Cerberus Capital Management sees 5 more years of buying loans

The biggest buyer of soured real-estate debt in Europe says disposals of non-performing loans from across the continent’s banks and governments will continue until at least 2021.

Cerberus Capital Management, which acquired more bad loans in Europe than any of its peers in the past two years, expects the market to remain busy, said John Snow, the private equity company’s chairman and former US treasury secretary for President George W Bush.

The US private equity firm purchased €28bn of the debt last year.

Those purchases included mortgages from failed UK lender Northern Rock sold by the UK government, according to Cushman & Wakefield.

Cerberus has been very active here buying bank debt from Nama and other distressed loans from private Irish banks.

“I expect that the opportunity to buy European NPLs will last at least another five years,” said Mr Snow.

“In US baseball terms, we are still in the early innings,” he said.

Europe’s banks have been shedding assets since the financial crisis as declining trading revenues and pressure from regulators to shore up balance sheets prompted lenders to restructure and reduce their operations.

Cerberus is best known here for its purchase of the Project Eagle group of loans secured on properties in the North and in Britain for around €1.6bn, in an auction by Nama in April 2014.

The case raised a furore after Independent TD Mick Wallace claimed in the Dáil that monies in the Isle of Man had been earmarked for local fixers and politicians in Belfast involved in the deal.

The UK’s National Crime Agency launched an investigation into the case last summer, and the Oireachtas Public Accounts Committee and the Stormont Finance Committee have held hearings on the matter.

Cerberus and its legal advisers in the Project Eagle loans acquisition have said they have done no wrong.

Nama has said that the auction process was robust and competitive and secured the best outcome for the Irish taxpayer.

Loan disposals across Europe by banks have grown every year since 2010, attracting interest from US investment firms, including Lone Star Funds, Apollo Global Management, and Oaktree Capital Group.

Sales of soured real estate debt and foreclosed assets totaled a record €85.9bn in 2015, according to Cushman & Wakefield.

While the pace of disposals slowed in the first quarter of this year, the New York-based company estimates as much as €80bn of sales by the end of 2016.


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