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Europe’s Top 40 Lenders 2020: The Non-Bank Lenders, Part 2

In the final part of our annual list of Europe's leading property lenders, we continue to look at the alternative debt providers that made their mark in 2020.

In the final part of our run-down of Europe’s Top 40 Lenders 2020, we continue to examine the non-bank lenders that continued to do business in European property markets after the onset of the covid-19 crisis.

Now in its seventh year, this list is intended to highlight those most actively providing liquidity to Europe’s property markets today. This year’s edition contains the highest number of alternative lenders since the list was launched in 2014.

THE NON-BANK LENDERS: PART 2

Caerus Debt Investments

  • Senior, whole loan, mezzanine, bridge, development lender

  • Active in Germany, Austria, Benelux

  • Lending in 2019: €254m (€137m in H2)

  • Lending in 2020 to end Q3: €478m (€386m in Q2-Q3)

  • Loan book at end Q3 2020: €1.2bn

Dusseldorf-based Caerus provided more than €385 million of finance in Q2 and Q3. Among its deals, the independent debt fund manager provided a €200 million development loan for the revamp of a residential complex in Lisbon in May.

Michael Morgenroth, Caerus
Morgenroth: leads Dusseldorf-based
Caerus

In July, it reported a €120 million loan to the Swiss Brisen Group for the development of a Mandarin Oriental hotel in Vienna, through a whole loan financing with an initial €40 million tranche released to the project.

Most of its lending, since the beginning of covid-19 lockdowns, comprised deals that were underway before March, although the firm said the €40 million closed in Q3 represented deals sourced during lockdown.

Caerus, led by chief executive Michael Morgenroth, lends in German-speaking markets and the Benelux countries. According to Real Estate Capital’s Debt Fund 25 ranking, published in June, Caerus raised $2.7 billion of capital between the start of 2015 and the end of 2019.

Cheyne Capital

  • Senior, mezzanine, special situations lender

  • Active in the UK, western Europe

  • Lending in 2019: €919m (€328m in H2)

  • Lending in 2020 to end Q3: €496m (€254m in H2)

  • Loan book at end Q3 2020: €3bn

London-based alternative investment manager Cheyne said sponsor activity was muted in March and April, but demand for recapitalisation, finalising stalled deals and financing opportunistic purchases had subsequently increased.

In Q3 it closed four senior loan deals, totalling £232 million (€254 million), financing residential, co-living, offices and student accommodation property across the UK, France and Spain. It added that it has £800 million of transactions in the pipeline for Q4 2020. In one of the four deals, Cheyne provided a £75 million loan to London-based residential developer Strawberry Star for the mixed-use Lu2on scheme in Luton in the south of England. The residential-led scheme is being built by the end of 2021 on the former site of the town’s Vauxhall Motors factory.

In another of the four deals, Cheyne provided DTZ Investors with debt finance as part of a £70 million forward funding of a 310-room co-living scheme in south London, known as The Collective Earlsfield.

In October, Real Estate Capital reported that Cheyne had held simultaneous first closes on its sixth and seventh debt funds, with £500 million raised.

DRC Capital

  • Senior, whole loan, mezzanine lender

  • Active across Europe

  • Lending in 2019: €716m (€460m in H2)

  • Lending in 2020 to end Q3: €703m (€527m in Q2-Q3)

  • Loan book at end Q3 2020: €2.8bn

In its submission for this list, London-based debt fund manager DRC Capital, which is part-owned by Savills Investment Management, said it closed deals that were underway before March, but with additional steps to ensure risks were mitigated.

London
London: home city of DRC Capital

“This included additional underwriting to ensure that we were covered under a severely distressed covid-related scenario,” it said. “There was also some renegotiation of the investments’ economics, including the pricing and further cash reserves put in place by the borrowers, to further protect us and to adequately reflect the risk as lender.”

Its deals since the crisis started include the provision in August of a £52 million (€56 million) whole loan to Angelo Gordon and Beltane Asset Management for the acquisition and redevelopment of the Marylebone House office building in London’s West End. The building was fully vacant when financed.

“This transaction represents opportunistic lending to strong, institutional sponsors,” DRC said.

DWS

  • Senior, mezzanine, development lender

  • Active across Europe

  • Lending in 2019: €516m (€160m in H2)

  • Lending in 2020 to end Q3: €280m (all in Q2-Q3)

  • Loan book at end Q3 2020: €1.4bn

Germany-headquartered asset manager DWS, which is partially listed on the Frankfurt Stock Exchange, reported completing eight new deals during European covid-19 lockdowns, including senior and mezzanine finance for investment and development.

Frankfurt
Frankfurt: DWS is partially listed on the city’s stock exchange

DWS said it closed €110 million of French senior and mezzanine financing deals at the
start of lockdown “when the market was at its most uncertain”.

It provided a €30 million mezzanine loan alongside senior debt from Société Générale in a €205 million refinancing of the Défense Plaza office building in Paris in May. It acquired an €80 million participation in a French supermarket portfolio financing. DWS provided a €52 million participation in the acquisition financing of a portfolio of 27 Spanish supermarkets as part of a sale-and-leaseback transaction, with LCN Capital Partners purchasing from Spanish retailer Mercadona.

It also participated in the senior financing of a portfolio of Spanish logistics and the mezzanine financing of offices in Madrid and Barcelona.

Generali Real Estate

  • Senior lender

  • Active across Europe

  • Lending in 2019: €200m (All in H2)

  • Lending in 2020 to end Q3: €500m (€310m in Q2-Q3)

  • Loan book at end Q3 2020: €700m

The property arm of Italian insurer Generali launched its European real estate lending strategy in 2019, establishing a debt vehicle with a €1.5 billion target.

In 2020, as the pandemic struck, the firm took the opportunity to win business, closing around €500 million of transactions across Europe for the Generali Real Estate Debt Investment Fund.

Nunzio Laurenziello
Nunzio Laurenziello: runs Generali’s debt strategy

Deals closed after the covid-19 crisis began in Europe included a €60 million participation in a €350 million financing in May for the repositioning of the Treptowers office building in Berlin, which is pre-let to a German government tenant. The sponsor in the deal was Blackstone. In May, it also provided £50 million (€56 million) of a £400 million senior loan understood to be for Brookfield’s London Wall Place.

In October it provided €50 million of a €150 million loan to a European asset manager to finance two office buildings in Rome. It followed that in November with a €75 million participation in a €510 million loan to finance a logistics portfolio across central and eastern Europe.

ICG Real Estate

  • Senior, whole loan, mezzanine, preferred equity lender

  • Active in the UK, expanding into continental Europe

  • Lending in 2019: €625m (€227m in H2)

  • Lending in 2020 to end Q3: €357m (€298m in Q2-Q3)

  • Loan book at end Q3 2020: €4bn

ICG Real Estate, the real estate division of specialist asset manager Intermediate Capital Group, closed several loans following the onset of the pandemic.

Philippe Deloffre
Deloffre: hired for European growth

In July, it provided a £90.7 million (€99.2 million) senior loan to UK property company Maurice Investments to refinance a portfolio of six office buildings on the fringes of the City of London.

In June, it announced a £177 million construction loan for the development of the 266,000 square foot Triptych Bankside residential, office and retail development on the South Bank of London’s River Thames, for developer JTRE.

In June, it hired Philippe Deloffre from BNP Paribas Asset Management and Aisling McCarthy from fintech platform Coimmvest to spearhead its growth in continental European markets. Previously, ICG Real Estate’s focus had been on its home market of the UK.

LaSalle Investment Management

  • Whole loan, mezzanine, development lender

  • Active across Europe

  • Lending in 2019: €1bn (€549m in H2)

  • Lending in 2020 to end Q3: €348m (€142m in Q2-Q3)

  • Loan book at end Q3 2020: €3.6bn

Investment manager LaSalle said that, in the 18 months to the end of September, it arranged £841 million (€926 million) of capital across 14 deals, including £602 million in
10 whole loans and £239 million in four mezzanine loans.

During lockdown, LaSalle closed a €20.3 million whole loan facility to finance the acquisition and capital expenditure of a portfolio of six self-storage properties in Belgium.

In February, it provided a £28.5 million mezzanine loan for the development of a build-to-rent residential scheme in Edinburgh, Scotland. In the same month, it provided a £106 million loan for the development of two luxury retirement villages in the south of England.

LaSalle has been active as a fundraiser. In September, it held a €435 million first close on its fourth flagship mezzanine fund. In March, it closed €300 million of investor commitments for its whole loan strategy, bringing the size of the programme to €900 million. It topped up its residential programme with £475.7 million in Q4 2019 and in December 2019 raised £225 million for special situations investments.

M&G Investments

  • Senior, whole loan, mezzanine, development lender

  • Active across Europe

  • Lending in 2019: €1.5bn (€762m in H2)

  • Lending in 2020 to end Q3: €1.1bn (€652m in Q2-Q3)

  • Loan book at Q2 2020: €5.3bn

In its submission, investment manager M&G said, counting five deals in due diligence at the time, that it expected more than £1.7 billion (€1.9 billion) of lending in 2020.

£353m

Size of M&G’s London office and supermarket deal in October

After a full review of its loan book in March, it paused lending until June, when it became more confident in pricing risk. In September, it funded its first deal since the onset of the pandemic: €215 million of senior finance towards Project Hermes, a portfolio of 31 logistics assets located throughout France, Spain and the Netherlands. M&G participated in a €400 million-plus bank syndication, with a seven-year term.

It provided £353 million in October for the refinancing of the Riverside House office building and a supermarket in London, in one of the largest loan deals by a non-bank in the UK this year. In March, it provided a £98.5 million whole loan for a luxury residential development in London. The loan was secured against 41 newly built but unsold units.

Nuveen Real Estate

  • Senior, mezzanine, whole loan lender

  • Active in the UK, Spain, Ireland, Netherlands, Germany

  • Lending in 2019: €914m (€726m in H2)

  • Lending in 2020 to end Q3: €631m (€328m in Q2-Q3)

  • Loan book at end of Q3 2020: €4.5bn

Investment manager Nuveen Real Estate lends on behalf of its insurance company parent as well as for third-party mandates. This year to the end of Q3, it reported €631 million of lending activity. Its loans since the beginning of covid-19 lockdowns have included deals in the Netherlands, UK and Germany.

Christian Janssen
Janssen: leads Nuveen’s European property lending

In the Netherlands, it provided a €110 million mezzanine loan on a portfolio of office and logistics assets.

In the UK, since lockdown began in March, Nuveen completed a £70 million (€56 million) senior loan on a portfolio of logistics assets in London, a £60 million mezzanine loan on a grade A office asset in London and a £50 million senior loan on a prime office and retail property, also in the UK capital. In another deal, it provided £65 million of mezzanine finance for a portfolio of UK purpose-built student accommodation assets.

Its lending business is led by Christian Janssen in London.

PIMCO

  • Senior, whole loan, mezzanine, development, bridge, loan-on-loan lender

  • Active across Europe

  • Lending in 2019: €830m (€713m in H2)

  • Lending in 2020 to end Q3: €686m (€540m in Q2-Q3)

  • Loan book at end Q3 2020: c€2bn

In 2019, US-based PIMCO provided €320 million of senior investment financing, €230 million of senior development financing, and closed €280 million of loan portfolio acquisitions and financings in the European property market.

Roman Kogan, PIMCO
Kogan: joined from Deutsche Bank

In March 2020, former Deutsche Bank European real estate head, Roman Kogan, joined the business to lead its European lending activities.

It reported closing several deals in Europe since covid-19 hit, including: acquisition financing of an Italian last-mile logistics portfolio; acquisition financing of a Brussels office building; and a residential development financing in Manchester, UK.

The firm is also understood to have participated in a senior loan alongside lenders including RBC Real Estate Capital for three life sciences parks in Cambridge, UK, for Blackstone and BioMed Realty in October.

“We managed to provide the leverage, liquidity and sheer scale of balance sheet that was absent from the market and all without the need for syndication partners or back leverage,” PIMCO said in its submission.

PGIM Real Estate

  • Senior, whole loan, mezzanine, bridge, preferred equity lender

  • Active across western Europe

  • 2019 lending: €1.4bn (€910m in H2)

  • 2020 lending to end Q3: €421m (€140m in Q2-Q3)

  • Loan book at end Q3 2020: €5bn

Investment manager PGIM Real Estate reported €421.2 million of senior lending in 2020 to the end of Q3, with €140 million of that total closed after the end of the first quarter, against the backdrop of the pandemic.

It added that its sixth preferred capital fund, totalling £1 billion, was fully invested at year-end 2019. It held a first close of its seventh PRECap fund in February, with £800 million of commitments and a pipeline of £209 million across six deals.

The Netherlands
The Netherlands: PGIM has grown its loan book in the country

In September, it grew its presence in the Dutch real estate debt market. In the first of two deals, it provided a €56 million acquisition and refinancing facility for seven logistics assets across the Netherlands for a three-year term. In the second deal, it partnered with Dutch bank ABN Amro on a €105 million, seven-year refinancing of a private rented sector residential portfolio in the cities of Amsterdam and Eindhoven.

In January, it committed to a £77.5 million, five-year loan comprising fixed and floating rate tranches against 13 industrial properties across the UK. The deal closed on 31 March, around a week after the UK’s covid-19 lockdown began.

Starwood Capital

  • Whole loan, mezzanine, development, bridge lender

  • Active across Europe

  • 2019 lending: €1.5bn

  • 2020 lending to end Q3: €440m (€350m in Q2-Q3)

  • Loan book at end Q3: €2.7bn

The London-based real estate lending business of US private equity firm Starwood Capital reported in its Q3 quarterly update that it provided a £180 million (€198 million) loan to finance a portfolio of 27 student housing properties in the UK and a €50 million loan to finance 139 industrial assets in the Netherlands and France.

In its submission it also reported closing a senior acquisition loan on an industrial portfolio in the UK and Germany for a longstanding client: “We stood by our client when they needed us and we got the job done in a world of maximum volatility,” it said.

In total, in the third quarter, it funded $656 million of loans, of which $427 million related to Q3 originations and $229 million was under pre-existing loan commitments, according to the factsheet.

Speaking about activity since March, it said in its submission: “We closed acquisition loans that were in process and importantly we are assisting borrowers through tricky trading periods. We increased communication with all our clients immediately when the volatility and lockdown began.”

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