US opportunistic investor Lone Star emerged as the biggest buyer of commercial real estate loans in H1 2014, accounting for almost €15 bn of sales as overall volumes rose more than 600% compared to the year-earlier period.
US opportunistic investor Lone Star emerged as the biggest buyer of commercial real estate loans in H1 2014, accounting for almost €15 bn of sales as overall volumes rose more than 600% compared to the year-earlier period.
The figures are based on Cushman & Wakefield's latest update on its European Real Estate Loan Sales Market report. According to the research, Lone Star and Cerberus were responsible for 77% of all European commercial real estate (CRE) and real estate-owned (REO) loan sales during the six-month period.
BANK EXPOSURE
Cerberus accounted for loan sales of €6.2 bn in the first half, followed by CarVal Investors with €3.3 bn, Blackstone with €2.2 bn and Oaktree Capital with €2.1 bn. Total sales volume for the period hit €40.9 bn, and Cushman & Wakefield is now forecasting a full-year figure of €60 bn as European banks continue to offload non-core real estate loans. The first-half figure represents an increase of over 30% on volume for the entirety of 2013, the adviser said.
Cushman & Wakefield’s Corporate Finance team estimates that European banks and asset management agencies have a gross exposure of €584 bn to non-core real estate which is subject to disposal or work-out strategies.
The findings are based on research into the non-core real estate exposure of 46 banks and asset management agencies throughout Europe. The nine European ‘bad banks’ analysed hold over 46% of the total gross exposure to non-core real estate, indicating their importance in the CRE loan and REO sales market in the next few years.
The publication details eight ‘mega-deals’ – those with a face value over €1 bn – which have closed in H1, while another four are currently being tracked. These ‘mega-deals’ accounted for 71% of the total H1 loan sale volume; this is up from 40% in H1 2013.
Contrary to the trend observed across Europe in 2013, the average size of loan sale transactions has virtually doubled in H1 2014 to €621 mln from €346 mln in the same period last year.
MEGA DEALS
Frank Nickel, executive chairman of Cushman & Wakefield’s EMEA Corporate Finance group, said: 'US investors have raised an enormous volume of capital targeting opportunistic real estate. "Mega-deals" prove popular to these buyers since they offer a chance to gain large exposures to key assets and markets in one transaction, saving on both costs and time.'
Following a record first quarter dominated by IBRC (Irish Bank Resolution Corporation), Q2 saw activity spread to Southern Europe as vendors look to take advantage of increasing investor appetite in the region. As a result, Cushman & Wakefield’s Corporate Finance team estimates €16.3 bn of sales completed in the three months to July, over six times the volume closed in Q2 2013 (€2.5 bn).
Cushman & Wakefield’s Federico Montero, head of loan sales, EMEA Corporate Finance, said: 'The record loan sales volume seen so far in 2014 has been impressive, although the non-core real estate exposure of €584 bn across Europe signifies the enormity of the deleveraging process still to occur. Additionally, the upcoming stress tests being enforced by the ECB will guarantee that the current high levels of activity in the market will be sustained in the next few years.'