Europe’s Top 40 Lenders 2020: The Banks, Part 1

Starting today, Real Estate Capital reveals the organisations that have made our annual list of those most actively providing finance to European property markets. Here, we start with the banks.

This is the first in a four-part series of Europe’s Top 40 Lenders 2020

This year’s rundown of Europe’s Top 40 Lenders has a very different tone to previous editions.

In recent years, this list has showcased the activities of a lending industry in full stride. This time, it illustrates an industry dealing with an unprecedented crisis.

First, a reminder of what this list is all about. It is not a ranking: we do not have a single metric by which to grade lenders. Rather, it was launched in 2014, then as a Top 30, to list the organisations we saw as most actively providing liquidity in their parts of the market. It has since become an annual measure of the participants at the forefront of the market.

In September, we invited lenders to tell us their highlights since the 2019 edition was published. We asked for evidence of their response to the covid-19 crisis in Europe, with emphasis placed on the Q2 and Q3 period. We then selected 40 lenders, after carefully considering the information in front of us.

Before you delve in, here are a few observations.

There are fewer banks than in previous lists. This does not mean banks were out of the game in 2020. Indeed, some of the largest lending deals were done by investment banks, while commercial banks continued to selectively lend, mainly to existing clients. However, it is clear investment banks have been far less bullish, most likely due to uncertainty in the loan distribution market. And while commercial banks did not shut up shop, their focus was more on managing their exposure to real estate than growing it.

Alternative lenders were keener to tell us what they have done this year. That does not mean they have all aggressively sought business during this crisis. Some of the lending volumes reported are modest in comparison with previous years, but should be viewed against the backdrop of a far slower real estate finance market.

There were plenty of decisions to make. Many of those lenders that paused their activity due to the pandemic did so for sensible reasons. But this list provides a snapshot of those striving to maintain liquidity in highly uncertain market conditions.

Please enjoy finding out who made it on to our list.

THE BANKS: PART 1

Bank of America

  • Senior, whole loan, mezzanine lender

  • Active across Europe

  • Lending volumes and loan book: Undisclosed

The Squaire, Frankfurt
The Squaire: Bank of America provided new finance

Bank of America was tight-lipped about its lending volumes. However, it made this list due to compelling evidence of its 2020 activity.

In August, the bank priced the first European commercial mortgage-backed securities deal since the onset of the pandemic. The £450 million (€488 million) Taurus 2020-2 UK securitised part of a £518 million loan to Blackstone to finance a mixed-use UK portfolio of mainly logistics property. The deal effectively tested the strength of demand from institutional investors for European CMBS.

In April, Bank of America provided part of a loan, alongside investment banking peers Citi and Morgan Stanley, to Blackstone for its £4.7 billion acquisition of the UK’s iQ Student Accommodation business from Goldman Sachs and Wellcome.

In February, the bank also financed AGC Equity Partners’ acquisition of The Squaire, Germany’s largest office building. Previously, it had securitised debt secured by the building for former owner Blackstone.

Barclays

  • Senior, capital markets lender

  • Active in the UK

  • Lending in 2019: €5.4bn (€2.2 bn in H2)

  • Lending in 2020 to end Q3: €1.9bn gross/€870m net

  • Loan book at end Q3 2020: €10bn gross

The UK bank reported £1.7 billion (€1.9 billion) of gross property lending by its corporate banking team in the first nine months of 2020. However, it told Real Estate Capital it completed £791 million of net new origination, not including refinancing and extensions.

“While activity levels have reduced, Barclays has continued to write new business,” a spokesperson said.

Deals included a £50 million development facility in September for UK private rental specialist The PRS REIT to fund the delivery of sites across its initial portfolio. In August, it provided investor and developer Curlew Capital with a £49.5 million construction loan to finance four student accommodation schemes across the UK. The bank was close to finalising the deal when the UK was placed into lockdown, temporarily halting construction.

In February, the bank arranged a £225 million financing, of which it held 50 percent, to fund a company owned by family investor Freshwater Group in its takeover of London-based property owner Daejan Holdings.

In October 2019, it partnered with HSBC and NatWest in a £450 million revolving credit facility to UK real estate investment trust Derwent London, which included a £300 million green tranche.

Berlin Hyp

  • Senior, whole loan, development lender

  • Active in Germany, France, Benelux, Poland, Czech Republic

  • Lending in 2019: €6.3bn (€4.4bn in H2)

  • Lending in 2020 to end Q3: €3.3bn (€2.2bn in Q2-Q3)

  • Loan book at end Q3 2020: €23.1bn

Germany’s Berlin Hyp reported closing €2.2 billion of new lending in Q2 and Q3 2020, since the onset of the covid-19 crisis in Europe. In July, it provided €144 million, alongside the same amount from another Berlin-based bank, Berliner Sparkasse, to finance a portfolio of German apartments for residential group Covivio.

It followed that deal in August with a €750 million loan to Berlin-based property group GSG to finance 41 commercial properties in Germany, covering 8.3 million square feet.

In its submission, Berlin Hyp said it did not withdraw any loan deals once the pandemic began but noted that reduced activity by its clients led to reduced lending activity. “When granting new loans, we decide on a case-by-case basis after careful consideration,” it said.

On the environmental, social and governance front, the bank said it hit its target of increasing the proportion of green buildings, according to its sustainability agenda, in its loan portfolio to 20 percent in 2019, ahead of schedule. Its aim is for a third of its portfolio to be green by 2025.

BNP Paribas

  • Senior, whole loan, development lender

  • Active across France, UK, Italy, Germany, Spain, Netherlands

  • Lending volumes and loan book: Undisclosed

In its submission, France’s BNP Paribas said that in the past year it had integrated its real estate business into a combined capital markets platform, expanding its range of products.

In November, it partnered with Bank of America and Société Générale in the Pearl Finance 2020 DAC commercial mortgage-backed securities transaction. The €318.6 million pan-European transaction for Blackstone was the bank’s first public euro-denominated multi-tranche CMBS.

In May, it participated, alongside five other lenders, in a €1.1 billion, seven-year loan secured by five French shopping malls for a consortium comprising Unibail-Rodamco-Westfield, Crédit Agricole Assurances and La Française Group.

In December 2019, it was bookrunner and underwriter in a £500 million, five-year refinancing of 1-5 Bank Street, a 716,000 square foot office tower recently developed in London’s Canary Wharf, for Brookfield and Qatar Investment Authority. In the same month, it was sole underwriter of a €290 million loan to a consortium of investors led by Amundi Immobilier for the acquisition of a high street retail, office and residential portfolio in Lyon, France, comprising 38 properties.

Citi

  • Senior, mezzanine lender

  • Active across Europe

  • Lending volumes and loan book: Undisclosed

Citi was another US investment bank reluctant to share its lending and loan book figures. However, deal evidence won it a spot in this list.

£340m

The size of the loan arranged by Citi in April to refinance two luxury London hotels

In April, Real Estate Capital reported Citi had arranged a £340 million refinancing of two luxury London hotels, the Berkeley and the Connaught, for Constellation Hotels, owned by Qatar Holding. Citi said the fixed private placement was done on a 10-year basis. It is understood that, also in April, Citi was part of a consortium that provided a £2.6 billion loan to finance Blackstone’s £4.7 billion acquisition of UK student housing platform iQ Student Accommodation.

In March, it provided acquisition finance alongside Goldman Sachs for logistics firm GLP’s acquisition of Goodman Group’s central and eastern European logistics portfolio. In its submission, Citi said it provided $1 billion of lending across three European logistics transactions, all of which had closed since the beginning of the covid-19 crisis.

Crédit Agricole

  • Senior lender

  • Active in France, UK, Italy, Spain

  • Lending in 2019: €4.1bn (€2.2bn in H2)

  • Lending in 2020 to end Q3: €1.4bn

  • Loan book at end August 2020: €11.1bn

In June, the French investment and commercial bank was mandated lead arranger on a €150 million, five-year revolving credit facility to French office and healthcare property company Icade Santé. The deal contained a mechanism by which the margin agreed by two of the lenders in the deal will be matched by the sponsor to benefit Institut Pasteur’s research into covid-19 vaccines.

In May, it acted as sustainability co-ordinator alongside Spanish bank BBVA in the conversion of Spain’s Grupa GMP’s €525 million secured tranche of a syndicated loan into a green loan. In January, it also provided its first green real estate loan in Italy, in a €91 million co-financing of an a office and retail property in Milan for asset manager DeA Capital Real Estate.

In November 2019, it provided an €82 million loan to The Student Hotel to finance two new hotel projects in Paris and Toulouse in a sustainability-linked facility. In Spain, it was sole bookrunner in a €62 million green structured financing to a joint venture formed by Tristan Capital Partners and Acciona for the development of an office complex in Barcelona.

DekaBank

  • Senior lender

  • Active in Germany, UK, Ireland, France, Italy

  • Lending in 2019: €4bn (€2.6bn in H2)

  • Lending in 2020 to end Q3: €1.5bn (€900m in Q2-Q3)

  • Loan book at end Q3 2020: €10.4bn

The London arm of Germany’s DekaBank provided three UK financing deals in June and July.

Chris Bennett, DekaBank
Chris Bennett: heads DekaBank’s London branch

In July, it provided a £40 million loan to a joint venture between logistics owner Goodman and Malaysia’s Employee Provident Fund for an Amazon-occupied logistics unit in Kent. In the same month, it provided a £55 million loan to Hines Global Income Trust for a portfolio of UK logistics properties.

In June, DekaBank was sole arranger of a £56.3 million loan to Swiss Life Asset Managers and UK boutique investor Mayfair Capital, secured on the Bonhill Building office property in London for four years.

In January, before covid-19 hit Europe, DekaBank closed a £94 million, 18-month loan extension to asset manager Schroders, secured on the 55 Bishopsgate office building in London, to enable the sponsor to progress its asset management strategy. DekaBank said its lending levels are expected to reach €2.9 billion in 2020.

Deutsche Bank

  • Senior, mezzanine lender

  • Active across Europe

  • Lending in 2019: €6.4bn (€4bn in H2)

  • Lending in 2020: Undisclosed

  • Loan book at end Q3 2020: €7bn

Germany’s Deutsche Bank is one of the few lenders to issue commercial mortgage-backed securities in Europe in 2020. In October, it closed the first social housing CMBS in the continent. Sage AR Funding No. 1 securitised a £220 million floating-rate UK social housing-backed loan.

In February, the bank financed a portfolio of six office assets in Barcelona and Madrid for US investor Blackstone with a €150 million loan. The deal followed late-2019 transactions including: a €1 billion participation in the €3 billion financing of Blackstone’s purchase of Dream REIT’s German office portfolio; a €300 million acquisition financing of 21 office assets in Germany for Apollo Global Management; and a £250 million participation in a £500 million financing of Brookfield’s London Wall Place office scheme in London.

The bank added that it has spent a lot of time since the onset of covid-19 refinancing its existing borrowers across its portfolio. “Originations and restructures in motion as covid lockdowns hit were largely progressed,” the firm said in its submission.

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