Thursday, December 22, 2011

European banks retreat from U.S. property sector

(Reuters) - In September, German bank Eurohypo and developer Forest City Enterprises Inc (FCEa.N) were negotiating a $65 million loan for 9 MetroTech, part of a 11-building office campus in Brooklyn, New York.

By October, the European bank told Forest City to find another lender, according to sources familiar with the talks. A month later, Eurohypo announced it was halting lending for U.S. commercial real estate altogether.

Eurohypo is not alone. Many European banks are retreating from the United States property market to deal with problems at home.

With other lenders also pulling back from the market, borrowing costs for property developers and buyers could jump, said Michael Higgins, managing director and head of U.S. real estate finance for CIBC World Markets Inc.

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