Euro Banks Unloading Property Assets at Record Pace

Bank_EspanaIn what could represent one of the final chapters in the real estate collapse, European lenders are starting to sell toxic real estate assets at a record pace, Cushman & Wakefield reports.

Euro banks, including Sareb, Spain’s “bad bank,” unloaded €40.9 billion of loans tied to property in the first six months of 2014, 611 per cent more than a year earlier and 30 per cent more than the total of all of 2013, the consultancy reports. The deal total will be closer to a record €60 billion by the end of the year, the firm predicts.

One of the leading sellers will be Sareb. Spain controls more than €192 billion in “non-core real estate” that needs to be sold or restructured, the largest block of bad assets in Europe, CW says. Sareb is responsible for 53 per cent of those assets, Cushman & Wakefield says.

“Spain is guaranteed to have a record-breaking year,” CW concludes.

In total, the banks are likely to sell about €584 billion in property assets, the property firm reports.

“Despite the record volume of commercial real estate (CRE) and real estate-owned (REO) sales seen so far this year, the deleveraging process throughout Europe is far from over,” Cushman & Wakefield reports.

Sales will be fueled by ready buyers, including funds in the U.S., the firm reports. US funds Lone Star and Cerberus accounted for 77 per cent of all European CRE loan and REO acquisitions in the first half of 2014. Both have been active in Spain.

Seventy-one per cent of the first half transactions were “mega deals”–deals of more than $1 billion–compared to only 40 per cent in the first half of 2013. The average size of deals increased from €346 million in the first half of 2013 to €621 million in 2014.

“U.S. investors have raised an enormous volume of capital targeting opportunistic real estate,” Frank Nickel, executive chairman of Cushman & Wakefield’s EMEA corporate finance group, said in a release. “‘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.”

Cushman Wakefield_Bad debt chart-Cropped (1024 x 699)

SPI Member Comments

One thought on “Euro Banks Unloading Property Assets at Record Pace

  • Great. Banks made wealthy people wealthier and then ran out of money. Taxes paid by the working class bailed-out the banks and now the banks are selling their real estate inventories at huge discounts – to wealthy investors. And these deep discounts are not available to working class people.

    Hungry people do not remain hungry for very long.

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