UK banks may transfer commercial property loans into real estate investment trusts to purge their balance sheets of debt and avoid future writedowns.
Banks are considering using REITs as publicly traded 'exit vehicles' that could limit the losses they and their borrowers face, said Ian Marcus, head of real estate at Credit Suisse Group. The British Property Federation has recommended the idea to the government as a solution for state-owned banks weighed down by property loans, said Peter Cosmetatos, BPF finance director.
'It’s obviously being considered by all relevant parties because the sector needs to recapitalize and that is one methodology of doing so,' Marcus said in a telephone interview. The concept is in its early stages, he said.