FOCUS ON UTP LOANS
The UTP (Unlikely to Pay) loans management differs from the management of Non-Performing Loans.
UTP borrowers are companies that usually constitute an important value in each of their local social and economic market. Considering this we analyse the files and set-up stable relations with the borrowers. AREC strategy is based on a cooperative approach and the negotiation of a restructuring agreement, allowing the turnaround of the initiative guaranteeing the real estate loans. This approach is usually preferred to a liquidation strategy, as it allows to protect – and, where possible, valorize – the assets of the borrowers. In order to manage properly UTP files, professionals specialized in restructuring and real estate projects turn-around are key.
In the financial statements of the main Italian banks, Real Estate backed UTP exposures were mainly granted to special purpose vehicles or Real Estate Investment Funds. These vehicles were created with the purpose of developing those real estate initiatives. Those real estate developments been mostly uncompleted, the result is a low appeal and a low value of the initiatives.
For the value of those projects to increase, they are to be repositioned and completed. As sector specialist, AREC works toward achieving that goal.