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CRE Finance World, Winter 2014

Exhibit 6 Surplus and Net Debt Funding Gap, USD bn, 2013–14 Source: DTZ Research We do see net gaps in a number of core markets. The biggest gap remains in Spain at USD14bn, although this is 17% lower than in June. This highlights the progress that is being made in Spain, where we have seen a number of loan sales complete over the past few months. We continue to see gaps in Ireland, Italy and the Netherlands. Of course you would expect to see larger absolute gaps in markets with higher debt levels. Therefore comparing the gap relative to the size of outstanding debt provides a clearer impact across markets. On this basis the Ireland and Russia stand out as being most exposed, with the net gaps at 11% and 8% relative to their debt . Spain is much lower at 5% and the Netherlands and Italy at 3%. Net Gaps Remain in Many Markets Overall we continue to see a net gap across Europe of USD42bn (Exhibit 7), although this is 16% lower compared to the USD50bn gap six months ago. This highlights the progress of deleveraging and improving market conditions in shrinking the gap and is supported by continued strength in non-bank lending. CRE Finance World Winter 2014 64 In addition, we continue to see strong levels of equity chasing commercial real estate across Europe, totalling around EUR130bn. With around two-thirds of this capital raised by value-add and opportunistic funds, this capital should be well placed in helping to bridge the gap, especially the better quality secondary properties. Exhibit 7 European Gross and Net Debt Funding Gap 2013–14, USD bn Source: DTZ Research Growth in Loan Sales Across the Continent Both banks and bad banks have been active in selling loan portfolios during the year, with a clearer focus towards sales across continental Europe. Up to November 2013 there have been sales with a face value of over EUR12bn concluded. This compares to EUR18bn in 2012. Over second half of 2013 there have been a growing number of sales in Spain, where SAREB (the Spanish bad bank) has been increasingly active over recent months (Exhibit 8). There also remain a number of significant sales in the pipeline, notably four portfolios from the Irish Bank Resolution Corporation (IBRC) along with a further portfolio on the market from the Spanish bad bank (SAREB). We expect further loan sales on the market, especially from the bad banks as they accelerate their workout over the coming years. Europe Progresses in Debt Workout


CRE Finance World, Winter 2014
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