McKinsey has an interesting background paper on Commercial Real Estate finance (subscription required). One startling finding is that the European industry as a whole did not cover its cost of capital even in the good times of 2006-2007.

Eight large European banks took part in the initial survey; several others granted supplementary interviews. Collectively, McKinsey estimates that these two groups comprise about 40 percent of the CRE loans outstanding on balance sheets across Europe. The survey spanned 2006 and 2007, the final two years of the property boom, providing a clear picture of how the industry performs in good years.