FINANCE: This year is set to be the most active on record in terms of debt portfolio trades, according to accountancy giant PwC.
The firm said that the disposal of non-core loans by banks had reached new highs in 2014, with the face value of portfolios traded expected to be between €110bn and €120bn (£86.4bn-
£94.2bn), almost double the €64bn traded in 2013.
Of that volume, at least €50bn is real estate-backed, some €35bn of which is backed by commercial property, said Richard Thompson, chairman of PwC’s European portfolio advisory group.
Thompson said that while much of the activity to date had been in non-performing loans, PwC was seeing an increasing number of transactions involving performing portfolios and expected this trend to continue.
He estimated that the banks had around €3.5trn of lending on their balance sheets, one-third to one-half of which total is real estate-backed.
“This is a significant long-term investment opportunity. Some €500bn of total debt will trade over the next couple of years,” said Thompson.
He added that while buying activity in the sector would be led by the usual suspects of Lone Star, Cerebus, Apollo, and others, there would be new entrants over the coming months and years, including sovereign wealth and other large funds. Thompson said these new entrants were more likely to target performing loan portfolios, however.
In the first nine months of 2014, €67bn of loan portfolios have been traded across Europe, with Ireland leading the way, showing a jump from €2bn in 2013 to €28.5bn so far this year. The increase has been led largely by IBRC portfolio sales of €19bn completing early in the year.
According to PwC’s figures, CRE loan portfolio sales in the UK have reached around €4bn so far this year, compared with €5bn for the whole of 2013. In Germany some €5.5bn of CRE loans have been sold in the year to date, led by Commerzbank’s sale of its €4.4bn Spanish loan portfolio, Project Octopus. This compares with €9bn in 2013.
samantha.mcclary@estatesgazette.com
