Standard & Poor’s Ratings Services’ research has cast a pall over prospects for commercial real estate growth in many European countries.
The agency said that values would be generally stagnant at best, if not negative, and it did not expect a quick cure for restoring loan-to-value ratios for existing loans.
It also said that bank finance will remain constrained, focusing on relatively less risky assets in support of core franchise clients.
“In our view, these conditions point to a continuation of the long, slow workout of troubled assets in commercial mortgage-backed securities transactions and bank loan books alike.”
S&P has placed on CreditWatch negative its ratings on 240 tranches in 77 European CMBS transactions .
The CreditWatch placements affected around one-third of the European CMBS tranches that it rates. The affected tranches had a principal balance of about €14.67bn for euro transactions and £15.15bn for sterling transactions.
“Of the 240 tranches, the resolution of our CreditWatch placements prompted 126 rating actions as a direct result of the application of our criteria, and 114 due to performance issues. We withdrew our ratings on certain tranches either upon request or due to redemptions,” said the agency.
