Bank of England confirms support for UK CRE loan database
Excerpts from a CoStar article (20. Okt. 2015): The Bank of England confirmed last night that it will work in partnership with the UK real estate finance industry to build a commercial property loan database, the Real Estate Finance Group’s (REFG) centrepiece proposal to improve the resilience of the sector throughout the cycles. Alex Brazier, a member of the BoE’s financial policy committee, said in his address to the Property Investor’s Banquet at the City’s Guildhall the CRE industry must act now to avoid repeating the mistakes of the past. Mr Brazier told the audience, including senior executives of the UK commercial property industry, that outlined the Bank’s support for two key proposals put forward by the CRE finance industry, through REFG, a cross-industry group of senior real estate professionals chaired by Nick Scarles. The first was the capture of “systematic data”, which, he said, would minimise the risk of “gearing [moving] into a shadow on our radar screen”. Secondly, Mr Brazier, who is the BoE’s executive director for financial stability, strategy and risk, also confirmed the Bank’s backing for the adoption of ‘through-the-cycle’ property valuations to arrive at LTVs – another central plank of REFG’s Vision for Real Estate Finance in the UK proposals, launched two years ago. Peter Cosmetatos, chief executive officer at CREFC Europe, the trade association for the European real estate finance industry, said: “The recommendations from the Vision report have provoked a great deal of mostly constructive industry discussion over the last couple of years, none more than those for a loan database and a long-term value metric for analysing lending risk. “This strong endorsement for those key recommendations from the Bank of England should encourage enthusiasts and sceptics alike to engage with the Property Industry Alliance Debt Group’s efforts to ensure the outcomes are workable and as helpful as possible for the market. “As the voice of the property lending industry, CREFC Europe looks forward to playing a central role in the work ahead.” The next steps for the CRE finance industry falls to Property Industry Alliance (PIA) debt group, co-chaired by Kames Capital’s Phil Clark and Aviva Investors’ John Gellatly. PIA’s debt group has work-streams focussed on three of the REFG’s proposals: the CRE database; the long-term value metrics; and the CRE finance qualification.