A leading finance group is seeing a surge in business from the distressed property sector, where more and more property owners need help in re-financing their loans.
Rynda Property Investors told OPP this week that “the size of the distressed real estate problem in Europe, estimated to be in the region of half a trillion Euros of loans requiring refinancing over the next four years, means there are many opportunities available for real estate investment specialists.”
Rynda is now focusing hard on overseas property “debt recovery and distressed assets” and is “working with banks and special servicers of CMBS structures to provide practical services and advice.”
The company says that it get called in when “confidence in the original sponsor has been lost,” and that it tends to take “one of three positions:
· It becomes the sponsor and owner of the portfolio;
· It becomes the adviser; or
· It replaces the existing sponsor.
Rynda CEO Michael Walton told OPP that the firm were “awarded two large European mandates to manage portfolios of housing loans requiring asset management and liquidation” in the second half of last year.
According to Walton, “there has been much speculation that most distressed real estate loans are secured on secondary and tertiary assets, with banks liberally extending in the hope that there will be some sort of recovery.”
But, with €500 billion of loans needing refinancing by 2014, the equivalent of €17 billion per week, Walton believes that “the banks current extend and pretend approach will only work until the European Banking Association equity core ratios come into effect.”
He thinks that there is still plenty of equity available though, but it tends to be concentrated in areas where there is the most market liquidity.
“The big issues are the secondary and tertiary assets – that plus the massive lack of debt,” Walton told OPP. “New lender entrants to the market are insignificant in comparison to the withdrawals from the big players. Because there is so little debt, the returns from the secondary and tertiary assets can’t be achieved, so there are downside risks in achievable prices.”
Rynda Property Investors LLP is an independent real estate investment and asset / property manager. With offices in London, Paris, Lille, Frankfurt and Rotterdam, Rynda is 100% owned by its management team. It has 31 full-time staff and was founded in September 2005 by Michael Walton, who has more than 25 years of industry experience.