Robin Hubbard, executive director of CBRE's real estate finance business and Mike Birch, co-founder of specialist real estate debt and asset management group REAM Capital Partners, talked to PropertyEU Week Edition about the new service they offer lenders and borrowers.
Robin Hubbard, executive director of CBRE's real estate finance business and Mike Birch, co-founder of specialist real estate debt and asset management group REAM Capital Partners, talked to PropertyEU Week Edition about the new service they offer lenders and borrowers.
What is the aim of the alliance?
RH: Our first task is to help clients understand the nature of the debt problems facing the real estate sector today and how this may evolve this year. Many borrowers who originated loans at high loan-to-value (LTV) ratios are in difficulty as values have declined 40% since the peak in 2007. Selling assets is problematic for banks at the moment and refinancing is not an option due to the scarcity of credit. As a result, banks are generally rolling over their loans and really want to know and understand the risks inherent in the underlying property assets and the best way to enhance their value. We aim to leverage our own expertise with that of REAM to develop solutions for both borrowers and lenders.
How big is the debt problem?
MB: The latest edition of De Montfort University’s survey estimates the level of outstanding loans to commercial property in the UK rose 10% to £243 bn (€279 bn) by end-2008. We think the total is about £300 bn, a third of which will mature in the next three years. This is a global problem: my calculations are that €257 bn is set to mature in the rest of Europe and $835 bn (€596 bn) in the US.
The full interview was published in PropertyEU Week Edition on 10 June. Click on the link below to subscribe to PropertyEU's package of products.
