* Non-prime EMEA CMBS at greater risk of downgrades-Moody's
* Availability of financing to remain weak for next two yrs
* Concern of double dip in commercial property values
By Daryl Loo
LONDON, Feb 3 Commercial mortgage-backed
securities (CMBS) for non-prime properties in EMEA, especially
the UK, are at higher risks of downgrades this year as weak
credit conditions drag on longer than expected, Moody's said.
CMBS secured by poorer-quality properties that need to be
refinanced in 2012 and 2013 face the greatest downgrade risk,
with the availability of financing not rising meaningfully in
the next two years, the ratings agency said on Thursday.
The increased risks come from a slowdown in economic
recovery, the end of government stimulus spending, and a
shortage of available capital at banks, it said in a report.
[ID:nLDE70H1ZK] [ID:nLDE70I09V] [ID:nLDE70H1C4] [ID:nLDE6B216B]
"We are increasingly concerned about these downside risks
because of recent developments that could hurt the wider
CRE markets in a number of countries," said Moody's senior
analyst Oliver Moldenhauer.
The bulk of CMBS transactions in the Europe, Middle East and
Africa (EMEA) region are secured on commercial properties in the
UK, Germany, and France, while a minority are in Italy, Spain,
South Africa, and the Middle East, he told Reuters.
Property consultants DTZ DTZ.L has estimated that Europe
faces a real estate debt funding gap -- the difference between
debt balances and available refinancing -- of about $126 billion
over 2011-2013, the highest amount worldwide. [ID:nSGE6AM00F]
In the UK, Jones Lang LaSalle (JLL.N) said Bank of England
data showed bank lending to real estate fell by 16 billion
pounds ($25.9 billion) between September and December 2010, the
largest quarterly drop since records began in 1987.
Moody's, which earlier expected financing to improve from
2013, said its main concern was a double-dip scenario in which
commercial property values would decrease again, after most
markets staged a tentative recovery in 2010.
For instance, austerity measures across Europe such as
public spending cuts and tax rises will likely hurt employment
and consumer spending this year, which could in turn hit the
commercial property's recovery, Moody's said.
"This would have negative implications for the investment
markets, banks, the lending markets and therefore the
refinancing prospects of securitised loans that mature in the
coming years," Moldenhauer said.
(Editing by Karen Foster and Andrew Macdonald)
(See www.reutersrealestate.com for the global service for real
estate professionals from Reuters)