German non-performing loan portfolio goes up for sale

DebtX, the US-based online seller of the €94m package of non-performing loans, says the UK and Spain will be the next countries to see non-performing loans sales. DebtX is also selling a smaller €14m NPL portfolio backed by assets in eastern Germany.

DebtX, a Boston-based online marketplace for loans, has said it will sell a €94 million portfolio of non-performing loans backed by real estate in Germany next month.

The company said it would also sell a smaller €14 million portfolio of non-performing loans backed by residential assets in the former Eastern region of Germany. The larger German portfolio includes a loan against a property once used as a barracks by the Russian army.

The sale comes amid an avalanche of interest in distressed assets with many opportunity funds and some mainstream private equity firms eyeing opportunities. Sources at one large New York-based private equity firm told PERE recently it had been an active bidder on non-performing loans backed by property in Germany.

Despite the interest in the country, DebtX founder and chief executive Kingsley Greenland suggested the UK and Spain would present the greatest opportunity over coming months. “Sales are being teed up in the UK and Spain for the second half of the year and 2010,” he said, adding that his firm knew of a loan portfolio being sold by a Spanish bank involving coastal residential developments.

Greenland also confirmed that commercial banks in both Europe and in the US had not been selling loans in the quantities initially expected in the aftermath of the credit crunch. This is because of plans by governments to assist banks with problem assets and because bid-ask spreads remain wide. 

He said: “We are seeing significantly more sales of non-performing loans, but the amount that is stacking up that isn’t being sold is many times larger.”

Mainstream private equity firms that are real estate related are among those with equity wanting to buy these loans, he observed, with “numerous firms” being launched adding to the liquidity in the market.

Today, bids were due on a $311 million portfolio of mainly commercial performing and non performing loans being sold on behalf of the Federal Deposits Insurance Corporation – the independent agency of the US government that protects the public against loss of savings and deposits – as receiver for a failed bank.