European loan sales exceed €12b in Q1 as activity spreads

The first quarter of 2015 saw over €12 bn of commercial real estate (CRE) loan sales in Europe and was characterised by a spreading of activity throughout the Continent, according to research from Cushman & Wakefield’s EMEA Corporate Finance team.

Italy in particular emerged as a new real estate loan market with over €1 bn of closed transactions in the first three months of the year, the broker said.

This total is over 2.5 times the volume recorded during the whole of 2014 and makes Italy the third most active European country by closed transactions in Q1.

Several large transactions in Q1 2015 helped boost the closed volume, including Permanent TSB which completed the sale of its Capital Home Loans servicing platform and the €3.5 bn of associated residential loans to Cerberus.

In addition, in its drive to cover its capital shortfall following the results of the AQR last October, it also finalised the disposal of its €1 bn and €500 mln Irish CRE loan portfolios (dubbed Project Leinster and Project Munster respectively) to Haybell Limited, a newly formed entity believed to be funded by Deutsche Bank and Apollo.

Cushman & Wakefield expects loan sales for 2015 will be in the region of €60-€70 bn.

Although last quarter’s overall performance represented a decrease of 49% on the totals for both Q1 2014 and Q4 2014, it also represents over half the transactions reported during the whole of 2012, a more average year for commercial real estate loan sales.

'Although completed transaction volumes are slightly down on those recorded for 2014, there are plenty of large transactions being prepared for the market which will boost activity in the second half of the year and catch the eyes of awaiting investors,' commented C&W’s head of EMEA loan sales, Federico Montero.

Frank Nickel, executive chairman of C&W's EMEA corporate finance group, added: 'Vendors in the UK and Ireland have undoubtedly led the way in the deleveraging cycle since the crash of the market, setting an example to banks and asset management agencies throughout Europe and even globally. As many now approach the completion of their workout strategies, the likes of Spain and Italy have the opportunity to step up to the plate and grab the attention of a wealth of investor interest flooding in from the US.'