According to the Corporate Finance team of Cushman&Wakefield, European banks and asset management businesses are at gross exposure to non-core real estate which undergo $770 billion (€584 billion) sale or workout procedures. offers
Despite the record volume of sales of Commercial Immobilien (CRE) and Immobilien (REOs) recorded this year, the deleveraging period in Europe is far from complete, according to the results of an update in the company's European Immobilien Loan market H1 2014.
Detailed research on the non-core real estate exposure of 46 banks and asset management agencies throughout Europe was carried out by Cushman & Wakefield Corporate Finance in the details of the thorough report. The nine European weak banks analyzed possess over 46% of the gross non-core exposure to real estate, indicating its importance in the next few years in the CRE loan and REO sales markets.
WPC Updates | WPC Updates European Real Estate Loans Top Buyers 1st quarter 2014 The study describes 8 'mega deals' or face value transactions over $1.3 billion which were concluded in H1 and four others presently under monitoring. These 'mega transactions' represented 71% of the entire amount of H1's loans, up from 40% in 2013.
In H1 2014, the average size of the loan sales deals grew from 455 million dollars last year to 818 million dollars in the same time frame, diluting the trend in 2013 throughout Europe, making sales even more difficult for smaller investors.
Two major American investors, Lone Star and Cerberus, still make headlines, accounting for 77% of all European CRE loans and REO buys in H1 2014.
EMEA Corporate Finance Group Executive Chairman Frank Nickel, Cushman & Wakefield remarked, "American investors raised an enormous amount of money to invest in opportunistic real estate. These purchasers like mega transactions because they allow them in one transaction to have wide exposure to important assets and markets, saving time and money."
After a record first quarter driven by the IBRC, activity expanded throughout southern Europe during the second quarter, with suppliers trying to profit on the rising demand of investors in the area. As a consequence, the Corporate Finance team of Cushman&Wakefield said that $21.4 billion in transactions were concluded more than six times the amount in the second quarter of 2013 ($3.3 billion) over the three months leading up to July.
Compared to the Q1 2014 number of $32.5 billion, the entire value is $53.8 billion for the first half of this year. This represents an increase in volume of over 30% in the whole of 2013 and 611% in the first half of 2013.
Cushman & Wakefield Corporate Finance anticipates that close-out CRE and REO revenues will reach $79 billion in 2014 because of an active first quarter.
Federico Montero, Head of Loan Sales, Cushman & Wakefield Corporate Finance, stated, "Although the record amount of loans as witnessed so far in 2014 is significant, Europe's 770 billion non-core exposure to real property underlines the enormity of the still pending deleveraging process. In addition, the planned stress tests by the ECB would guarantee that the current high operating levels of the market are maintained in the next few years."