There’s an interesting opportunity in European Commercial Real Estate Debt markets today and that is driven by the fact that bank regulation, combined with the rising rate environment, is making it more difficult for banks to provide the same type of liquidity as they have historically.
The reason for that is fairly straightforward—as loans are perceived to be more risky, which can be because they are higher loan to value or perhaps because there is less affordability because of rising rates, the bank must hold greater regulatory capital against those, and so each time the bank allocates greater capital to loan A it means there is less capital available for loans B, C and D.
For an alternative lender that’s great. We feed on the periphery of bank appetite so as banks shrink, because they are 90% of the market here in Europe, it has a monumental impact on the size of the opportunity for alternative lenders, non-bank lenders. That’s the reason that we think the next 36 months is going to be highly favorable, to be well capitalized with flexible capital, able to deploy into this environment.