Up to £600bn of loans made to commercial property borrowers by banks will need to be refinanced within the next two years.
Research from advisory firm, Navigant, has warned of the looming commercial property funding crisis in the UK and Europe.
It says that the institutions previously positioned to make these loans either no longer exist, for example Lehman Brothers, or have tightened their lending criteria.
Many of these loans have been securities in the form of commercial mortgage-backed securities, and temporarily rolled over as banks “delay and pray”.
Navigant predicts that increased delinquency rates, together with ballooning maturities on these loans, will force banks in the UK and Europe to jettison commercial property holdings.
Navigant Capital Markets Advisers director John Lasala said: “Spiking deliquencies, ballooning maturities and increased liquidity requirements of Basel III increase the institutional pressure to exit non-core commercial real estate assets.”
nathan.cross@estatesgazete.com
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