Deloitte, the London-based professional services giant, is making a concerted push into real estate debt advisory, in a move the head of its UK-based Debt and Capital Advisory business says is designed to fill a “gaping hole” in the unit’s offering.
Last month, Deloitte hired Chris Holmes, a real estate debt adviser who most recently worked at capital advisory firm CAPRA Global Partners, which was bought by property consultancy JLL in March. Until 2019, Holmes had been EMEA head of debt advisory at JLL, before his move to CAPRA.
In his new role, he is based within Deloitte’s DCA unit, which is focused on borrower-side advisory for clients including corporates, private equity firms and private companies. In recent years, Deloitte has undertaken real estate debt advisory work, albeit typically across several parts of the business and mainly focused on advising real estate-based operating businesses. Holmes’ task now is to build a dedicated property debt advisory business line, which will combine with the DCA team’s existing infrastructure offering to comprise its real assets business.
Chris Skinner, head of the DCA unit, told Real Estate Capital a dedicated approach to real estate debt was long overdue: “Fifteen years ago, when we launched this business, there were four of us working to help borrowers get the best deal they could with lenders. We started with private equity and bolted on business lines including corporates, infrastructure and private companies.
“In adding real estate debt, we are adding another client vertical. We had this gaping hole in our proposition which we have been trying to fill for two-and-a-half years. We just could not find the right individual, with the right level of expertise, and a willingness to build a business.”
With Holmes now onboard, Skinner insists Deloitte has big ambitions in the area. “We would love to scale Chris’s business as much as possible. He had a team of nine in the UK and 32 in Europe at JLL – we would like to eventually double that.”
The real estate debt advisory industry has grown in Europe in recent years, with a handful of large real estate consultancies operating dedicated units, and a multitude of small, independent businesses springing up to help sponsors navigate a more complex lending landscape. Holmes argued there is room in the market for another large-scale real estate debt advisory business, adding it is an apt time to launch.
“Covid will drive the need for huge amounts of capex into real estate,” he said. “There is also a huge focus on decarbonisation and the repurposing of redundant real estate, as well as the shifting of capital out of sectors such as hospitality and retail and into beds and sheds. Dealing with all these issues will require huge amounts of debt and equity capital in the next business cycle. It creates the need for advisers to almost set up borrower-lender marriages for the coming years.”
Holmes argued that his unit will have the benefit of drawing on the expertise and contact books of the multitude of business lines operating across Deloitte. “Three days in, I have already seen the opportunity set that is swirling around internally,” he said. “The reach here is extraordinary into the corporate world and the investment world.”
Skinner added that there is a place for a large, established company like Deloitte in the niche industry of real estate debt advisory. “We genuinely believe professional services as an industry trends towards scale. The bigger you get, the better service you can provide, the more professional you can be, and the more confidence borrower clients, as well as lenders, have in the proposition. It also results in more deal-flow.”
Skinner added that Deloitte is building a corporate turnaround unit within its DCA business, which he describes as “one of the most significant investments Deloitte has made recently in the UK”. The growth of the real estate debt advisory business, he explained, is another area the company is backing for growth. “There is absolutely no upper limit to the amount of support we have from Deloitte – one of the world’s largest professional services firms,” he explained.