European banks aim to sell €74bn of real estate debt

European banks and asset managers are seeking to sell €74 billion of real estate debt and foreclosed assets, the most ever, as they trim their soured loan books.

Vendors sold €23.5 billion of property loans in the first half, 42 per cent less than a year earlier, New York-based broker Cushman and Wakefield said in a report on Monday.

"Behind the scenes there has been a flurry of preparation work as key vendors line-up 'mega deals' for the second half of the year," Frank Nickel, a partner at the broker, said in the report.

“Investors will have plenty of distressed opportunities before the year is out.”

Bad banks

Debt sales will be driven by Nama and UK lenders, according to the report.

Italy

,

Romania

and

Poland

will probably set up bad banks to help sell off soured property loans because others around

Europe

have proven successful and investor demand remains high, Cushman and Wakefield said.

Asset management agencies such as Nama and Spain’s Sareb hold commercial real estate loans, residential mortgages and foreclosed properties with a face value of about €233 billion, the report showed. The assets are now worth about €144 billion after loss provisions, Cushman estimates.

UK Asset Resolution Ltd, formed out of collapsed lenders Bradford and Bingley Plc and Northern Rock Plc, plans to sell £13 billion of mortgage loans this year.

Portfo

Nama is offering Project Arrow, a €7.2 billion portfolio of loans in

Ireland

and the UK, the report said.

Private-equity firm Cerberus Capital Management bought €5.7 billion of assets in the first half, more than any other investor, Cushman and Wakefield said.

A venture between Deutsche Bank AG and Apollo Global Management LLC was the second biggest purchaser, acquiring €3.2 billion of loans and defaulted real estate.

China may be the next target for opportunistic investors such as Cerberus once loan sales in Europe slow, according to Cushman and Wakefield. – (Bloomberg)