The European banking sector will present one of the best opportunities for future deals in the region as financial institutions start dealing with the troubled real estate loans on their balance sheets, according to Morgan Stanley Real Estate Investing’s Olivier de Poulpiquet.
The head of Europe, Middle East and Africa, de Poulpiquet said the firm was eyeing three main areas for new deals, including sale-leasebacks and using trading partners to source off-market deals. Earlier this month, MSREI closed its latest opportunity fund, MSREF VII Global, on $4.7 billion
In an interview in the June issue of PERE magazine, de Poulpiquet said MSREI was also looking at the banking sector, which is sitting on huge portfolios of commercial real estate loans.
During a wide-ranging interview with MSREI's senior executives, de Poulpiquet stressed: “We are not going to rush to make investments. We will make the right investments for our investors and we will take our time.”
De Poulpiquet rejoined MSREI in April 2010, after six years at Pirelli Real Estate as chief investment officer. He was previously at MSREI Europe between 1996 and 2004.
In March, real estate consultant DTZ warned there were more than €482 billion of commercial mortgages due for refinancing in Europe between now and 2012, with the region expected to face a debt funding shortfall of up to €156 billion. Roughly €116 billion of new equity is expected to be available for investment in European property, however when combined with available debt it still does not cover the amount of capital needed to refinance all loans. That situation could be resolved within two to four years, the firm said in its DTZ Insight: European debt funding gap report.
MSREI has invested just 6 percent of MSREF VII Global, with the firm expected to focus on debt investing in the immediate future.
“Everything we are doing today starts with debt,” MSREI head of Americas and global head of debt John Klopp said during the same interview with PERE. “Virtually everything we are doing is debt related in one way or another, that’s just the shape of the world today,” he said.