The Dallas-based real estate lender Amresco Inc. is planting deeper roots in Mexico's distressed market.
Last week the company announced the formation of a Mexico City-based joint venture with Banco Bilbao Vizcaya, Spain's largest bank.
The initiative, Amresco Mexico Inc., would buy, service, and manage distressed loans.
The move underscores efforts by U.S. institutions to reap a harvest from collapsed real estate markets abroad.
Banks, thirsty for the 20% returns they garnered from investments in distressed U.S. real estate assets in the early 1990s, have dispatched professionals to Japan, Canada, and Europe to seek out similar opportunities. Bankers are trying to get into foreign markets as early as possible to get maximum returns.
But these ventures are risky, partly because of currency fluctuations, different legal systems, and collection processes.
In Mexico, bankers said, sales have advanced much more slowly than expected.
In 1995 the Mexican government set up Valuacion y Venta de Activos to sell $40 billion of problem assets taken over after the Mexican peso crisis of 1994.
Valuacion y Venta tapped Bankers Trust New York Corp. and GBM-Banco del Atlantico last September to act as advisers. Sales are expected to continue for five years.
"Given that many of these assets have not been fully serviced for a number of years, going back in and coming up with information that could be used for underwriting and bidding purposes is a gargantuan task," said Gregory Adams, Amresco's senior vice president and director of asset management for the United States and Mexico.
Valuacion y Venta's approach looks pretty good, he added, when compared with that of the Resolution Trust Corp., which handled sales of bankrupt real estate assets for the U.S. government in the early 1990s.
Amresco, which has managed over $35 billion in subperforming real estate assets, teamed up with Goldman, Sachs & Co. last September and won the bidding on the first portfolio Mexico sold, a $16 million package of 45 performing and subperforming loans. Thirteen institutions had competed for that package.
Fobaproa, a trust set up by the Mexican government that operates as Valuacion y Venta's sister agency, has slightly changed its course. Instead of continuing to sell assets, it is now auctioning off servicing rights. This will give bidding companies more time to assess what is being offered, Mr. Adams said.
Fobaproa is preparing to seek bids, maybe next week, on servicing $275 millon to $300 million of loans on roughly 5,000 to 6,000 properties, according to Mr. Adams.
"With better information we will be in a good position to estimate the values of the portfolios and to subsequently get better pricing on bidding on the portfolios," he said.
Amresco intends to staff its Mexico City office with 40 to 50 bankers. Some of them will come from other parts of the company, but a major hiring effort is also planned.
By teaming up with Banco Bilbao Vizcaya, Amresco hopes to gain in-depth market knowledge about the terms of lending and the workout environment in Mexico, Mr. Adams said.
The partnership should help Amresco "navigate the waters better," Mr. Adams added.
