US-based private equity funds have raised billions of euros for European opportunities and competition for distressed assets is increasing, according to panellists at the PropertyEU Distressed Investment Briefing hosted in London earlier this month.
US-based private equity funds have raised billions of euros for European opportunities and competition for distressed assets is increasing, according to panellists at the PropertyEU Distressed Investment Briefing hosted in London earlier this month.
In addition to real estate specialists such as Tristan, Orion and Moorfield, hedge funds like Centerbridge and private equity firms like KKR and Baupost are finding their way into the European playground.
‘Hedge funds are often looking to buy B-notes in existing CMBS structures, where there is no income component to the total return, it is in fact an option type of investment,’ commented panellist Daniel Ryland, a partner at SJ Berwin in the UK.
Ryland: ‘We also see clients interested in newly originated CMBS, which are an attractive play because they are based on current values and are compliant with CMBS 2.0 - a new generation of CMBS structures which gives investors more protection.’
Although the sources of capital are not homogenous, Ryland reckons that the market is becoming increasingly competitive, raising concerns over the price at which some distressed portfolios are being sold.
‘In some cases the banks have actually even been able to write back some profits as the secured price was in excess of the price foreseen,’ Ryland noted. ‘A lot of companies looking to invest have similar business plans and it is important for them to demonstrate deal deliverability to their investors,’ he explained.
