Investors in the UK and Germany may need to come up with €39 billion over the next few years to plug the real estate debt funding gap created by the COVID-19 crisis.

Although both countries have experienced moderate pre-COVID-19 loan-to-value (LTV) levels compared to the global financial crisis (GFC), AEW has said that capital value declines, combined with more conservative lending, will lead to refinancing problems. The manager has calculated that the UK and Germany will have debt funding gaps of £30 billion (€33 billion) and €47 billion, respectively, over 2020–2023. Should lenders and investors adopt a similar approach to bridging the post-GFC gap — with a combination of discounted sales of nonperforming loan portfolios and loan write-downs, as well as equity top ups from investors — then AEW believes investors in both countries will need to spend heavily between 2020 and 2027 to protect their debt-funded investments.

However, in a report on refinancing