EURO PROPERTY FINANCE


IN ORDER TO BORROW MORE TO FUND NEW DEALS, VEHICLES MUST SHED THEIR OLD BANK DEBT. CAN NON-BANK DEBT SOURCES COME TO THE RESCUE?


BY PAUL STROHM


We all borrowed too much in the boom years – on a personal, corporate and national level. And the property sector in particular has been keenly aware that reducing leverage is essential to good financial performance, or even survival. Leverage is the main reason why investment


vehicles have been underperforming over the past decade, according to research published by property education and research body the Urban Land Institute (ULI). In some cases,


returns are reduced by as much as 13.2% per annum for a 60%-leveraged opportunity fund. “The performance of property funds over


the past decade is a complex picture, with returns affected by a range of factors, including fund vintage, style and structure. However, the asymmetric effect of leverage, horribly damaging in the downswing, has had a huge impact on investor returns, and the value that has been created by intelligent asset management has in many cases


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