Creation of the first multi-originator fund to manage real estate UTPs in Italy

  • Creation of a new innovative multi-originator platform to manage real estate UTPs
  • Banks participating in the project will be able to benefit over time from potential credit recoveries and from a scalable platform – in terms of participants and assets managed – capable of managing also additional loans contributions
  • AMCO will act as Master and Special Servicer, while Prelios as Fund manager and real estate partner

Milan, 27 December 2019. AMCO and Prelios Group signed an agreement with Banca Monte dei Paschi di Siena, MPS Capital Services per le imprese, UBI Banca and Banco BPM to create a multi-originator platform to manage UTP (Unlikely to Pay) loans – relating to the real estate sector.

The project – named Cuvée – is structured as follows: AMCO and Prelios Group will manage together through a partnership a portfolio of small/medium UTP loans ranged from 3 to 30 million Euro granted to real estate companies undergoing restructuring activities or experiencing financial difficulties, and conferred by banks and AMCO itself.

The project will be implemented by means of a securitization process of the loans granted by the banks and AMCO, and with the support of a closed-end mutual investment Fund managed by Prelios SGR. The banks involved and AMCO will hold the quotas of the Fund.

AMCO has the role of Master and Special Servicer of the securitization, while Prelios Group the role of the real estate partner, as well as the manager of the Fund through its SGR. The partnership allows to merge financial management skills with specific expertise in the real estate sector, generating synergies and increasing the probability of credit recovery. Furthermore, the Fund is also expected to provide new financing to support the turnaround of the companies and the completion of worthy real estate projects.

During the current first phase of the project 50 borrowers are transferred to the Fund for a total of approximately 450 million Euro (111 million Euro from MPS Group, 121 million Euro from UBI Banca, 66 million Euro from Banco BPM and 154 million Euro from AMCO, also via “patrimoni destinati” -segregated accounts-). The loans will thus be deconsolidated already as of 31 December 2019 results. The overall target size of the Fund is 1.5 billion Euro under management to be achieved through further transfers.

The project Cuvée’s structure, which could be replicated to manage other multi-originator operations related to different industries, allows banks to benefit from the potential value recovery of the UTP loans through the quotas held in the Fund. As to the borrowers, Cuvèe increases the chances of their succesful turnaround thanks to the provision of new financing, allowing for proactive management of loans and underlying real estate assets.

Bain & Company acted as industrial advisor within the project, RCCD, Chiomenti and Molinari e Associati as legal advisors and by Studio Legale Tributario CBA as expert evaluator.