Over the last decade, Europe’s real estate lending landscape has evolved quickly. Mainstream banks, private credit funds and challenger banks have all grown their lending franchises, often with strong underwriting discipline and well-managed risk frameworks.
But the current cycle is bringing a new challenge that very few lenders — across the entire spectrum — have fully prepared for:
the rising need for dedicated restructuring and workout capability.
This isn’t a criticism of any lender type. It’s simply a reflection of how fast the market has shifted. A lending environment shaped by low rates, stable asset values and predictable refinancing has been replaced by one defined by valuation resets, higher borrowing costs and more complex borrower situations.
As a result, the skill sets required to manage portfolios are changing — and quickly.
Why restructuring matters in today’s market
Across Europe, lenders are encountering a similar set of pressures:
- Loans originated during 2021–22 are converging with today’s tighter underwriting conditions
- Higher interest costs are compressing coverage ratios
- Sponsors are facing increased capex and operational challenges
- Negotiations with borrowers have become more sophisticated
None of this reflects poor lending behaviour.
Rather, it reflects the reality of a market transition that is affecting almost every lender in some way.
This is why the topic of restructuring capability is becoming increasingly important — not because portfolios are failing, but because portfolios are becoming more operational.
Why lenders haven’t yet fully built restructuring teams
Every type of lender is navigating the same dynamics:
- The cycle shifted faster than operating models
Most teams were built during years of strong liquidity and rapid lending growth. They were designed primarily for origination and portfolio expansion, not the more complex demands of active restructuring.
- The need wasn’t obvious until recently
For almost a decade, refinancing was straightforward. Problems were infrequent. The industry as a whole had little reason to build large workout teams.
- Restructuring skill sets are scarce
Special situations and restructuring talent is niche, expensive and often concentrated in a handful of organisations. Mid-level experience in particular is in short supply.
- Lenders already run lean teams
Across banks, private credit funds and challenger lenders, teams are typically optimised for efficiency — which makes it harder to allocate capacity for a capability that wasn’t historically essential.
This is a shared industry challenge, not a weakness of any single lender type.
What this means for hiring over the next 24 months
Lenders across Europe — regardless of size or origin — are starting to recognise the benefits of investing in restructuring capability. We expect increased hiring in roles such as:
- Restructuring / Workout Leads
- Special Situations professionals
- Credit officers with restructuring exposure
- Hybrid portfolio–underwriting roles
- Asset-backed restructuring specialists
These individuals bring skills in borrower negotiation, scenario analysis, problem-solving and value preservation — capabilities that complement existing underwriting and origination teams.
Notably, these hires are not a sign of distress.
They are part of a broader industry shift toward more proactive, hands-on portfolio management. At time of writing, we’re hiring a Head of Portfolio Management for a leading challenger bank who seeks a credit trained, experienced real estate banker with strong restructuring skills for its London office. We see this trend continuing.
The bottom line
The European real estate lending market is healthy, sophisticated and well-capitalised. But it is also entering a phase where managing complexity will matter as much as originating new loans.
Building restructuring capability is not a defensive move — it’s a strategic one. It equips lenders to support their borrowers more effectively, protect value through the cycle, and strengthen resilience in a more operationally demanding environment.
At Caravel, we are already advising banks, private credit funds and challenger lenders on how to build the teams they will need for this next phase — from specialist workout professionals to hybrid credit roles that bridge underwriting and restructuring. We hired our first workout professional in 2008 and since then have evolved into the leading real estate debt search firm.
