Banks to unbundle portfolios from early 2011: Internos

Investors will have a 12 to 24 month window of opportunity as major banks, under pressure on all sides, unbundle their European real estate portfolios, says Jos Short, executive chairman of Internos Real Investors, in the latest issue of Internos' strategic bulletin, The Decisive Eye..

'The upturning economies of Northern Europe will see more of the unbundling action in early 2011, which is likely to create a 12 month opportunity for investors,' he says. 'Initially this opportunity will express itself as seldom seen rental yields, leading to excellent growth in capital values but this will probably not be until 2013.'

In addition, Short says that overleveraged and quoted small and mid-cap real estate businesses form a signal opportunity for the opportunistic investor or fund manager. Short is a founding partner of Internos, the EUR 1.5 bn owner-managed real estate fund management business.

Short believes pressure on banks to unbundle will come from three phenomena: bank business strategies and their attitudes to commercial real estate are undergoing a fundamental change; global regulation of banks becoming much stricter with revisions to the Basel ll accords, the so-called Basel lll; and, a significant peak in loan maturities in 2011 and 2012 for loans with swap arrangements contracted in 2006-07 at interest rates much higher than today's.