Specialist Property Lenders and Private Credit: Financial Stability Considerations
Kitty Moloney and
Paraic O'Gorman
Additional contact information
Kitty Moloney: Central Bank of Ireland
Paraic O'Gorman: Central Bank of Ireland
No 1/FS/25, Financial Stability Notes from Central Bank of Ireland
Abstract:
In this Note, we focus on non-bank lenders that lend almost exclusively to the commercial real estate (CRE) sector and are set up as Special Purpose Entities. These Property SPEs (PSPEs) are typically sponsored and financed by international financial intermediaries that engage in the private credit markets. They also rely on third party financing thatis highly concentrated in the European banking sector. PSPEs represent the majority of new lending by non-bank lenders to the CRE sector and they typically provide large loans to developers (€8.3mn average loan size). This activity benefits the domestic economy by deepening and widening the availability of credit to a supply-constrained property development sector. Increased sensitivity of domestic credit provision to international financial conditions, concentration risk, and exposure to opaque international private credit markets are key financial stability risks stemming from PSPEs. A reduction in credit supply from PSPEs could directly affect the real economy through the property market channel and indirectly through spillover effects to the broader financial system.
Date: 2025-05
References: View references in EconPapers View complete reference list from CitEc
Citations:
Downloads: (external link)
https://www.centralbank.ie/docs/default-source/pub ... df?sfvrsn=bd366b1a_7 (application/pdf)
Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:cbi:fsnote:1/fs/25
Access Statistics for this paper
More papers in Financial Stability Notes from Central Bank of Ireland Contact information at EDIRC.
Bibliographic data for series maintained by Fiona Farrelly ().