KPMG: €32bn of live European loan portfolios up for sale

There is currently more than €32bn in ongoing European loan portfolios transactions, according to KPMG, including as much as €17.5bn in commercial real estate-led transactions.

KPMG logoKPMG, in its annual European Debt Sales report published yesterday afternoon, reports that there are 25 pending CRE-related loan portfolios in the market.

The largest four loan portfolios – projects Swan (€5.5bn), Ruby (€4.0bn), Emerald (€2.1bn) and Porto (€1.0bn) – reflect €12.6bn, or 72% of the visible CRE-related live pipeline (this percentage, and all that follow, is calculated excluding portfolios which the size is unpublished).

In the mid-sized deal segment, between €250m and up to €1bn, there are seven deals together worth €3.4bn, comprised of predominantly CRE in Ireland (2 deals; €1.1bn); Italy (2 deals; €848m); Germany (1 deal; €700m); Portugal (1 deal; €501m); and Romania (1 deal; €287m).

There are a further 10 smaller deals – of up to €250m in size – worth €1.5bn – which are dominated by CRE assets in Spain (4 deals; €592m); Germany (2 deals €477m); and the Netherlands (3 deals; €350m).

In addition, KPMG cites four confidentially-sized CRE portfolios – projects Rembrandt, Isabella, Julieta and an unnamed Generali Dutch CRE and residential loan portfolio.

NAMA and Propertize are substantially the largest sellers: NAMA has three transactions – projects Ruby, Emerald and Lee (€350m)– together amounting to €6.5bn, or 37% of the current visible pipeline; Propertize’s has two deals, Project Swan and Project Triple (€130m) together amount to €5.6bn, or 32% of the current pipeline.

By country, there 12 of the current 25 ongoing CRE-related loan portfolio sales account for €15.3bn of CRE-related loan sales, or 88% of the visible pipeline, from four jurisdictions. This segment is comprised of:

  • Ireland: three deals – projects Ruby, Emerald, Abbey (€700m), together worth €6.8bn, or 39%;
  • Netherlands: four deals –projects Swan, Triple, Hieronymus and the Eurocommerce Loans portfolio, together worth €5.9bn, or 34%;
  • Portugal: two deals – projects Porto and Andorra, together worth €1.5bn, or 9% of current stock; and
  • Germany: three deals – GE Capital’s office loan portfolio, Lone Star’s secured NPL sale and FMS Wertmanagement’s Project Samba, together worth €1.2bn, or 7% of visible stock.

In addition to the €17.5bn in ongoing CRE and CRE-dominant loan portfolios, KPMG has identified a further €12.5bn in corporate, consumer, SME, residential, secured, unsecured and mixed portfolios. A significant minority of this pool of ongoing European loan sales will be backed by CRE assets.

By deal size, there are two deals which are €1bn and above, reflecting €5.2bn, or 42% of the visible stock. In the mid-size range, from €250m up to €1bn, there are 14 deals, together amounting to €6.5bn in loans, or 52%. In the small deal bucket, below €250m, there are six deals together amounting to €889m, or 7%.

In addition, there is one unknown deal size – Intesa Sanpaolo’s Project Towers loan portfolio and platform.

KPMG reported that there was more than over €104bn in closed transactions across 30 European countries in 2015, including €86bn from the UK, Ireland, Italy, and Spain.

KPMG writes: “Intense competition between buyers for portfolios in the UK and Ireland since 2013 has led investors to turn their eyes southward toward the recovering economies of Spain and Italy for acquisitions.

“Spain recorded over €15bn in closed transactions, with Italy just behind with over €13bn in 2015. Notably, both markets have now begun the process of selling real estate owned (REO) and real estate secured debt in larger volumes, which has drawn greater attention from buyers and financiers.

“Countries in Central and Eastern Europe (CEE) continue to mature as loan sale markets, with over 35 transactions brought to market across all asset classes. Notably, Hungary saw its first successful secured loan sale by MKB Bank to Lone Star, and Romania saw the largest successful sale in CEE this year, the €1.2bn Project Tokyo sold by Banca Comerciala Romana (Erste Group) to Deutsche Bank.”

In the UK, over the short to medium term, UKAR plans to dispose of £800m equity release lifetime mortgages, £5.5bn of self-certified mortgages and £22bn of buy-to-let mortgages.

In Ireland, NAMA is on track to complete its wind down two years ahead of its 2020 targeted timeline.  Spain continues to lag behind the UK and Ireland in its deleveraging journey.

KPMG writes: “2015 also saw an increase in the number of portfolios where sales were delayed or withdrawn from market due to high bid-ask spreads.”

However, an improving macroeconomic environment leading to increased real estate values is driving the narrowing of the bid-ask spread, notably for real estate-backed loans.

The Italian government has, to some extent, streamlined bankruptcy proceedings and the foreclosure process, establishing a more creditor-friendly environment which is expected to stimulate NPL sales, suggests KPMG.

In addition, KPMG reports that, in early 2016, the Italian government is due to release a new guarantee scheme on securitised bad loans – the Garanzia Cartolarizzazione Sofferenze (GACS) – with the objective to facilitate the de-risking process of Italian banks.

KPMG writes: “The GACS, which will be released only on rated senior tranches at market price (thus not classified as state aid as defined by the European Commission), is expected to provide Italian banks with an opportunity to dispose of bad loans, reducing the cost of senior notes, and thus further boosting the Italian NPL sale market.

Further afield, many investors are now eying Greece and Cyprus for future deal flow as the domestic banks seek to “revive their banking sectors, address problem loans, and as their banks continue to divest their overseas subsidiaries across CEE,” writes KPMG.

The situation in Greece, of course, remains precarious. Greece’s most recent EU bailout – of €86bn in August 2015 – expires in 2018. Many investors are likely to wait for further certainty of what happens thereafter before deploying capital in the struggling country’s commercial real estate market, whether in equity or debt.

jwallace@costar.co.uk

 CRE Ongoing Loan Portfolios Sales

Vendor  Project  Type  Country  Face value (€m)
Propertize Project Swan CRE + Platform Netherlands  5,500
NAMA Project Ruby CRE + Resi Ireland  4,000
NAMA Project Emerald CRE + Resi Ireland  2,100
Millennium BCP  Project Porto  CRE  Portugal  1,000
GE Capital Germany offices & loans CRE Germany  700
Confidential Project Abbey CRE Ireland  700
Caixa Geral de Depositos  Project Andorra  CRE  Portugal  501
UniCredit/BMPS/Unipol Una Hotels debt CRE Italy  500
NAMA  Project Lee  CRE  Ireland  350
Confidential Project Botticelli CRE + Resi Italy  348
Intesa Sanpaolo  Project Rosemary  CRE + Resi  Romania  287
Lone Star German NPL sale – secured pool CRE Germany  247
FMS Wertmanagement Project Samba CRE + Resi Germany  230
Banco Mare Nostrum Project Neptune CRE Spain  200
Santander Project Formentera CRE Spain  162
Banco Mare Nostrum  Project Stream  CRE  Spain  160
Propertize Project Triple+ CRE Netherlands  130
FMS Wertmanagement  Project Hieronymus  CRE  Netherlands  120
ING Eurocommerce Loans CRE Netherlands  100
Confidential  Project Spring  CRE + Corporate  France  88
BBVA  Project Liceo  CRE  Spain  70
FGH Bank  Project Rembrandt  CRE  Netherlands  Unknown 
ING Group  Project Isabella  CRE  Spain  Unknown 
ING Project Julieta CRE Spain  Unknown 
Generali Dutch property portfolio CRE + Resi Netherlands  Unknown 

 Non-CRE European Ongoing Loan Sales

Vendor  Project  Type  Country  Face value (€m)
General Electric / Credit Agricole / RBS / Prelios Project Compilation Corporate + Consumer Italy  4,200
Veneto Banca Italian NPL portfolio Unknown Italy  1,000
Grupo Cooperativo Cajamar  Project Baracoa  Corporate  Spain  800
Nova Ljubljanska Banka  Project Pine Corporate Slovenia  800
Santander Project Mamut Resi + SME Spain  800
Heta Asset Resolution Project Friuli Corporate/SME + Platform Italy  700
Iccrea Bancalmpresa Mixed Secured / Unsecured Secured + Unsecured Italy  500
Eurobank Bancpost and Retail Corporate + Consumer Romania  500
Confidential Project Root Unsecured Portugal  440
Nova KBM Slovenian NPL portfolio SME + Retail Slovenia  420
Aegon Project Otto Resi + platform Hungary 360
Confidential Project Venus Consumer Italy  309
RBS  Project Detroit  Resi  UK  300
Santander Unknown Secured + Unsecured Portugal  280
Lloyds Banking Group Project Twickenham Other Spain  276
CIB  Project Helena Corporate + SME Hungary  237
Privredna Banka Zagreb RE and Corporate NPL Resi + Corporate Croatia  200
Cassa Centropadana NPL portfolio Secured + Unsecured Italy  170
Snoras  Project Marble Resi + Corporate Russia  140
Credit Agricole  Project Olympus  Consumer + Platform  Greece  86
Confidential Project Light Secured Portugal  56
Intesa Sanpaolo Project Towers Platform Italy  Unknown

About CoStar News

Finance Editor, CoStar News
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