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December 4, 2009

Lenders advised to focus on commercial mortgage books

by Gill Montia

Story link: Lenders advised to focus on commercial mortgage books

A new report from CB Richard Ellis (CBRE) warns lenders that they should be focusing their attention on the quality of the UK commercial properties against which loans were secured during the last few years.

The study, entitled “UK Commercial Real Estate Debt – a Two-Tier Market”, claims over half of the outstanding debt is due to mature before the end of 2012 and identifies 2006 and 2007 loan “vintages” as containing the biggest debt problems.

According to the commercial real estate advisor, loans in the Poor Quality Property category represent £79 billion or 27% of the total amount of commercial real estate debt outstanding in the UK.

The report also states: “High LTV debt secured on good quality real estate and debt maturing post 2015 were the other two categories that the analysis revealed could contain some problem debt.”

CBRE executive director, Peter Damesick, says: “The amount of current outstanding debt is clearly a significant challenge for lenders.”

The state-supported Royal Bank of Scotland and HBOS were both major lenders in the UK commercial property market prior to the credit crisis.

 

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