Asia property funds not suffering from European bank pullback
Most large Asian real estate funds are not suffering from a pullback in lending as a result of the euro zone difficulties because their exposure to European banks is minimal, according to a survey by the Asia Pacific Real Estate Association.
Of the 100 respondents from among APREA's members, which include companies as well as funds, a significant majority said they had no European bank debt at all, Reuters reported. Those that do, limit exposure to around 5% of total debt facilities, with a handful reaching 15%.
Private equity participants have noted in recent weeks that it is increasingly difficult to do buyout deals in Asia because banks are holding back on lending. Rising capital costs have made lenders wary of the risks tied to mispricing a loan, leaving private equity firms to increase the cash portion of buyouts.
"What we notice is banks are working through commitments they made earlier, and new deals in general are struggling for liquidity," Aart Jan den Hartog, head of Asia Pacific sponsor coverage at ING Bank, said at a conference in Hong Kong in October. "Bankers do not want to catch a falling knife, because the market in which you price a deal today ... pricing might have moved away from you tomorrow."
Debt-to-EBITDA multiples on deals in Asia are around 4.68x compared to 6-7x in Europe and the US.
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