Banks to sell $20 billion of european commmercial real estate loans

by LJ Miehe on September 28, 2011

According to this article, a “fire-sale” in euro is happening for the commercial real estate market.   As could be guessed, the countries that are shedding this paper are banks in Ireland and Spain, along with countries that helped finance or have exposure to these markets like Britain and Germany.  It is stated that some of these properties are going for as low as 20% of face value.   That says volumes, either these investors are feeling impaired with these assets or they are wildly over-valued.

De-leveraging is mentioned as a motivation as well, this could point to some distressed institutions that need to raise capital fast.  If the Greek bailout falls apart, we will see more turmoil in the global markets and that will accelerate the amount of assets that will be shed into the market, putting more pressure on prices.  For people with capital on the side-lines, opportunities will be arriving in mass most likely sooner than later.   Keep you posted.

BusinessWeek (Simon Packard)  Banks will sell about 15 billion euros ($20 billion) of loans secured by commercial property in Europe through 2012 as they anticipate tougher capital regulations, debt adviser Situs Cos. said.

British, German, Irish and Spanish banks will probably be the most active sellers of property loans, particularly those tied to peripheral markets or overseas, Situs said today in a statement. The Houston-based company has acted as an adviser on distressed loans in Europe, including sales by Credit Suisse Group AG from 2008 to 2010.

European lenders are starting to seek buyers for commercial property backed loans on their books. The Bundesbank, Germany’s central bank, has hired AgFe to help sell more than 4 billion euros of loans used as collateral by Lehman Brothers Holdings Inc. Lloyds Banking Group Plc is looking for a buyer for 1 billion pounds ($1.6 billion) of U.K. commercial property loans.

“Time constraints and pressure to deleverage will be the key drivers of loan sales,” Hugo Raworth, a director in Europe for Situs, said in the statement.

Some commercial property loans have been sold for less than 20 percent of their face value, he said. Most buyers will likely be hedge funds, buyout firms and other specialist investors.

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