European banks and asset managers are seeking to sell 74 billion euros ($80 billion) of real estate debt and foreclosed assets, the most ever, as they trim their soured loan books.
Vendors sold 23.5 billion euros of property loans in the first half, 42 percent less than a year earlier, New York-based broker Cushman & Wakefield said in a report on Monday.
“Behind the scenes there has been a flurry of preparation work as key vendors line-up ‘mega deals’ for the second half of the year,” Frank Nickel, a partner at the broker, said in the report. “Investors will have plenty of distressed opportunities before the year is out.”
Debt sales will be driven by U.K. lenders and Ireland’s National Asset Management Agency, according to the report. Italy, Romania and Poland will probably set up bad banks to help sell off soured property loans because others around Europe have proven successful and investor demand remains high, Cushman & Wakefield said.
Asset management agencies such as NAMA and Spain’s Sareb hold commercial real estate loans, residential mortgages and foreclosed properties with a face value of about 233 billion euros, the report showed. The assets are now worth about 144 billion euros after loss provisions, Cushman estimates.
U.K. Asset Resolution Ltd., formed out of collapsed lenders Bradford & Bingley Plc and Northern Rock Plc, plans to sell 13 billion pounds ($20.3 billion) of mortgage loans this year. NAMA is offering Project Arrow, a 7.2 billion-euro portfolio of loans in Ireland and the U.K., the report said.
Private-equity firm Cerberus Capital Management bought 5.7 billion euros of assets in the first half, more than any other investor, Cushman & Wakefield said. A venture between Deutsche Bank AG and Apollo Global Management LLC was the second biggest purchaser, acquiring 3.2 billion euros of loans and defaulted real estate.
China may be the next target for opportunistic investors like Cerberus once loan sales in Europe slow, according to Cushman & Wakefield.