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Recent Trends in European CMBS Servicing

As the credit crunch continues, the majority of borrowers under loans held in European commercial mortgage-backed securities (CMBS) transactions face significant challenges in their ability to refinance or sell properties at levels sufficient to repay their loans. In addition, many borrowers have encountered issues in maintaining rent on their properties at a level sufficient to meet their debt service obligations under their loans. As a result, an increasing number of borrowers are defaulting on their European CMBS loans. In such situations, these loans are more frequently becoming specially serviced and are undergoing restructurings or enforcements. This trend is expected to increase significantly over the next three years as up to £150 billion of loans in over 100 CMBS transactions near their maturity dates.

In this article, the authors, who represent special servicers, investors and borrowers in a number of prominent European CMBS transactions, examine some of the emerging trends in these deals.

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