Banking sector still in state of denial, Investment Briefing hears

Everybody is talking about a shift in the European lending market but it’s not there yet, according to Jan-Evert Post, member of the Global Management Team at ING Real Estate Finance. Speaking at PropertyEU’s European Debt Finance & Investment Briefing at Expo Real XPO this week, Post said many banks were still in a state of denial. ‘I fail to see that the shift is there. I can’t see any action yet from the banking side, and until there is acceptance there will be no shift there.’

Up to now, only a handful of insurers have stepped into the lending market, but Post does see scope for the banking sector to oil further participation. Christian Delaire, CEO of AEW Europe, is also keen to forge further links with the banking sector. His company recently set up a senior debt fund and is poised to do more in the debt space. ‘We have a lot of complementary skills and want to build partnerships with banks. That’s good for them and good for us.’

The debt financing market is attracting all sorts of investors including traditional fixed-income players, Ad Buisman, partner, EMEIA Head of Real Estate at Ernst & Young noted. Interest is being fuelled by the disparity between returns on corporate bonds and senior debt, he added. ‘The disparity between debt and equity is even greater.’

The Spanish market also offers potential in the debt space, said Jesus Varela, partner and head of Real Estate Spain at law firm Salans. ‘But there are not many new lenders. We see equity funds but they have such high costs of capital and expect high returns. And the Spanish banks have other fish to fry. That’s why the market is so flat.'