Publications

- January 1, 2016: Vol. 10, Number 01

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The good, the bad and the ugly: The bad bank era comes of age

by James Wallace

Six years on and the “bad bank” industry is less than halfway through expunging legacy commercial real estate loans. Since the trickle of early loan portfolio sales in 2010, the loan sales market in Europe has undergone rapid expansion.

This has been driven by a perfect storm of regulators and governments pressuring banks to deleverage while global private equity funds — the cornerstone buyers — have operated under a different kind of pressure: to put their opportunistic investment capital to work.

It is fair to say that Europe’s real estate loan market has now matured. In the past three years to the end of 2015, the aggregate European real estate loan sale market is estimated at circa €200 billion, according to figures compiled by Cushman & Wakefield’s Corporate Finance team in London.

Annual transaction volume in 2015 was expected to reach €70 billion, a 13 percent year-on-year decline compared to 2014’s €80.6 billion — the high water

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