Work It Out: The Key to Bank Workout Success Is Selecting the Right Investment Management Solution
As major banks across Europe address their balance sheet exposure to commercial real estate, there is a real danger that continuing to “extend and pretend” will create a suboptimal solution for the underlying real estate portfolios involved, impacting tenants and leading to increasing voids. But that scenario can be avoided by a fundamental and innovative restructuring of their investment management plans.
Around €400 billion of commercial real estate debt is scheduled to mature in Europe within the next five years; against this, bank plans for limited new lending and the continued restricted appetite in the capital markets for bond issuance have created a growing “funding gap”. Combined with a time when the outlook for property values remains challenging and when new regulations, such as Basel III, are forcing banks to increase capital ratios, it remains a challenging climate for banks to tackle their multi-jurisdictional and often complex real estate