(The following statement was released by the rating agency)
Dec 20 - With some notable exceptions, a common theme has played out in European Commercial Real Estate (CRE) in recent years: Reduced capital values and economic weakness have undermined CRE loan performance across Europe, breaching covenants and pushing other loans into default. To address investor questions on our view on the 2013 outlook for CRE, Standard & Poor's Ratings Services has published a Credit FAQ titled "2013: Another Year Of Managing The Legacy Of The European Commercial Real Estate Boom."
In this Credit FAQ, we address the following questions:
-- What does Standard & Poor's consider to be the key messages for the commercial real estate sector for 2013?
-- How far have European CRE market prices fallen since mid-2007?
-- Does Standard & Poor's consider that capital values are now fully deflated, or is there scope for further falls in 2013?
-- Which are the most relevant CRE markets in Europe for ratings?
-- What does Standard & Poor's believe is driving European CRE defaults?
-- How big is the CMBS refinancing problem?
-- The U.S. CMBS market has seen the return of significant volumes of new issuance. Why hasn't this occurred in Europe?
-- How representative are CMBS portfolios of bank CRE loan books?
-- Will other systems have to create further "bad banks" to relieve the burden of nonperforming CRE?
-- Will there be a glut of supply from deleveraging banks, unwinding CMBS deals, and other forced sellers?
-- Where and on what terms is new bank finance available for CRE lending?
-- Will insurance companies step in to fill the debt financing gap?
-- Why have the credit profiles of the rated European property companies and REITs remained resilient, despite the downturn?
-- Does Standard & Poor's consider CRE exposures to be an important rating driver for European banks through 2013?