As we approach the final quarter of the year, it is clear that during the course of 2012 the CRE industry has really begun to find its feet and take some significant steps towards counteracting the excesses of the past. Indeed last week saw the long awaited completion of the restructuring of Opera Finance (Uni-Invest) CMBS thus heralding in a new era for the restructuring of CMBS. Meanwhile Deutsche Bank is set to bring Europe’s first CMBS agency deal since 2007 to market (a circa €650m to €700m German multi-family CMBS). Given that agency deals such as this have been seen by many as one of the solutions for the refinancing void market participants will be keen to see this price well.

However, what 2012 is really likely to be credited with is the emergence of an active and dynamic non performing loan (NPL) market. Off the back of the closure of Project Royal and Isobel in December last year, 2012 has seen a number of significant portfolio transactions take place including Lloyd’s Project Prince (€360m) and Project Harrogate (£625m) and Deutsche Bundesbank’s disposal of its entire interest in the CRE CDO, Excalibur Funding No.1 PLC and there are currently other deals on the cards to end the year such as Anglo Irish’s Project Pivot (£383m) and Project Kildare (€645m). Whilst portfolio sales are integral in providing a mechanism through which the European Banks will be able to delever they also provide a tremendous opportunity for value, thus Europe has recently seen a marked increase in the formation and expansion of funds that are looking to invest and capitalise on the new opportunities presented by NPL’s.

In view of the significant importance of the NPL market, it is fitting that this evening, the 5th September, CREFC are holding an after work seminar on NPL’s at the London offices of Reed Smith which will give leading market participants an invaluable opportunity to discuss and consider this important and growing NPL market. Given the relative infancy of the European NPL market, it is clearly in an exciting place at the moment and as it continues to mature, it will be fascinating to see how it evolves, the structure and financing techniques employed and ultimately the impact that this will have on the CRE finance sector as a whole.