AEW study reveals extent of crisis-driven debt gaps in 2021

The disposal of distressed assets could become a feature of the real estate market in the remainder of 2021 as the crisis takes its toll on the values of some properties, according to Dennis Schoenmaker, associate director research and strategy at AEW.

Talking to Real Asset Insight’s Richard Betts, Schoenmaker explained that AEW has quantified the debt funding gap in a research study undertaken in conjunction with Dr Nicole Lux of The Business School, formerly Cass Business School.
He said that the debt gap occurs when refinancing a loan following a fall in capital value and adverse change in LTV. “If it can’t be covered by the loan offered today then there is a debt funding gap,” he said.

The study has quantified and contrasted the situation in the UK and Germany and the UK total debt gap is an estimated £30 billion. Schoenmaker referred to a recent announcement that NatWest bank is marketing a non-performing loan portfolio. “We can already see the effects of the crisis in these distressed opportunities that will come to the market,” he said.

Click on the video above to watch the full interview or listen to the podcast below.