Since the global financial crisis, the European commercial real estate (CRE) lending market has been a story of shifting sands, with banks retreating from lending against CRE and debt funds rushing to fill the void. Nevertheless, despite this apparent shift, banks have continued to play a pivotal role by indirectly financing CRE, and providing debt to these alternate lenders in the form of loan-on-loan facilities and repo lines.
Today, the market is on the cusp of a paradigm shift, thanks to Starz Real Estate’s recent closure of Europe’s maiden CRE collateralised loan obligation (CLO), a capital markets instrument created by the securitisation of loans secured by CRE. In other words, funds raised in the capital markets will finance CRE in lieu of banks.
