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April 15, 2013 at 10:00 AM
Most investors are as active as they were one year ago seeking opportunities to acquire distressed loans, according to a new survey from Ernst & Young.
The study, “Flocking to Europe: Ernst & Young 2013 non-performing loan report,” reveals that investors remain as active (38 percent) or more active (32 percent) as they were in 2012 seeking opportunities to acquire “distressed” or nonperforming bank mortgage loans that have been securitized. Less than one-third of the survey respondents (30 percent) say they are less active than they were one year ago.
About one-third of the respondents, the report adds, have allocated less than $100 million for the purchase of non-performing loan (NPL) portfolios in 2013, up from 23% in last year’s survey. Smaller percentages of investors intend to invest more.
Just over two in 10 (22 percent) plan to allocate between $100 million and $500 million, the report shows. Less than one in 10 (8 percent) of the respondents intend to acquire NPL portfolios valued at $500 million to $1 billion.
When asked how frequently they access the NPL market on a scale of one to four (one being the most frequent, four being the least), most of the survey respondents (1.41) flagged “off-market transaction sources and direct negotiations.” The investors cited less frequently “participation in broadly marketed offerings by sales agents” (multiple bid; 2.33 on the scale); and use of “online resources such as Internet auction sites” (2.84).
