Cushman & Wakefield market commentary
Against a background of economic uncertainty and impending regulatory changes, activity in the European loan sales market accelerated in 2012.
During the year, C&W recorded 40 completed commercial real estate loan portfolio and real estate owned (REO) sales across Europe, totalling €21.9bn. There was a tendency towards larger portfolio sales, but deal sizes ranged from €40m to €2bn.
This total was a big rise on the volume of publicly announced 2011 deals. It may not have been enough for many disappointed bidders, but it showed that European CRE loan portfolios can be successfully traded.
By volume, more than 90% of deals occurred in the UK, Ireland, Germany and Spain. The UK alone accounted for 31%, while nine of the top 10 sellers were based in those four countries.
C&W recorded deals involving €2.18bn of loans that failed to close in 2012. One suggested cause for failures was inadequate provision of information on the underlying collateral.
This year, C&W expects a reduction in the average portfolio size and an increasing number of buyers. The market has made a promising start in Q1 2013, with 11 deals already closed, amounting to €3.45bn.
C&W is seeing a big build up of activity among deleveraging institutions, with €11.7bn of ‘live’ deals in 14 transactions and a further 17 being planned, with an outstanding principal balance of more than €18bn. C&W forecasts more than €25bn of CRE loan portfolio and REO sales in 2013.