European Banks Sold $91 Billion of Property Assets in ’14

European banks and asset managers in 2014 sold real estate loans and defaulted properties with a face value of a record 80.6 billion euros ($91 billion), Cushman & Wakefield Inc. said.

The increase in deals, 26 billion euros more than the previous two years combined, came as U.S. funds including Cerberus and Lone Star Funds sought to acquire more European assets, the New York-based broker said in a report today. Transactions will reach 60 billion euros to 70 billion euros this year, Cushman estimates. 

The volume of “loan sales recorded highlights the full extent of the troubled assets European lenders have had to deal with since the crash,” said Federico Montero, Cushman & Wakefield’s head of European loan sales. “It also illustrates the vast amount of U.S. capital still hungry for distressed opportunities in Europe.” 

The region’s banks and asset managers are selling real estate loans and properties as they repair balance sheets damaged during the financial crisis. Europe’s main banks hold 236.5 billion euros of soured loans and assets linked to non-residential real estate, the European Central Bank said in October. 

U.S. investors acquired 77 percent of all of the loans and foreclosed properties by face value sold last year, up from 67 percent in 2013.

Biggest Buyer 

Cerberus bought 17.7 billion euros of assets, almost 22 percent of the total and more than any other investor, Cushman & Wakefield said. Lone Star Funds bought 16.1 billion euros of loans and defaulted real estate and Blackstone ranked third with 8.7 billion euros. 

The former Anglo Irish Bank Corp. and National Asset Management Agency, Ireland’s bad bank, sold 18.7 billion euros and 10.1 billion euros of assets respectively, making them the largest sellers, Cushman & Wakefield said. NAMA’s deals included joint transactions with other vendors. Royal Bank of Scotland Plc. was the third-largest vendor with 9.6 billion euros, including joint sales.

About 21.7 billion euros of property assets is currently being offered for sale by Europe’s lenders and asset managers, Cushman & Wakefield said. More foreclosed properties will be sold this year, particularly in Italy, because rising values will allow lenders to sell them at a higher price, the broker forecast. 

“With activity levels from key vendors such as Lloyds and RBS expected to slow in 2015, lenders in southern and eastern Europe may have a gap to bring more product to the market,” Montero said.

Source: Bloomberg