Despite a fair degree of scepticism in many corners of the market, insiders are confidently predicting that one (maybe even two) commercial real estate CDOs will close in Europe by the end of this year. These structures pool a wide range of real estate assets such as CMBS bonds, whole loans, B notes and mezzanine loans and have been popular in the US since the late 1990s. The relative immaturity of the CMBS market in Europe (particularly at the junior part of the capital structure) has always been considered a barrier to their use there. However, enthusiastic pioneers are now talking up the prospect of the product jumping the Atlantic.
The first CDO backed by commercial real estate assets appeared in 1999, and transactions backed by actively managed pools of assets appeared in 2004. The US market grew by 50% the following year to reach $14 billion at the end...
