Welcome to the sixth of our annual lists of the organisations making the biggest impact on European real estate finance.
Europe’s Top 40 Lenders 2019 is not a ranking. The list contains debt providers of various sizes and strategies that cannot simply be compared on a like-for-like basis. Rather, we considered which organisations have stood out in the parts of the market they aim to serve since we compiled our previous list in October 2018. These have been listed under the following categories: UK banks, German banks, other European banks, North American banks and non-bank lenders.
In May, we invited organisations to pitch to be included. We are grateful to all those who made submissions. In July, after the deadline passed, we considered the pitches, trawled our story archive, spoke to debt advisors, borrowers and lenders, and thought deeply about who deserved to be on the list.
There were plenty of difficult decisions to make. It is testament to the strength of Europe’s real estate lending industry that several worthy organisations missed out. Some of those that made the list did so because they had closed the market’s needle-moving deals since last October. Some made it because they demonstrated consistent lending during this period in parts of the market where the need for liquidity was greatest. Some provided evidence of innovation, including sustainable financing products, or loans in emerging segments of the market.
Commercial real estate lending is a specialised pursuit and the rundown of the leading organisations active in Europe does not change dramatically on an annual basis. However, there are new entrants among the stalwarts.
As well as a snapshot of who we see as the most active lenders, our top 40 provides insights into their strategies and details of their most important recent deals. In that respect, the list helps shine a light into a relatively opaque market. We expect our top 40 to spark debate and we are keen to hear your views on it – please email me at firstname.lastname@example.org.
In the meantime, we hope you enjoy Europe’s Top 40 Lenders 2019.
THE UK BANKS
Senior, whole loan, mezzanine and development lender
Active in the UK and Ireland
Lending in 2018: £4.7bn
Lending in H1 2019: £3.1bn
Loan book: just under £15bn
Last September, the UK government announced a partnership with Barclays to provide £1 billion (€1.1 billion) of loans to small and medium-sized developers, with the aim of speeding up the delivery of new homes in England.
The bank told Real Estate Capital in July that it had deployed £155.3 million through the scheme. This was accounted for by a deal, closed in June, to provide Merton Catalyst – a joint venture between housing association Catalyst and developer Galliard – with
£150 million for 604 apartments in Wimbledon, south-west London, and £5.3 million for a smaller scheme in Southampton.
Overall, the bank reported £7.8 billion of lending in 2018 and the first half of 2019, although it declined to say how much had been for new loans and how much had been in refinancing deals.
Transactions closed since October 2018, when the last top 40 was published, include a £175 million senior development loan in April for Damac International to finance the construction of a 450-unit residential tower in London’s Nine Elms district, alongside Burgan Bank and Emirates NBD. Barclays also provided a £43.9 million senior development loan for Mount Anvil to finance the construction of a further 125 residential units in nearby Vauxhall. The bank provided a £200 million unsecured facility to Tritax Big Box REIT in June and a £150 million refinancing for UK Commercial Property REIT in February.
Barclays Corporate Banking’s real estate team, led by Dennis Watson, remained active in the equity and debt capital markets. This included its role as joint placement agent on Derwent London’s £250 million US private placement in December. It also acted as joint global co-ordinator and joint deal manager on Derwent London’s £175 million convertible bond in June.
Senior lender, bridging, capital markets, corporate lender
Active across Europe
Net loan book increase on 2018 $2.1bn
Loan book (end 2018) $29.7bn
HSBC declined to disclose its European real estate lending volumes, although it told Real Estate Capital its European loan book had increased by a net volume of $2.1 billion during 2018, calculated on a constant currency basis. The UK bank’s $29.7 billion European real estate loan book includes finance for corporate, institutional and high-net-worth customers.
In March, HSBC was bookrunner on a £350 million (€378 million) bond financing for UK housing association Home Group, with a 24-year sterling bond. Other deals included the early refinancing in Q1 of a £275 million syndicated UK bank facility for RDI REIT.
In the alternative assets market, HSBC acted as mandated lead arranger and bookrunner on a £300 million refinancing of a UK car park portfolio in Q4 2018, in which HSBC had a final hold of £75 million. The bank was mandated lead arranger and lender on an upsizing of a €200 million acquisition facility for a German cinema portfolio for Aermont Capital in the first quarter of this year.
In December, HSBC partnered with Wells Fargo and Helaba to provide a £400 million loan to Argent – the first in the UK written to the Loan Market Association’s Green Loan Principles – for the development of new offices for Facebook at London’s King’s Cross. In May, HSBC provided a £175 million loan, also written to Green Loan Principles, to hotelier Edwardian Group to finance construction of The Londoner, a luxury hotel in London’s Leicester Square.
In May, it advised Singaporean developer Oxley Holdings on its green finance framework and provided the firm’s first green loan deal, the first GLP-compliant loan in Ireland. Sharon Quinlan is head of corporate real estate, UK. Brian Roxburgh is head of corporate real estate, EMEA. Nicola Free is the bank’s European head of real estate finance.
Lloyds Bank Commercial Banking
Senior, development, capital markets lender
Active in the UK
Lending volumes Undisclosed
Loan book Undisclosed
Although UK clearing banks are known to have a limited appetite for new lending, one borrower describes Lloyds as responsive to potential mandates. A debt advisor points to the bank’s ability to write long-dated loans as a selling point.
Unlike in previous years, Lloyds did not disclose its 2018 real estate lending. Its last known annual volume was 2017’s £8.4 billion (€9.2 billion). However, the bank did announce a series of deals which highlight its activity in its home market. Through its green lending initiative, it led a club of four banks in a £185 million three-year financing for Manchester-based Bruntwood SciTech’s Circle Square scheme in the city in July. In the same month, it provided a £200 million, two-year revolving credit facility to BlackRock’s UK Property Fund in the largest bilateral loan to be completed as part of the green lending programme.
Lloyds continued to provide long-dated finance in conjunction with group insurer Scottish Widows, including a £75 million, 15-year financing in December to UK investor LXi REIT.
Other deals included a £53.5 million revolving credit facility to fund 11 properties across M&G UK Enhanced Value Fund’s portfolio in January. In February, Lloyds subsidiary Bank of Scotland provided Scottish investor HFD Group with an £89 million office development loan in Glasgow. In November, Lloyds provided a £177 million loan to a Singaporean firm for 97 office properties bought from Telereal Trillium.
On the personnel front, Andy Hulme was appointed co-head of real estate and housing, in a job share with Madeleine McDougall. Under the new arrangement, both co-heads will work three days a week in a rare example of a job share in a senior UK finance role. Hulme said the new role would give both co-heads the “flexibility to support our young families” while working at the forefront of the sector.
Senior lender, small allocation to high-yield loans
Active in the UK
Lending in 2018 £6.0bn
Lending in H1 2019 £1.1bn
Loan book (March) £28.8bn
Following a rebrand, Royal Bank of Scotland’s commercial real estate finance business now operates under the NatWest name. Like other UK clearing banks, market sources describe NatWest as relatively risk-averse, although the size of its loan portfolio and longstanding relationships mean it maintains large lending volumes.
By March, its real estate loan book stood at almost £29 billion (€31.6 billion), including £814 million of loans in western continental Europe and £638 million of loans provided through the bank’s sub-£2 million lending platform, Property Finance Direct.
NatWest’s total core UK commercial real estate loan book stands at around £23 billion, making it one of the largest lenders in the country by scale. Residential loans stand at around £4.3 billion, the bank reported in June.
In March, NatWest provided a £65.5 million development loan to a vehicle owned by Galliard Homes, Cain International and construction group O’Shea for a residential-led mixed-use scheme in the Docklands area of east London.
In February, it contributed £71.5 million to a £214.6 million loan to developer Downing alongside HSBC and Barclays for the development of three student housing schemes in Coventry, Manchester and London.
In November, NatWest partnered with German bank Helaba in a £165.2 million financing of the Highcross shopping centre in Leicester, following the sale by Hammerson of a 50 percent stake in the asset to an Asian investor represented by M&G Real Estate.
Other loans completed since last October included a £30.3 million term loan to NewRiver REIT to finance the acquisition of four retail parks. It also provided £36 million to developer EcoWorld for the development of 155 new homes and two leisure centres in west London in April, and £16.8 million to Liverpool-based developer Elliot Group for the final phase of the Wolstenholme Square project in the city in June.
THE GERMAN BANKS
Active across Europe
Lending in 2018: €5.6bn
Lending in H1 2019: €1.6bn
Loan book: €18bn
In 2018, Aareal’s structured property finance segment provided €9.5 billion of real estate loans, up on the €8.7 billion total for 2017. Of last year’s total, the German bank provided €5.6 billion in European markets, with the remainder in North America and Asia-Pacific.
The bank said new structured property lending in Q1 2019 had been focused on high-margin opportunities, with the average margins on new business above 250 basis points. That level would not be sustained through the year, the bank conceded, with a target range for 2019 of 180-190bps.
Aareal’s first-half real estate lending total was €3.2 billion, down from €4.2 billion year-on-year. The figure relates to the bank’s global real estate lending, with Europe accounting for €1.6 billion. The bank added there was a particular focus on US and Asia-Pacific business. The “rather quiet” first quarter of 2018, when €800 million was lent globally, reflected the fact that the overall loan portfolio, at €26.6 billion, remained comfortably within the €26-€28 billion target range for 2019, the bank said. Its target new business volume for 2019 is between €7 billion and €8 billion globally.
European deals included last November’s €447 million five-year financing of a European hotel portfolio for Swedish company Pandox. The loan financed 14 hotels in Austria, Belgium, Germany and the Netherlands.
Last October, Aareal announced the acquisition of a stake in London-based online real estate financing platform BrickVest. Hermann Merkens, chairman of Aareal’s board, said: “[BrickVest] perfectly fits our commitment to innovation and digitalisation.”
Senior, whole loan, development lender
Active in Germany, France, the Netherlands, Poland
Lending in 2018: €6.1bn
Lending in H1 2019: €2.2bn
Loan book (end 2018): €21.1bn
Berlin Hyp remains a significant lender in continental Europe, according to market sources. It provided €6.1 billion of debt in 2018, of which new loans accounted for €4.9 billion. Although down on 2017’s €8.1 billion, the bank said it achieved its target for the year.
The bank has focused on technology in the last year, with a crowd-based inspection service for the real estate sector launched in October, called OnSite ImmoAgent. In April, it bought a stake in PropTech1, the first venture capital fund to specialise in European proptech start-ups. It has also invested in Berlin-based proptech company 21st Real Estate to focus on digitising real estate valuation.
Berlin Hyp continued to focus on its green lending programme. In July, it issued its fourth green Pfandbrief, raising €500 million of funding for refinancing sustainable buildings.
Recent lending deals include a €384 million loan, alongside the same amount from two other German banks, for 133 residential properties across Germany for Berlinovo, known as the Kontor portfolio. It also partnered with ABN Amro and Helaba for a €500 million refinancing of the High Tech Campus in Eindhoven for Dutch investor Ramphastos Real Estate.
Alongside two other banks, Berlin Hyp provided a €167 million development loan to a joint venture including Art-Invest Real Estate for the development of I/D Cologne, the largest commercial project in the German city. In March, it provided French REIT Argan with a €44 million loan to finance a logistics development project near Paris. In February, the bank provided a €55.7 million, 10-year loan to LBBW Immobilien Management for the refinancing and refurbishment of the Lautenschlager Areal complex in Stuttgart. Assem El Alami is the bank’s managing director and head of real estate finance.
Deutsche Bank (including DWS)
All types of lending
Active across Europe
Lending in 2018: €4.6bn (€465m for DWS)
Lending in H1 2019: €2.1bn (€375m for DWS)
Deutsche Bank has experienced a torrid 2019, with plans to cut a fifth of its workforce and a Q2 net loss of more than €3 billion. Despite its troubles, the investment bank’s real estate finance division remains a significant lender.
Its 2018 European lending volumes, at €4.6 billion, were almost 65 percent higher than the €2.8 billion reported for 2017.
Deals included a surprise participation in the £625 million (€697 million) refinancing of HSBC’s headquarters at 8 Canada Square, London. Although typically a higher yield lender, the deal followed an expansion of the team’s remit to target lower leverage, high-quality assets.
Other deals included a £150 million financing of the Intu Derby shopping centre in the UK, following the creation of a joint venture to own it. The bank financed UK social housing provider Sage, refinanced the Capital Dock mixed-use scheme in Dublin and provided acquisition and refurbishment financing of a multi-let office building in Stockholm.
In May, it arranged a €343 million securitisation of three loans to Blackstone backed by Italian real estate.
The bank’s majority-owned asset management business, DWS, runs third-party lending funds. In H1 2019, it provided €375 million, including €200 million of mezzanine. Of the total, €215 million backed development. In 2018, it lent €465 million, mainly senior, but including €150 million of mezzanine.
The firm has raised €270 million of third-party capital since October. It is also planning to launch a fourth debt fund focused on whole loan and mezzanine lending.
The DWS real estate debt platform, which is run from Frankfurt by Alexander Oswatitsch, hired London-based David Ruiz to head European origination. It recently completed a €202.5 million mezzanine loan for the construction of T1, a Frankfurt office tower under development by German investor Groß & Partner.
Senior, whole loan, development lender
Active in Germany, UK, France, Benelux, Spain, Poland
Lending in 2018: €2.9bn
Lending in H1 2019: €1.5bn
Loan book (end 2018): €12.3bn
Deutsche Hypo is not the largest of the German banks, but it is a consistent lender across target markets. In the first half of 2019, it reported volumes of €1.5 billion; of this, €800 million was in its home country, €270 million was in the UK, €180 million was in Benelux and €150 million was in Poland.
Its 2018 lending volume was €2.9 billion, down from €3.8 billion in 2017. Despite the drop, the bank maintained a geographic spread, including €400 million in the UK, a similar amount in Benelux and €300 million in France. Germany accounted for €1.7 billion of lending in 2018.
Whole loans comprised a major element of its lending during this period, a spokesman for the bank said.
A milestone in the last year was the bank’s launch of a green lending product. Following the issue of a second green Pfandbrief in September 2018, the bank launched a sustainable lending product on to the market in May. Loans written as part of the programme focus on the financing of energy-efficient properties, determined using an in-house scoring model, with the margin adjusted accordingly.
In March, the bank provided a loan of unspecified volume to finance the development of a Paris office building, called Woodwork, to be constructed using solid wood. The loan was provided to a joint venture between France’s L’Etoile Properties and a US investor. In June, the bank provided €56 million for the construction and investment phase of the Central Post residential scheme in Rotterdam, for Greystar.
In May, Deutsche Hypo provided €116 million of development finance for a shopping centre in the German city of Bochum. The Viktoria Karree scheme is due to complete by the end of 2021.
Recent UK loans have included the £34.5 million (€37.5 million) financing of a retail and residential building on London’s Oxford Street.
Senior, development lender
Active in north-west and central Europe
Lending in 2018: €7.2bn
Lending in Q1 2019: €1bn
Loan book: €26.7bn
Helaba’s annual real estate lending volume increased by around 13 percent year-on-year in 2018, to €9.8 billion, of which €7.2 billion was in Europe. Real estate was the largest contributor to its overall 2018 lending, accounting for 37.6 percent.
The bank’s appetite for real estate lending shows no sign of abating. The targeted 2019 volume is budgeted at 4 percent higher than 2018, at €10.2 billion, with syndication to be reduced temporarily to help grow the bank’s portfolio. By the end of the first quarter, the bank had completed €1 billion of new real estate lending in Europe.
In its 2018 results, it said margins on new business were “more or less” maintained compared with the previous year. Although income from the division was on a par with 2017, the figure was lower than expected, it confirmed.
Helaba said 2019 would see real estate lending, in and outside its home market of Germany, “subject to intense competition and downward pressure on margins”.
Deals outside its home country included a €170 million loan to Atrium European Real Estate for the Wars Sawa Junior retail centre in Warsaw last December. In January, it provided a €500 million refinancing of the High-Tech Campus Eindhoven alongside Berlin Hyp.
It partnered Wells Fargo in December on a £400 million facility to finance the construction of offices at UK developer Argent’s scheme in London’s King’s Cross in a loan written to the Loan Market Association’s Green Loan Principles. In November, Helaba partnered with NatWest in a £165.2 million financing of the Highcross shopping centre in Leicester.
Christian Schmid is Helaba’s board member for real estate lending. In January, Jan Peter Annecke became head of the German real estate lending business.
Senior, whole loan, development lender
Active in Germany, UK, other parts of western Europe
Lending in 2018: €7.1bn
H1 2019 lending: undisclosed
Loan book (end 2018): €24.6bn
LBBW – or Landesbank Baden-Württemberg to give it its full name – focuses on financing prime real estate across Europe’s major cities. The Stuttgart-based bank’s stand-out deal of the last year was its €1.1 billion long-term financing of Berlin’s Potsdamer Platz, which was announced in February.
The loan was provided to Canadian real estate giant Brookfield Properties. It refinanced debt provided by a club of banks and will also fund the repositioning of retail space at the 270,000 square metres mixed-use estate in the German capital. Planning is currently underway for a comprehensive repositioning of the retail space inside the Potsdamer Platz Shopping Arkaden, with construction scheduled to begin in January 2020.
Another major loan this year was its €400 million facility provided in May to Aggregate Holdings and Taurecon Real Estate Consulting for the Quartier Heidestrasse Track development in Berlin, including funding nine connected buildings which are due to be completed in 2023. The scheme is close to Berlin’s central railway station.
In January, LBBW partnered with pbb Deutsche Pfandbriefbank on a €500 million, 10-year loan to German listed residential landlord Vonivia. The loan is secured by a residential property portfolio in Dresden with total rented space of 800,000 square metres.
The bank’s real estate and project finance division made a €235 million pre-tax profit in 2018, according to its full-year results. In total, the bank provided €8.7 billion of real estate finance in 2018, although its 2019 first-half figures were not available at the time of publication.
pbb Deutsche Pfandbriefbank
Senior, development lender
Active in Germany, UK, France, CEE, Nordics, Spain, Benelux
Lending in 2018 (global): €9.5bn
Lending in H1 2019: €4.6bn
Loan book (March): €34.2bn
The UK share of the German bank’s new business reduced significantly last year “due to uncertainty arising from Brexit”, according to a spokeswoman. However, sources note pbb as a major lender in continental European markets. Germany accounted for 40 percent of 2018 lending, while France, with 13 percent, became its second biggest market.
The final quarter of 2018 was pbb’s strongest quarter ever for real estate financing, the bank reported, with €4 billion of new lending contributing to a €9.5 billion total. Its H1 2019 total was €4.6 billion, up on the €3.8 billion in the first half of 2018.
Pre-tax profit for 2018 was €215 million, up 5 percent year-on-year. Its H1 2019 profit was €117 million, down slightly on the first half of the previous year.
The bank has said it is focusing on digitalisation in 2019, including the planned launch of a client portal to improve efficiency and customer satisfaction.
In July, pbb provided €170 million to German investor GEG Group for the purchase of a high-rise building in Berlin’s Alexanderplatz. In the same month, it partnered with Bavarian bank BayernLB to finance one of four towers of the Four Frankfurt development. The loan size was not disclosed but was referred to as a ‘three-digit million’ sum. In June, pbb partnered with German bank Kreissparkasse Köln for a €162 million loan to CODIC for the development of an office building in Dusseldorf’s ‘Medienhafen’ area. In June, the bank also provided €41 million to Norwegian firm Ness, Risan & Partners for the acquisition of a logistics property in Helsinki.
Other deals included a €43 million loan to Revetas Capital Fund III in October for the purchase of The Landmark office complex in Bucharest. Alongside LBBW, it provided German landlord Vonovia with a €500 million, 10-year loan, secured by a residential portfolio in Dresden in January.