2023 Outlook: Need of Alternative Finance 

We look forward to a year full of achievements and would like to share our outlook for 2023 with you:

Real Estate Investment Market

There is a need of funding that will increase in the coming months. Certain real estate owners are impacted by a combination of issues mainly loan maturities, covenant breaches and raising capex budgets. Unfortunately, traditional banks are on the sideline and the transaction market is not able to offer a satisfactory exit plan to property owners. With the end of accomodation lending and further assets repricing in the 2nd quarter of 2023, the volume of distressed situations should continuously increase. The real estate market itself faces labor costs issues, supply chain challenges and is confronted to disruptive consuption models since Corona. Given this confluence of factors, investors and lenders are currrently extremely focused on sorting out what will be conform to the demand of the market after this recession.

Distressed Situation Management

The risk return in the equity market is not attractive anymore. This opens the door to less regulated debt funds who are currently absorbing the increasing market volatility. More resilient whole loans are absolutely critical today in order to reposition and keep assets attractive after the storm. Based on their core competences and resources, property owners are currently sorting out which assets should be recapitalized and which are not strategic anymore. A capital stack restructuring will be the ultimate capital protection for core assets. Non strategic assets will silently be transferred to suited market players in order to provide a solid basis for strategic realignment. A value based management of distressed situations offers the opportunity to real estate players to focus again on their expertise.

Given the context, TCP Brokerage recommends property owners and developers to recapitalize the assets with a bright future. For the remaining assets, it’s a chance to find a consensual solution: banks and junior lenders might want to sell non-strategic loans to NPL collectors who offer creative workout matrix. TCP Brokerage provides both solutions silently.