- Outstanding bad loans drop by about 10% to 531 billion euros
- Deutsche Bank, Apollo, Lone Star among biggest purchasers
Cerberus Capital Management LP was the biggest buyer of distressed real estate debt in Europe through the first nine months of the year, closing eight deals with an original face value of 7.69 billion euros ($8.6 billion), according to Cushman & Wakefield Inc.
Sales of soured real estate debt and foreclosed assets totaled 44.6 billion euros in the period, a 23 percent drop from a year earlier, the New York-based broker said in a report published Tuesday. Lenders and funds had 531 billion euros of real estate exposure before impairments as of the third quarter, a drop of about 10 percent from July last year, it estimated.
A venture between Deutsche Bank AG and Apollo Global Management LLC was the second-biggest buyer with 6.27 billion euros, followed by Lone Star Group with 5.28 billion euros.
“We expect to see more transactions in Spain, Italy and the Netherlands as these are the countries where banks still have a great deal of exposure that needs to be wound down,” Federico Montero, head of loan sales for Cushman & Wakefield’s EMEA corporate finance group, said by telephone. An estimated 92.7 billion euros of planned and active sales "will boost activity by the end of the year."
European banks are selling real estate loan books and properties as they repair balance sheets damaged when values crashed and borrowers defaulted during the financial crisis. While Spain and the U.K. remain the countries with the most bad-loan risk, the amount is falling in Britain while rising slightly in Spain. Bad debt in Italy climbed by 81 percent to 67 billion euros over the last 12 months amid delays in creating a mechanism to sell it off.
Cerberus has also been making big bets on U.S. real estate, spending billions of dollars on modified home loans and buying more than 4,000 single-family houses to become one of the nation’s top landlords. It’s working with Morgan Stanley on a bid for the $18.2 billion Granite portfolio of mortgage-backed bonds being offered by a U.K. government unit holding assets of the country’s failed lenders, Bloomberg News reported Oct. 2 citing people familiar with the matter.
Most of the loans sold in the first nine month were in the U.K. and Ireland, led by Royal Bank of Scotland Group Plc, Cushman said. The Edinburgh-based lender disposed of 5.72 billion euros of loans, including a portfolio of 2.6 billion euros from Irish unit Ulster Bank.
There are 54 billion euros of loans currently on the market, more than twice the level of last year, according to the report. Spain tops the list of sellers, with 16 deals valued at 8.9 billion euros on the market. Planned sales for the last quarter and the first quarter of 2016 total 38.9 billion euros.