CFI: News review

Ireland has largest funding gap says report

by

Ray Clancy,

editor, Propertywire. com

Banks may face a €156 bil- lion shortfall in funds needed to refinance commercial real estate debt in the next two years. about €480 billion of prop-

erty loans will mature by the end of 2011, according to re- search by the London-based broker dtZ. it warns that banks won’t

be able to refinance all of the debt, particularly when loans exceed the value of the prop- erties backing them. Lenders

are originating far fewer loans than the market wants, pend- ing more shake-outs in their mortgage books, even as calm returns to commercial real es- tate pricing across europe, it also says. Larger markets with higher absolute levels of outstand- ing debt have higher funding gaps than smaller markets. more than half, 56%, of the shortfall will occur in the uK and Spain, while France, germany, italy and ireland account for a further 28%, its report says. and in terms of relative

exposures to overall stock invested, the report esti- mated ireland has europe’s largest debt funding gap,

Lowry

Capital

“ IRELAND HAS EUROPE’S

LARGEST DEBT FUNDING GAP, AT 10% COMPARED WITH 7% AND 8% IN THE UK AND SPAIN RESPECTIVELY”

TM

Bridging Finance

at 10%, compared with 7% and 8% in the uK and Spain respectively.

germany and France have more modest relative debt funding gaps at 2 and 3% respectively. Based on a separate analy-

sis, dtZ estimates there to be €58 billion of equity available to target direct real estate in- vestment in europe in each of the next two years. it says that this €116 bil-

lion war chest is sufficient to finance the european debt funding gap, but many op- portunity driven debt inves- tors can only meet high total return requirements if banks sell loans at significant dis- counts to par.

in contrast,

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