Changing of the Guard: The Real Estate Industry Is Facing Up to Transformational Pressures in the Debt Finance Markets
European real estate is in the midst of a generational deleveraging cycle that is less than halfway through, more than five years on from the onset of the global financial crisis. There are different ways to frame the refinancing challenge that lies ahead for Europe’s real estate debt markets. The most common is to characterise the difference between the total outstanding debt securing European real estate, estimated by Morgan Stanley back in March at €2.4 trillion, and the total estimated available new property lending.
Estimates of both outstanding debt and new lending are imperfect. Banks across Europe do not make the maturity profile of their real estate loan books public, so perfect sight only exists for the publicly-traded CMBS component of the “refinancing wall”. It is similarly difficult to calculate how much debt capital will be available in any given year or longer time period. Furthermore, analysing the difference between the two requires assumptio