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Buoyant property opens up new growth routes

June 1, 2014

Scott Reid

A RESURGENT property market has triggered a surge in demand for smaller debt portfolios and opened up fresh routes to growth capital, according to legal experts.The market has been dominated by a string of major deals, where large funds have acquired huge property and debt loan books from institutional investors. Now that demand appears to be filtering down to much smaller assets.With a surge in the number of sub-GBP100 million deals going on to the market, a "major opportunity" for investors has been created.Jamie McIntosh, a partner in the corporate restructuring practice of law firm HBJ Gateley, said demand was being driven by increased appetite for commercial loans and assets, prompting lenders to negotiate the sale of non-performing property loans to specialist asset managers."There is a lot of activity now at the secondary level," he noted. "Some of these assets are not as high profile but the people buying them can sweat the assets and, percentage wise, actually end up making higher returns."Lenders have provisioned for these liabilities on their books over a number of years, and there's now a tipping point in values which means they can look seriously at disposals to free up capital for other lending."He added: "Investors in Scotland can theoretically have their pick of billions of pounds worth of property assets, and for as long as the market continues to pick up then the returns will be there to encourage more of this kind of activity over the coming months."He pointed to a mixture of assets, including retail schemes with occupiers in place, industrial properties and developments. While an overheating residential market in some areas has prompted fears of a property bubble, McIntosh played down concerns that may be replicated with commercial assets."I don't see that happening as we are starting from such a low base," he said.Many of the portfolios acquired in 2008 are now being broken up into smaller lots, McIntosh added.

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Source: Scotland on Sunday

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