This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

3 Top U.S. Stocks for the Great Euro Real Estate Selloff

Stocks in this article: WFC SPG BX JPM

NEW YORK ( TheStreet) -- European banks will sell an estimated $380-$760 billion in commercial real estate (CRE) loans over the next five years, leading to investing and lending opportunities for several U.S. players, according to a Morgan Stanley report published Friday.

Banks in the European Union have already announced plans to unload $380 billion of that total, including some $50 billion in U.S. exposure, Morgan Stanley's analysts estimate.

Wells Fargo leads U.S. banks with more than $50 billion in capacity for new loans, Morgan Stanley estimates.

While U.S. companies won't be able to sop up all the excess lending capacity as Europe's banks deleverage, some have already been taking advantage of the dislocation and are expected to continue. Here are three best-positioned U.S. stocks for the Great European CRE selloff.

3. Wells Fargo (WFC) has a slight edge over JPMorgan Chase (JPM) when it comes to expected CRE lending capacity, according to Morgan Stanley's analysis which includes current capacity plus expected new capacity generated by earnings over the next five years. Both banks are expected to have CRE lending capacity in the mid-20 billion dollar range in a bear case and in the high 30s in a bull scenario. The banks bought some $5 billion in U.S. CRE loans between them from Irish lenders in 2011.

Wells far exceeds JPMorgan when it comes to total current lending capacity across all types of loans, however. Wells has more than $50 billion of total capacity, with JPMorgan at under $38 billion.

2. Simon Property Group (SPG)

The giant U.S. mall operator has already been an active buyer in Europe, which currently accounts for 3% of its portfolio.

Simon recently bought 29% of Klepierre, a French mall real estate investment trust (REIT). Simon financed the acquisition in conjunction with a U.S. portfolio purchase, raising a total of $3.1 billion in debt and equity, while paying an interest rate of just 3.4% for 15-year unsecured debt.

"As the result of favorable financing, the acquisitions were immediately accretive and management increased 2012 earnings guidance by 2%," Morgan Stanley analysts point out. Overall, they believe U.S. REITs "have the capacity to absorb up to $150 billion of CRE over the next five years."

1. Blackstone Group (BX)

The private equity giant "looks uniquely positioned to benefit from dislocation in global real estate given significant firepower at its disposal, with $48 billion of real estate assets under management including $13 billion of dry powder. Blackstone currently has north of $10 billion of commitments for its latest flagship global real estate fund," according to Morgan Stanley.

Blackstone's $13 billion of "dry powder" compares to $8 billion at Lone Star Funds, the second best-positioned private equity player, and leaves Goldman Sachs (GS)'s private equity arm a distant third with $3 billion to invest.

-- Written by Dan Freed in New York.

Follow this writer on Twitter.

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,617.81 +260.94 1.50%
S&P 500 2,039.93 +27.04 1.34%
NASDAQ 4,707.4120 +63.10 1.36%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs