Up to €80 billion of non-core real estate debt and lender-owned properties could change hands during 2018, with the Spanish market likely to be most active, according to the latest loan sales report by investment banking firm Evercore.
The Spanish market stood out last year, accounting for €50.8 billion of the €104 billion of real estate loan and real estate-owned (REO) transactions that closed in 2017.
Two ‘mega-deals’ – involving sales of very large or entire non-core real estate books by BBVA and Santander – boosted last year’s sales volumes in Spain, which could encourage other Spanish vendors such as Sareb, Banco Sabadell and CaixaBank to follow suit, the report adds.
Evercore’s Real Estate Portfolio Solutions team, headed by Federico Montero, is currently tracking a pipeline of approximately €35 billion in potential European real estate loan and property portfolio transactions, of which approximately 78 percent of the total deal pipeline corresponds to Spain.
“Both CaixaBank and Banco Sabadell are rumoured to be assessing the sale of €12 billon of real estate portfolios and circa €12 billion of toxic real estate assets respectively,” the report notes.
As Real Estate Capital reported previously, activity in the distressed market has been shifting southwards. Last year’s closed deals demonstrate this trend.
The Italian market continued to develop last year, with €29.4 billion of sales recorded. Activity was supported by a wide range of vendors, as banks look to reduce their levels of non-performing exposures. One the last year’s key transactions was the disposal of €26.1 billion in toxic loans by Banca Monte dei Paschi di Siena. The Italian bank used a securitisation vehicle, with the rescue fund Atlante II acquiring the mezzanine and junior notes.
Despite being less noticeable in absolute terms, volumes in the Portuguese market almost quadrupled to €747 million in 2017, which suggests that more activity can be expected going forward into 2018.
The report highlights the Greek market as a likely focal point for investors in 2018. Having closed a number of unsecured NPL portfolio sales last year, Piraeus Bank is currently selling the €1.5 billion Project Amoeba as activity begins to ramp up in the country.
Meanwhile, the UK and Ireland can now be considered as peripheral loan sales markets, following a considerable drop in activity in 2017 compared with previous years, Evercore noted.
The UK’s closed volumes of €18.3 billion was inflated by a single deal: UKAR’s €15 billion Project Ripon sale to Blackstone and Prudential. Excluding this transaction, the remaining deals in the two markets represented just 5.7 percent of last year’s total sold volumes in Europe.