Real estate loan sales to hit €30b by end-2013 as activity spreads: C&W

Cushman & Wakefield has increased its year-end European real estate loan sale estimate from €25 bn to more than €30 bn as activity spreads across the Continent.

The European loan sale market got off to a strong start in the first six months of 2013, with €5.8 bn worth of commercial real estate (CRE) loan and real estate-owned (REO) portfolio sales taking place across 18 transactions.

This is slightly less than the €7.6 bn sold in H1 2012. However, a busy start to the second half of the year has seen further transactions close, including the Hypothekenbank Frankfurt AG (Eurohypo) sale of its €5 bn UK loan book, which has brought the year-to-date total to €11.2 bn.

The majority of closed transactions were CRE loan sales (73%), with the remainder representing REO sales (19%), CMBS asset sales (6%) and residential loan sales (2%).

More transactions are in the pipeline, says C&W, which is tracking €12.1 bn in live CRE loan and REO sales and a further €44.1 bn in planned sales. More than 50% of these planned loan sales by face value represent the loan books of European asset management agencies, such as Nama, IBRC and Sareb.

Based on an assessment of all of these potential transactions, C&W predicts total transaction volumes at the end of 2013 will be in excess of €30 bn.

The UK, Ireland, Germany and Spain continued to capture the majority of transactions in H1 2013, accounting for almost 90% of closed sales by volume.

However, investors are beginning to turn to other markets. C&W says it is witnessing live sales in the Netherlands, Italy, Finland and France - markets which have so far seen very little activity.

The average loan size has decreased by more than half from €658 mln in 2012 to €321 mln in the first half of 2013. This trend reflects vendors’ attempts to market to a more diversified investor base to maximise recovery. Vendors are bringing portfolios to the market with a more thorough understanding of the property collateral and this is having a beneficial impact on price discovery and transparency.