Greenfield Partners and Raith Capital Partners are seeking to take advantage of the flood of maturing European debt over the coming five years by establishing a brand new real estate loan servicing platform in London.
Mount Street Capital partners Ravi Joseph and Bill Sexton, along with former European head of loan and special at CBRE, Paul Lloyd, are setting up a brand new joint venture European commercial real estate primary and special loan servicing business for balance sheet and CMBS loans.
The new joint venture partnership will see Lloyd, who left CBRE on Friday three years after joining from Deutsche Bank to set-up the loan servicing team, re-united with Joseph after the pair worked together at Morgan Stanley almost a decade ago.
Joseph was the former head of real estate lending and securitisation at Morgan Stanley until 2004, spearheading the creation of Europe’s first CMBS conduit program, ELOC, while his Mount Street co-partner Sexton was the co-founder of Halverton Real Estate Investment Management, a pan-European real estate fund and asset management business.
Joseph and Sexton worked with Lynn Gilbert at Mount Street, before she joined Renshaw Bay in May. Gilbert remains a non-executive partner of Mount Street.
“Given the scale of bank deleveraging, the opportunity is there for us to build a brand new full service European loan servicing platform, managed by a senior and experienced team, alongside an experienced investor with strong capital backing,” Joseph told CoStar News.
Greenfield owns a majority interest in Clayton Holdings, a major US mortgage loan due diligence servicer, which in turn owns Clayton Euro Risk, a European equivalent operation, as well as Quantum Servicing Corp., a US commercial real estate special servicer, and Green River Capital, the US residential mortgage loan servicer.
European commercial real estate loan servicing is considered a strategic fit with Greenfield and Raith Capital’s other businesses.
There is as much a €1trn in maturing European real estate debt in the next five-years across balance sheet and CMBS loans, according to DTZ Research, which reflects 55% of the total outstanding debt secured against the asset class.
More than €45bn of this European total is CMBS debt, according to Standard & Poor’s, which warned on Tuesday that the European commercial mortgage servicing market will continue to navigate increased operational pressures.
In a report – entitled The Changing Face Of Servicing In The European Commercial Mortgage Market – S&P wrote that the economic climate, the rising tide of loan maturities, together with no recovery among poor secondary and tertiary property values and limited refinancing options, would continue to characterise a difficult environment for servicers.
“Deteriorating market conditions have tended to result in more prolonged and complex workout periods,” wrote S&P.
The ratings agency continued: “The number of special servicers in the European commercial mortgage market has increased in the past two-to-three years, and now includes more participants. We consider that the increased competition is generally positive for the market and is likely to promote improved performance.
“Although our rankings show that servicers are holding their own in difficult times, the European commercial mortgage market is unlikely to improve much in the next few years, in our view, as demand and prices remain depressed and lenders show no sign of re-entering the commercial real estate market.”
S&P forecasts that the trend of two-thirds of the European CMBS loans that it rates will fail to repay by maturity is likely to extend into 2013. Based on the 159 loans scheduled to mature in the next year which S&P rates, this equates to €12bn of the €24bn maturing loan balance.
CoStar Finance 