Secondary sales of commercial real estate loan portfolios throughout Europe are starting to increase in scale, with €1.2bn in sales since last summer recorded by C&W Corporate Finance, while quarterly new NPL sales slipped 49% to €12.2bn in the three months to Q1 2015.
The largest deals comprised Cerberus’ acquisition of Permanent TSB’s €3.5bn residential Capital Home Loans and servicing platform. Permanent TSB, the sole Irish bank to fail last October ECB AQR stress tests, also sold the €1.5bn Projects Munster and Leinster to Apollo Global Management and Deutsche Bank’s joint venture for around €800m.
With fewer mega-deals completed in Q1 2015, the top five investors accounted for 69% of the closed sales volume in the first quarter, according to C&W Corporate Finance.
Despite lower closed volumes in the UK and Ireland, the two countries continue to lead the way, together accounting for almost two thirds of closed transactions in Q1 2015. Activity continues to spread across Europe with Italy recording over €1bn of closed transactions in the first three months of the year; to put this into perspective, this is over 2.5x the volume witnessed in the entirety of 2014.
C&W Corporate Finance said that despite the relatively quiet start to the year, volumes in the second half of 2015 will be boosted by the €49.2bn pipeline of live and planned sales, with NAMA and the Italian banks set to be key vendors.
The team has forecasts loan sales up to €70bn for the year, compared to circa €82bn in 2014.
Since last summer, Lone Star has been the notable consistent seller of acquired loans, including: Project Woodstock to Oaktree Capital Management, which was part of the European UK Project Acorn portfolio; Ocean Portfolio and Fradley Park to Legal & General Investment Management; and the €350m Dublin office portfolio to Starwood REIT.
Cushman & Wakefield’s head of EMEA loan sales, Federico Montero, said: “Although completed transaction volumes are slightly down on those recorded for 2014, there are plenty of large transactions being prepared for the market which will boost activity in the second half of the year and catch the eyes of awaiting investors.
“As predicted, we have already seen a noticeable uplift in the number of sales coming from Italy, which was the third most active European country in the first quarter.”
Frank Nickel, executive chairman of Cushman & Wakefield’s EMEA Corporate Finance group, said: “Vendors in the UK and Ireland have undoubtedly led the way in the deleveraging cycle since the crash of the market, setting an example to banks and asset management agencies throughout Europe and even globally.
“As many now approach the completion of their workout strategies, the likes of Spain and Italy have the opportunity to step up to the plate and grab the attention of a wealth of investor interest flooding in from the US.”