At least a dozen large international investors are lining up to look at a large Spanish property-loan portfolio sale that will take the temperature of one of Europe’s most distressed real-estate markets.

Commerzbank AG CBK.XE -3.81% recently began shopping around the portfolio—code named Project Octopus—that includes loans with a face value of €4.4 billion ($6 billion) that are backed by shopping centers, hotels and offices.

The loans were originally extended by Eurohypo AG, a unit of Commerzbank that is being wound down after suffering large losses in recent years.

The deal is expected to be one of the biggest of its kind in Europe this year and will be a key test of investor faith in Spain’s budding economic recovery. Any buyer of the loans likely would pay a discount to their face value. Still, they would be making a multiyear bet on the euro zone’s fourth-largest economy, which late last year emerged from more than two years of recession.

Investors looking at the deal include Blackstone Group BX +1.18% L.P., Cerberus Capital Management L.P., Värde Partners, Apollo Global Management APO +0.53% LLC, Lone Star Funds, Kennedy WilsonKW -0.43% Pacific Investment Management Co., Starwood Capital Group LLC, CarVal Investors, Colony Capital LLC and Centerbridge Partners L.P., according to people familiar with the deal. Some of these funds have teamed up with large lenders such as Deutsche Bank AG DBK.XE -1.89% and Wells Fargo WFC +0.80% & Co.

Commerzbank, which is among a number of European banks that have been unloading loan portfolios to align with new banking regulations, hired investment bank Lazard Ltd.LAZ +0.20% to run the sale. Commerzbank declined to comment.

European banks still are digging out from an avalanche of bad real-estate debt that crushed them when the financial crisis hit. In 2014, more than €40 billion in European real-estate loans could be put on the market, a 32% increase from 2013, according to a report last week from real-estate broker Cushman & Wakefield.

Big sellers include so-called bad banks that were set up in Spain and Ireland to manage soured real-estate assets. Those banks are increasing their disposal activity, while sales in Italy also are expected to pick up, said Andrew Sim, head of European investment at Knight Frank in London.

Spain’s real-estate market has seen a revival of late. The government, through its bad-bank structure Sareb, is expected to put several large property portfolios up for sale in the first quarter, and local banks also are looking to reduce their exposure to real estate.

However, there are reasons to be cautious, say some analysts. A shock to the economy would be a “particularly big problem” for the property market, where asset values have fallen far less than in other troubled countries like Ireland, said Matthew Richardson, European real-estate research director at Fidelity Worldwide Investment in London.

“If you’re an institutional investor running third-party money, it’s a heck of a risk to take,” Mr. Richardson said.

Last week, Commerzbank sold €710 million of nonperforming Spanish property loans to hedge funds. In December, it sold €280 million of shipping loans to a buyer affiliated with Oaktree Capital Management L.P.

The latest Commerzbank Spanish portfolio sale is expected to be completed this summer. Interested investors will participate in the first round of bidding within the next four to six weeks, a person close to the deal said.

The deal could be structured similarly to Commerzbank’s £4 billion ($6.6 billion) U.K. real-estate portfolio deal last year, said people familiar with the ongoing process. About half the Spanish portfolio consists of performing loans, while the other half is split between nonperforming and subperforming loans, these people said.

The U.K. sale was broken into two parts, with Wells Fargo taking control of £2.7 billion in performing loans, while Lone Star took on £1.3 billion of nonperforming loans.

There also is a chance one investor could buy the whole portfolio, said Adolfo Ramírez-Escudero, managing director in Spain at CBRE Group Inc., which is representing one of the bidders. He noted only a handful of bidders have the resources to consider this option.

Large asset managers such as Lone Star and Kennedy Wilson have opened local offices in the Spanish capital, and funds including Apollo Global Management and TPG Capital LLP have purchased real-estate servicing units from local banks, giving them a platform to manage the assets they buy.

On Tuesday, a portfolio of seven shopping centers in Spain was sold to U.K.-based GreenOak Real Estate Advisors L.P. and Spanish investor Grupo Lar Real Estate Investments SA for €160 million by Dutch property fund Vastned Retail VASTN.AE -0.96%NV.

The rising number of investors looking at distressed Spanish assets also may drive prices higher, increasing risk. A person familiar with Project Octopus noted the deal was “extraordinarily” well bid.

“You look at the bigger picture and it sounds pretty good. But on second look, you’re thinking the good news might be priced in,” the person said.

—Eyk Henning in Frankfurt contributed to this article.

Write to Art Patnaude at [email protected] and Christopher Bjork at[email protected]

Corrections & Amplifications
Matthew Richardson is European real-estate research director at Fidelity Worldwide Investment. An earlier version of this article incorrectly gave his employer as Fidelity Investments.