- November 1, 2010 Vol. 4 No. 10

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Work It Out: The Key to Bank Workout Success Is Selecting the Right Investment Management Solution

by Martyn McCarthy

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

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