The boom years saw huge amounts of real estate-related debt pumped into the market with CMBS transactions providing an efficient exit for the banks, freeing up their balance sheets to allow yet more origination.
Over the past five years however, the sector has faced a series of potentially devastating blows: the sub-prime crisis, the European and US ‘credit-crunch’, the subsequent collapse of Lehman Brothers, the part-nationalisation of various European banks, the continuing Euro crisis and the struggle to get Western economies growing again. Many of the real estate-related loans became distressed and the market was left with a legacy of falling property values, out-of-the-money swaps and debt that could not be refinanced.
Yet, as we find ourselves moving into 2013, real estate remains an attractive and fundamental asset class to finance in the key cities of Europe, the US and Asia. This report seeks to explore the reshaping of the sector and how it has survived these blows.