AEW research shows €93b European real estate debt funding gap

There is an estimated €93 billion ($101 billion) European real estate debt funding gap (DFG), representing the shortfall between the original amount of secured commercial real estate (CRE) debt originated in 2018 to 2021 and the amount available for refinance at the loan maturity in 2023 to 2026 across all four property sectors in France, Germany, Italy, Netherlands, Spain and the United Kingdom, according to AEW.

“While commercial real estate lending shows signs of stabilizing, the significant increase in all-in interest rates has made debt less attractive for the majority of leveraged equity investors, while equity investors have paused for thought until prices and valuations settle,” said Hans Vrensen, managing director, head of research and strategy – Europe, at AEW. “Declining collateral values and lower LTVs in a higher-interest-rate environment are likely to trigger significant refinancing challenges, illustrated through our expanded analysis which shows an