

The Investment Property Forum has commissioned a trio of UK researchers to investigate how the sources of debt for real estate have changed since the onset of the global financial crisis in the UK and overseas.
The IPF Research Programme project will be headed by Hans Vrensen, consultant director of research & education at CREFC Europe, Nicole Lux of De Montfort University and Neil Blake of CBRE.
Changing Sources of Debt Capital Flows will address a number of issues, including: the emergence of a shadow banking sector, what the market implications may be of a change in the sources of debt, and, particularly, whether this will inject more or less risk into the system.
It will also consider how regulation is affecting the ability and appetite of different market participants, as well as the impact of an abundant supply of equity on bank lending.
The IPF is based in the UK, but wants the investigation to extend beyond the UK, to consider how the funding of real estate debt markets has evolved in North America, Europe and Asia in general over the last decade.
A project steering group will meet the researchers regularly to provide support. The group is chaired by Legal & General Property’s director of research Rob Martin and also includes: Matthew Bennett of Wells Fargo, Christian Janssen of TH Real Estate, Deutsche Asset Management’s Richard Day, and Anne Breen of Standard Life Investments.
The report, which will be published in the late autumn of this year, may also consider:
What are the typical risk / return appetites of the different participants? Are there parts of the market where different sources of capital are more / less competitive? How do different market participants price opportunities?
How is regulation affecting the ability and appetite of different market participants? What is the likely future direction of regulation and how does this differ across national / regional jurisdictions? Is there evidence / a risk of regulatory arbitrage? What are the implications of US banks being unable to include associated fees in individual loan pricing?
What is the scale of junior and mezzanine debt within the broader market? How has this changed since the GFC? What distinct role does it play?
How does the volume of debt securitisation differ across regions and what are the implications of having more and less well-developed secondary markets in real estate debt? Do they create market resilience / reduce spreads by broadening participation, etc.
Rob Martin, commented: “This is an area of considerable interest to the real estate investment community and beyond, as illustrated by the IPF-sponsored cross-industry report A Vision for Real Estate Finance in the UK, published in 2014.
“The current research will complement this earlier work and extend our understanding of how competing influences can affect the market.”