S&P: Insurance Firms Filling Euro CRE Funding Gap
European insurance companies and funds are increasingly filling the commercial real estate (CRE) lending gap that was left by banks. However, these firms might not be able to pick up all the slack, according to a short note this morning from Standard & Poor's.
The rating agency cited AXA Real Estate's announcement that it bought an €800 million CRE portfolio from Societe Generale. S&P had said that AXA is planning to increase its senior lending capacity to €7 billion ($9.05 billion) by yearend.
In a Sept 13 Credit Suisse report, analysts cited an article from CoStar News reporting that on April 5 Lone Star bought the nominally valued €200 million nonperforming loan (NPL) portfolio from SocGen, which was supposedly sold at a roughly 30% discount. This puts the price Lone Star paid at around €116 million.
Credit Suisse mentioned that since the NPL was first marketed, the portfolio has shrunk significantly from its original €500 million portfolio, although it still comprises a mix of defaulted French and German corporate real estate loans and senior loans.
Lone Star reportedly had to fight the competition for the NPL from Deutsche Bank, Bank of America Merrill Lynch, Starwood Capital and Fortress Investment Group. SocGen had initially wanted to divest a €500 million portfolio in November 2011, but it had reduced the offering after the initial bids were taken.