The chairman of the US Carlton Group has predicted that his real estate investment banking firm will do €10bn of business in Europe, as more distressed deals come onto the market.
Howard Michaels said: “We will close $10bn of business in North America this year and we think we will do €10bn of business in Europe next year.
“We specialise in accessing large amounts of debt and equity for our clients. There is a huge amount of business in Spain and Italy and also in London, although the UK is a tighter market.”
He was speaking after Carlton brokered a €250m recapitalisation in Italy – where deal volumes have been low and capital hard to attract – for the Milan Four Seasons hotel. It was Carlton’s “first big European closing this cycle”, Michaels said. The restructuring was a discounted loan payoff, with the borrower buying back its debt at a discount without bringing in any other equity investors.
The bank selling its €250m loan was Bank of America Merrill Lynch. The borrower is thought to have paid €200m, with London money manager The Children’s Fund providing the capital. “This is a precursor to other discounted loan payoffs, as financial institutions with European exposure look to monetise underwater loans,” Michaels said.