from Catalunya Banc.
‘Those who squatter today were your neighbors yesterday’, says real agent Vicente Beltran from Valencia. He no more hangs the ‘for sale’ signs on listed properties to avoid potential squatters.
Local anti-eviction organization known as PAH by its abbreviation in Spanish has taken many actions demanding the moratorium which could prevent thousands of people from being thrown out from their homes. In March, the association occupied over a dozen of BBVA branches in the city of Sabadell.
Some lenders prefer to negotiate with debtors, or even buy plane tickets for foreigners who cannot pay their loans. In Spain, home mortgages are classified as outstanding loans, meaning that even if the foreclosed property is sold, the borrowers must redeem their debt.
Another problem faced by Blackstone is the independence movement in Catalonia which adds to uncertainty among real estate investors.
Original article: Expansión (by Jeannette Neumann)
Translation: AURA REE
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Source:: AURA Real Estate Experts