Hipoges Iberia Rankings Affirmed As A Special Servicer Of Residential And Commercial Mortgages In Spain

  • We are affirming our AVERAGE ranking on Hipoges Iberia as a special servicer of commercial mortgages in Spain, and maintaining our positive outlook.
  • We are affirming our ABOVE AVERAGE ranking on Hipoges Iberia as a special servicer of residential mortgages in Spain, and maintaining our stable outlook.
  • Established in 2008, Hipoges Iberia is an asset-management company with offices in Spain, Portugal, Greece, and Italy.
LONDON (S&P Global Ratings) April 03, 2019--S&P Global Ratings today affirmed 
its AVERAGE overall ranking on Hipoges Iberia S.L. (Hipoges) as a special 
servicer of commercial mortgages in Spain. The outlook is positive. 

We also affirmed our ABOVE AVERAGE overall ranking on Hipoges as a special 
servicer of residential mortgages in Spain. The outlook is stable. 

Our rankings reflect:
•Hipoges' experienced management team, subject to several adequately managed 
executive changes since our last review; 
•The servicer's ability to increase assets under management, both in terms of 
residential and commercial mortgages, deploying an enhanced onboarding 
•Expanded audit and risk management, and compliance teams, demonstrating the 
servicer's focus on internal controls. Hipoges reported a higher number of 
high risk audit findings than peers as a result of its more conservative 
controls methodology, which was updated in 2018;  
•The servicer's continuous investment in IT, resulting in the introduction of 
a new in-house loan management system, HAMS, supported by several 
complementary applications and business intelligence tools;
•Well-established residential mortgage servicing workflows, which have been 
further improved since our last review; and 
•Rapidly expanding commercial mortgage servicing operations, supported by an 
experienced leadership team and updated policies and procedures. 

We have maintained our positive outlook on Hipoges as a special servicer of 
Spanish commercial mortgages. Hipoges has an experienced leadership team that 
has introduced several changes to the servicing operations since our last 
review, such as dedicated real estate advisors, that it needs to consolidate. 
Although Hipoges has continued building its track record on managing 
portfolios of loans backed by residential real estate developments, which 
comprise the majority of the commercial portfolio, it substantially increased 
its assets under management in the second half of 2018. Hipoges took on a 
large transaction, accounting for over €2 billion, at the end of 2018, which 
we will monitor as it matures. Similarly, we will continue monitoring Hipoges' 
collections performance compared with its business plan. 

Our outlook on Hipoges is stable as a special servicer of Spanish residential 
mortgages. Hipoges has reliable servicing operations, supported by a flexible 
IT system. 

Since our last review (see "Servicer Evaluation: Hipoges Iberia S.L.," 
published on July 28, 2017, on RatingsDirect), Hipoges has reported the 
following key changes:
•KKR Financial Holdings now owns 84% of the company's capital, with management 
owning the remaining shares; 
•In September 2018, Hipoges' previous co-founder and executive president left 
the company and the company's managing director and the head of advisory took 
over his responsibilities following a handover period; 
•In March 2018, Hipoges appointed a new chief operating officer (COO) after 
the planned departure of the previous one; 
•In the second half of 2018, the company significantly increased its 
residential and commercial mortgages special servicing portfolios under 
management to €2.517 billion and €5.535 billion respectively; 
•Hipoges has reinforced its human resources (HR) function, comprising global 
and local teams working on implementing the training and development module of 
a new HR system, currently in use for recruitment and performance management;  
•Over 2017 and 2018, Hipoges strengthened its servicing operations, increasing 
the number of middle managers, assigning dedicated real estate managers to the 
servicing teams, and integrating the closing function; and 
•Hipoges updated and mapped its policies and policies in an innovative tool, 
Bizagi, facilitating data visualization. 

The financial position is SUFFICIENT. 

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