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Record-breaking year for European real estate loan sales as 2014 volumes pass €80 billion mark

Cushman & Wakefield’s EMEA Corporate Finance team has recorded a staggering €80.6 billion of closed European commercial real estate (CRE) and real estate owned (REO) transactions in 2014 – more than two-and-a-half times the volume recorded in 2013.

With both investors and vendors eager to meet their annual targets, the European CRE loan and REO market was a hive of activity in the final quarter of last year: over €23.9 billion of transactions completed during this period.

To put a record-breaking 2014 in perspective, this represented growth of 156 percent on the volume for 2013 and an increase of over €26 billion on the totals for 2012 and 2013 combined.

According to information revealed in the latest European Loan Sales Market report, an array of geologically named projects from IBRC dominated the start of 2014, while volumes in Q4 2014 were boosted by UK lenders which together accounted for 59 percent of all sales by face value.

The largest of these deals saw Cerberus acquire the €5.6 billion Project Aran, an upsized Irish and UK real estate loan portfolio sold by RBS which is looking to accelerate its disposal of its legacy Ulster Bank loan book. A partnership between CarVal Investors and Goldman Sachs also won several processes, together buying around €3 billion of Irish CRE loans from Lloyds Banking Group and IBRC. Although not the largest transaction, Cerberus also bought the €970 million Project Mermaid from the Danish ‘bad bank’ Finansiel Stabilitet, highlighting how activity has spread throughout Europe.

Although it is anticipated that it will be difficult for 2015 to reach the €80 billion mark, there have been early signs in the first few weeks of January that investors remain hungry for distressed European assets. Cushman & Wakefield’s EMEA Corporate Finance team has already recorded €2.7 billion of closed sales with approximately a third attributed to NAMA, affirming its intentions for the year of an accelerated wind-down. With IBRC disposing of almost a quarter of the 2014 total, 2015 will be dependent on the activity of the likes of NAMA and SAREB to feed the demand for European opportunities. €60-€70 billion of closed CRE loan and REO transactions are forecast in Europe for 2015, according to the report.

Cerberus tops the report’s Investor League Table 2014, acquiring over €17 billion of European CRE loans and REOs

As in 2013, Cerberus led the flock of investors chasing European CRE loan and REO opportunities, finishing 2014 with a flourish of activity to gain the top spot. In fact, the US private equity firm closed six deals in the final three months to account for 41 percent of the volume transacted in Q4 2014 and almost 22 percent of the annual total. Not too far behind with a further 20 percent was Lone Star, which dominated the Irish headlines at the start of year with several IBRC purchases and led the league table for the majority of the year.

Federico Montero, Cushman & Wakefield’s Head of Loan Sales, EMEA Corporate Finance, said: “All records were broken in 2014. The €80.6 billion of loan sales recorded highlights the full extent of the troubled assets European lenders have had to deal with since the crash. It also illustrates the vast amount of US capital still hungry for distressed opportunities in Europe.

“As in previous years, the UK and Ireland took centre stage in 2014 with both markets recording staggering volumes of closed transactions. However, 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.”

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