European real estate loan sales top record-breaking €80bn

Cerberus overtakes Lone Star as top investor in 2014.

Europe’s banks chipped a whopping €80.6bn off their mountain of unwanted real estate loans and assets last year, as the drive to clean up their loan books picked up speed, PDI's sister title Real Estate Capital reported. 

Cushman & Wakefield’s EMEA Corporate Finance team said the figure was more than two-and-a-half times the volume recorded in 2013.

In the last quarter alone, the market was “a hive of activity” Cushman said, with over €23.9 billion transacted, almost 60 percent by UK lenders.

The firm’s latest European loan sales market report highlights that the year’s total was boosted by a surge of “mega deals” of €1 billion or greater, led by Irish bad bank IBRC’s unwinding of its portfolio, a process which is almost complete. During 2014 IBRC sold loans with a face value of €18.7 billion which was 23 percent of all transactions.

Cushman said: “This is the result of the sale of five mega deals completed throughout the year, with the most recent being the disposal of the €1 billion Project Quartz to CarVal Investors and Goldman Sachs in December. The currently marketed c. €0.65 billion Project Pearl is set to be the final sale from the entity, meaning 2015 volumes will be reliant upon other vendors”.

While Cushman believes 2015 is unlikely to match €80 billion again, the report says: “There have been early signs in the first few weeks of January that investors remain hungry for distressed European assets”.

The team has already recorded €2.7 billion of closed sales with approximately a third attributed to NAMA, affirming its intentions for the year of an accelerated wind-down.
This year, with IBRC disposing of almost a quarter of the 2014 total, “2015 will be dependent on the activity of the likes of NAMA and SAREB to feed the demand for European opportunities. €60 – €70 billion of closed CRE loan and REO transactions are forecast in Europe for 2015.”

Cushman points out that Europe is “still awash with US capital”. Some 77 percent of assets by face value were acquired by US buyers.

Cerberus overtook Lone Star late on in the year to finish as the top investor, buying loans and assets with a nominal value of a staggering €17.7 billion. But Lone Star was close behind with over €16 billion.

Cushman is tracking a €21.7 billion pipeline of live sales and predicts that Ireland and Spain will remain highly active this year and next, driven by a continual recovery of the property market and their economies. Both NAMA and Royal Bank of Scotland – which still has a big Irish overhang – are accelerating their loan disposals.

The firm predicts that Italy will see increased demand from investors and that it is lagging Spain by a year in terms of activity in the CRE loan and REO sales market. It says the country accounts for 31 percent of planned, but not yet live, disposals.

See February's issue of Private Debt Investor for a report on Spanish loan market opportunities.