Property firms will have to post collateral to take out interest rate swaps in less than two years’ time, following a European Commission vote last month. Peter Cosmetatos, finance policy director at the British Property Federation, told the conference that an attempt to win real estate exemption from European Market Infrastructure Regulation (EMIR) had failed.
Companies will have to clear swaps through central exchanges and post cash collateral, increasing investors’ costs Benson Elliot finance head Ken MacNaughton said his firm had started to use interest rate caps instead. “We’ve explained it to investors. You have to pay upfront so it does draw in capital. But it is the right thing to do.”