The pandemic is reshaping Italy's financial structures and, in the field of private debt, an increasingly decisive role belongs to the credit management Unlikely To Payespecially in the real estate sector. Aurora Recovery Capital, the third largest company in the Italian UTP market, deals exclusively with the real estate sector and has assets under management of 2,2 billion. "Our contribution guarantees on average the creation of a value equal to +75% of that recorded at the beginning of the process - explains the general manager of the company, Marco Sion Raccah - We are focused on UTPs with underlying real estate, in terms of loans corporate and never of private citizens".
The difference between Utp and Npl
Intervening at the right time, before the outstanding credit becomes a bad debt and it becomes necessary to resort to the endless swamps of the courts, can become a vital issue for many banks. There difference between UTP and NPL lives right within this time frame. "Unfortunately in Italy many NPL managers have found themselves in the UTP market - observes Raccah - but the differences between one and the other are profound and if the approach is not correct, a fundamental part of the real economy is put at serious risk of the country. If the UTP is treated like an NPL, letting the company go into bankruptcy or executive proceedings, a whole market ecosystem collapses”.
UTPs and asset management
The heart of everything is therefore found in asset management and in the knowledge of the reference market. “It is also essential to build collaboration and synergy with the borrower – continues Raccah – with whom a healthy and professional relationship must be defined. The debtor will find new life in regaining a financial position thanks to our contribution. Bearing and essential element in the management of UTPs is then the ability to have a financial structure that can disburse new finance at bank rates. Without it, it is very complex to be able to correctly manage a UTP, and often the absence of the availability of new finance (which must be known and defined ex ante) determines the failure of the project and the deterioration of the credit”.
In the past Arec developed, among other things, the Sandokan 1 and Sandokan 2 projects, i.e. Unicredit's UTPs platform, but today it also aims to manage smaller files, granular UTPs, always with real estate guarantee. “On these bases Arec 2.0 is taking off, which essentially consists in an extension of the management to files with a size between 500k and 5 million. We are going through a complex phase full of transformations, with the effects of the pandemic having a strong impact".
Real estate market: the changes brought about by the pandemic
It is precisely the real estate market that is moving towards new forms and formulas, reshuffling some coordinates. “Compared to most other countries, Italy has a widespread and granular property, without too many mammoth aggregations – explains Raccah – The market is therefore more fragmented and with fewer giants than abroad. A reality that is now being remodeled in line with the new needs and new habits resulting from Covid. The search for properties has moved from the city center to more peripheral areas, perhaps with larger spaces that ensure the possibility of working comfortably in smart working. Activities that operate in proximity logistics are benefiting from the new phase, as are those who deal with data centers or need large warehouses. Often these are trends that were already underway and that the pandemic has accelerated considerably. Our challenge is precisely that of evolving on the basis of new trends".
