Thank you for sharing!

Your article was successfully shared with the contacts you provided.

Allan Saunderson is managing editor of Property Finance Europe and a contributor to GlobeSt.com.

LONDON-The banking crisis has opened up interesting opportunities for investors to buy distressed debt, says Paul Severs, finance partner at London law firm Berwin Leighton Paisner.

He told a panel at the European Real Estate Opportunity Private Fund Investing Forum in London last week however that investors need to be cautious and consider wider issues, including possible government intervention in the marketplace. Because of the still-limited condition of bank financing, the unwillingness of Pfandbrief-financed German banks to lend over 60% loan-to-value, and conservative lending ratios of non-German institutions, mezzanine financing – pseudo-equity that funds higher parts of the debt structure – is coming to the fore.

“It is still a minefield out there. Investments and investment structures are being constantly tested by unprecedented market conditions,” Severs said. “We are advising our clients who are buying real estate related debt to consider wider issues such as the likelihood of government intervention in addition to the more obvious factors such as the position in the capital structure, total leverage, real estate yields and lease run-off dates.”

Severs, who chaired a panel entitled Taking Advantage of the Distress: European Debt Fund, added: “The contraction of advance rates by banks has opened up the mezzanine finance area and a number of funds have been launched to cover this space.” Earlier this year the top-rated AAA segment of many securitised capital structures represented good value, he added.

Demand is now growing fast for asset servicers, special servicers and related advisory services to handle complex funding challenges. He has produced a booklet offering practical advice on buying and selling different types of real estate debt. It covers the process for buying large portfolios and outlines documentation for the acquisition of loans or securities.

With over 720 lawyers, including 190 partners, in more than 65 countries around the world, Berwin Leighton Paisner has offices in London, Abu Dhabi, Brussels, Moscow, Paris and Singapore. Clients include FTSE 100 companies and financial institutions, major multinationals, the public sector, entrepreneurial private businesses and individuals.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?


GlobeSt. Multifamily Fall 2022Event

Join the industry's top owners, investors, developers, brokers & financiers at THE MULTIFAMILY EVENT OF THE YEAR!

Get More Information


Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2022 ALM Global, LLC. All Rights Reserved.