EUROPE - Aviva Investors is expecting to see more bank foreclosures following Royal Bank of Scotland's (RBS) assumption of a German office portfolio owned by Morgan Stanley, but warned that commercial mortgage-backed securities (CMBS) refinancing will be a greater source of market uncertainty.

A fund managed by Morgan Stanley is understood to have returned the keys to RBS on portfolio acquired for €2.1bn from Union Investment in 2007.

And Ben Sterling, managing director for continental Europe at Aviva Investors, has predicted there could be more to come: "The markets in continental Europe have not fallen as far as the UK, so there has been less distress. But there are likely to be more cases like this coming up in the future."

In contrast, Richard Jones, UK managing director at Aviva Investors, has arguedthe large volume of CMBS financing, due to mature between now and 2014, was a bigger source of uncertainty for the real estate markets.

In standard bank loans, the borrower and the lender "know exactly who the other party is, and they can have a sensible dialogue and know exactly who they are talking to," he said.

"On CMBS, it is not as straightforward in knowing who it is they should be speaking to when it comes to restructuring," said Jones.

"There are normally a very large number of bondholders involved and the principal difficulty can be actually trying to find out who those bondholders are."

Jones warned that the "lack of experience in the market as a whole as to how these CMBS issues will unwind" would lead to uncertainty for real estate investors.

The comments were made at the same time as Tishman Speyer successfully negotiated one of the first CMBS refinancing deals in Europe, for its €400m German office portfolio.

Tishman Speyer's European Real Estate Venture VI Master fund is thought to have provided an equity injection worth €22m to enable an extension on the loan.