Alternative lenders behind 40% of debt transactions in H1, says C&W

‘Alternative’ non bank financial institutions continue to take up a growing share of an increasingly diversified mix of active lenders in Europe, according to Cushman & Wakefield’s European Real Estate Lending Update.

The research shows that alternative lenders, including insurance companies, property companies, private equity and debt funds now account for 40% of the total, up from 16% in Q1 2012.

The core markets of Western Europe – UK, France and Germany - remain the top targets for real estate lending with 60% of all tracked loans during H1 2014 secured by assets in these markets. Interest in non-core markets has increased, however, driven by new opportunities and demand from lenders to move up the risk curve in search of superior returns.

'Despite the supply of debt steadily increasing in most European markets, margins seem to have stabilised over the past quarter. This has helped accelerate the movement up the risk curve for many lenders,' said Frank Nickel, Chairman & CEO of Germany, EMEA Corporate Finance.

European property debt funds continue to play a vital role, with C&W currently tracking 39 funds looking to raise €22.1 bn to target real estate debt.

After a promising 2013, the European CMBS market has slowed in H1 2014. Despite this, investor demand remains strong and market commentators see further issuance in the near term.

The availability of loan-on-loan financing has grown rapidly during H1 2014, with over €5.5 bn of debt secured across nine transactions in the first half of 2014.

C&W's Corporate Finance team analysed the activity of 182 European lenders and tracked nearly €33 bn of real estate lending deals carried out over the past six months.