European banks have a €462bn (£390bn) exposure to non-core real estate, a fall of 6.3% since the end of 2015, according to Evercore’s first European Distressed Real Estate Market report.
The volume of non-core assets that need to be deleveraged at the 59 banks Evercore reviewed has fallen by 32.1% since the end of 2013.
Banks are increasing the amount of capital provision held against their non-core loans, the report said, as banks’ implied coverage ratio rose from 44.8% at the end of 2014 to 48.1% in June.
The report was the first by NPL specialist Federico Montero, managing director of Evercore, since he moved to the boutique investment adviser from Cushman & Wakefield in July.
Spain accounted for 41% of the European total with more than €189bn tied up in non-core real estate and is in the process of selling €13bn of it.
By contrast, the UK and Ireland have seen a fall of €146bn or 56% of their exposure since 2013.
The report suggested that UK banks could sell off 41% of their distressed portfolio “in the foreseeable future” with €26.8bn in live or planned sales.
Lone Star and JP Morgan were the most active buyers in Europe, having bought a €5.2bn distressed portfolio from Dutch bad bank Propertize in June.
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