CBRE expects to see banks across Europe continue to pursue sales of commercial real estate loans in 2012 as lenders seek to further streamline the process for reducing their exposure to property.
In 2011, CBRE recorded the completion of more than 20 loan sales by European banks, representing over 20 billion of real estate debt. At least a further 13 billion has also been placed on the market and is currently under execution. CBRE's own Debt Advisory team itself saw a threefold increase in loan sale mandates across Europe last year, with the majority of instructions originating in the UK and Ireland. Indications for 2012 show a continued appetite from lending institutions across Europe, Middle East and Africa (EMEA) to reduce their exposure via this method.
Natale Giostra, Head of UK & EMEA Debt Advisory, CBRE, said: "Banks now recognize that, in many cases, loan sales are the most effective way of diminishing their balance sheet leverage and exposure to real estate. In 2011, we saw this reflected in an increasing number of loans brought to the market by a wide variety of institutions. With over 13 billion of loans already understood to be on the market, we expect loans sales in EMEA this year to reach at least the same levels as 2012. Loan sales are a quicker solution for banks than asset level work outs and buyers generally have teams in place with demonstrable expertise in successfully completing asset level work outs."
At the same time, CBRE has launched a new Debt Advisory team in Ireland to provide expert real estate advice to domestic banks, appointing Andrew Tallon as Associate Director, who will work from both the London and Dublin offices. Andrew previously spent five years at Anglo Irish Bank working in the commercial lending division with a focus on the real estate sector.
The Debt Advisory team, which was established in 2006 within CBRE Real Estate Finance, provides clients with advice on loan sales and buybacks, acquisition financing, refinancing, development financing and mezzanine debt.
Guy Hollis, Managing Director of Ireland, CBRE, added: "The scale of the challenge faced by various Irish lending institutions in de-leveraging their balance sheets will inevitably lead to an increase in loan sales and we are already experiencing client demand for services related to these strategies. CBRE is excited to bring its expertise and reach in this specialist field to the Irish market."