Banks in Europe will try to unload roughly 15 billion euros ($20 billion) of loans secured by commercial real estate in Europe through 2012 as they comply with tighter capital regulations, according to Situs Companies, a debt advisor.
British, German, Irish and Spanish banks likely will be the most active sellers of CRE loans, particularly those tied to peripheral markets, Situs said in a statement. The Houston-based company has acted as an advisor on distressed loans in Europe, including sales by Credit Suisse AG from 2008 to 2010.
According to Bloomberg, European lenders are starting to search for buyers for commercial-property-backed loans on their books. The Bundesbank, Germany's central bank, has hired AgFe to help sell more than 4 billion euros of loans used as collateral by Lehman Brothers in 2008.
Lloyds Banking Group PLC is looking for a buyer for 1 billion pounds ($1.6 billion) of U.K. commercial property loans.
(Some of these foreign banks have suffered large losses on their U.S. subprime residential investments.)
"Time constraints and pressure to deleverage will be the key drivers of loan sales," Hugo Raworth, a director in Europe for Situs, said in the statement.
Some commercial property loans have been sold for less than 20% of their face value, he estimated. Most buyers will likely be hedge funds, buyout firms and other specialist investors.