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News Release

London

Jones Lang LaSalle Comment - EU Commission seeks input on valuation for distressed assets


 
London, 10th June 2009 – The European Commission is seeking consultation on an approach to the valuation of distressed assets destined for government assets relief schemes. These schemes are designed to clean bank balance sheets of impaired assets of which bad commercial property loans form a significant part.  The Commission issued guidance in February urging a common European approach to allow transparency, disclosure and the correct and consistent valuation of assets to go into such schemes.


The Commission has addressed the issue of currently depressed market values and the level of writedown and proposes that impaired assets be transferred to asset relief schemes at prices based on their 'long term real economic value' rather than current market value. The difference between these two values will constitute state aid.
Guiding principals and processes have been set out by the European Commission who are begining a consultation period this month seeking input from the RICS and other professional bodies.


Dermot Charleson, director of Jones Lang LaSalle’s European Valuations Team said: “Many of the impaired assets intended for asset purchase or insurance schemes will be illiquid and complex assets to value. Furthermore, calculating long term economic value is inherently subjective and a consistent approach to valuation will be important for the EU Commission to ensure fair competition for state aid across EU member states.”