European Distressed Debt Pursued

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.