Europe’s Top 40 lenders, part 3: the non-bank lenders

Non-banks made up the largest proportion of Europe's Top 40 Lenders 2019, with a total of 18 on the list.

Welcome to Real Estate Capital’s Top 40 European Lenders 2019. Now in its sixth year, this list is intended to highlight those most actively providing liquidity to Europe’s property markets today.

Here, in the third of three installments, we highlight the non-bank lenders that made the list. To see the first installment of this list – the UK and German banks – click here. To see the second – the other European banks and the North American banks – click here.

NON-BANK LENDERS

Allianz Real Estate

  • Senior, development lender

  • Active across Europe

  • Lending in 2018: €2.1bn

  • Lending in H1 2019: €714m

  • Loan book (March): €7.8bn

Since Allianz Real Estate established its centralised Luxemburg-based debt fund last July, it has deployed €1.5 billion in deals in the UK, Italy, Ireland, Sweden and Germany. Initial capital was raised from Allianz group insurance companies, although the platform will be opened to third-party investors this year in a first for Allianz across debt or equity strategies.

Roland Fuchs, head of European debt, said the fund had allowed the real estate business to accommodate Allianz clients, adding that the firm was “confident about our ability to attract third-party institutional money on to the platform across 2019”.

Across its European lending business, Allianz provided €1.9 billion of senior finance, plus £175 million (€189 million) in construction loans in 2018. In H1 2019, its €714 million volume was entirely comprised of senior loans.

Roland Fuchs, Allianz
Fuchs: Allianz’s head of real estate debt

Deals included its €230 million seven-year refinancing in June of existing debt against the Gropius Passagen shopping centre in Berlin, which is owned by Nuveen and Unibail-Rodamco-Westfield. The scheme is undergoing a refurbishment.

In April, it announced the financing of Starwood’s Southbank Central office scheme in London with a circa €200 million loan. The loan was Allianz’s fourth in the London debt market. In June, the real estate business opened an office in London, with Shripal Shah hired as head of debt origination for the UK operation.

Other 2019 deals include a €136 million participation in a €164 million refinancing of Oxford Properties’ 22,000 square metre, prime office asset at 92 Avenue de France, Paris, in April. In Stuttgart, also in April, Allianz was sole lender in a €140 million refinancing of the Königsbau Passagen retail and office building, owned by Italian investors Antirion and PosteVita.

Apollo Global Management

  • Senior, mezzanine lender

  • Active in the UK and western Europe

  • Lending in 2018: c. $1bn

  • Lending in H1 2019: $360m

  • Loan book: undisclosed

According to one real estate debt advisor, Apollo Global Management, which has numerous sources of capital, can write large-ticket loans “without blinking” and has built a reputation as a serious player in the high-yield lending space.

The US-headquartered alternative asset manager has invested more than $28.2 billion in real estate debt since it launched its platform in 2009 in the wake of the financial crisis.

The European arm of its property lending business was founded in 2013 and is run from London by Ben Eppley. More than $3.1 billion of the firm’s total lending has taken place in the European market. That total includes $1 billion written in 2018, a record year for Apollo’s European operation, including $766 million of first mortgage loans and $254 million of mezzanine debt.

In the first half of 2019, Apollo provided $360 million of debt in European markets; $322 million in first mortgage loans and the remainder in mezzanine debt.

Apollo is a balance sheet lender. It finances real estate through a mix of permanent capital sources, including a mortgage REIT, in-house insurance companies and open-ended managed accounts.

Among the lending deals completed by Apollo since the last top 40 was published in October was a €200 million senior loan to finance the acquisition and repositioning of an 88,400 square metre office complex in Berlin in June. In April, Apollo provided a £78 million (€84 million) senior loan to investment manager Tristan Capital Partners for the construction of a 25-storey office building in Birmingham, 103 Colmore Row, which is due to be the English city’s tallest building on completion.

Among its mezzanine financing deals was a £29.4 million loan for the construction of a mixed-use scheme in central London.

Aviva Investors

  • Senior, stretch senior, whole loan lender

  • Active in the UK, France, Germany, Netherlands

  • UK lending in 2018: £1.3bn

  • UK lending in H1 2019: c. £150m

  • Continental European lending in 2018: €189m

  • European lending in H1 2019: €135m

  • Loan book: c. £8bn

Aviva Investors Real Estate Finance, the property lending business of the investment management arm of UK investor Aviva, continued to expand its presence in continental Europe in 2018 and the first half of 2019.

Last year, it wrote €189 million of loans in continental Europe and ramped up lending activity in the first half of 2019, with €135 million originated by the mid-point of the year. However, the UK remains the mainstay of its real estate lending: the group provided £1.3 billion in 2018.

As well as in-house annuity capital, Aviva raises third-party money for lending. Since the start of 2018, the European team has raised more than €350 million by increasing commitments to its first debt fund and raising a second. The firm has 10 live mandates on a commingled or segregated mandate basis through which it is deploying capital in real estate finance.

Gregor Bamert, Aviva Investors
Bamert: head of real estate finance at Aviva Investors

In late September 2018, just after the last top 40 was compiled, Aviva completed a £264.5 million 15-year refinancing for MedicX Fund, a specialist healthcare infrastructure investor.

In January, Aviva provided a 10-year loan to refinance family-owned real estate investor and developer Bourne Capital’s Legacy Portfolio, which comprises the Queensway and Waterloo estates in London. In the same month, it also took a €50 million participation in a €500 million refinancing of the High-Tech Campus Eindhoven, in a five-year, 64 percent LTV loan. The loan was originally provided by Helaba and Berlin Hyp. In France, it provided a four-year, 65 percent loan-to-value, €133 million acquisition loan for Colisée Gardens in Paris. Gregor Bamert is the head of real estate finance.

AXA Investment Managers – Real Assets

  • Senior, whole loan lender

  • Active across Europe

  • Lending in 2018: €3bn

  • Lending in H1 2019: €1bn

  • Loan book: €8.2bn

The Paris-headquartered insurer is a major source of liquidity in the European real estate debt markets, although its influence is primarily in the syndicated loan market, rather than in primary origination. As such, AXA is something of a low-key, but major player.

Across its real assets platform, which includes real estate and infrastructure, AXA Investment Managers – Real Assets provided €4.4 billion of debt in 2018, of which almost €3 billion was property lending.

The firm has continued to raise capital. Since October, AXA reported raising just over €1 billion, of which €960 million was from third-party clients.

“Size is essential to access the real asset debt market as it gives us access to tier-one quality loans,” a spokeswoman told Real Estate Capital.

AXA is currently lending through its CRE Senior 10 fund, which closed on €1.5 billion in 2017. A focus of AXA’s recent lending strategy has been alternative assets. The firm is conscious that the European property cycle is in an advanced stage, the spokeswoman said, with annual investments averaging less than 10 percent of deals reviewed each year.

While this list focuses on Europe, an aspect of AXA’s recent business outside the region is worth noting. In November, it announced an agreement to acquire one of Quadrant Real Estate Advisors’ US-focused lines of business, including a dedicated investment team and the management of €8 billion of US commercial real estate loan mandates. The deal is set to bring AXA’s global loan portfolio to around €18 billion.

Isabelle Scemama is the group’s chief executive and is based in Paris. Timothé Rauly is head of the funds group and Antonio de Laurentiis is the head of private debt, CRE finance.

Barings Real Estate Advisers

  • Senior, development, whole loan lender

  • Active in the UK, Ireland, Netherlands and Spain

  • Lending in 2018: £420m

  • Lending in H1 2019: £265m

  • Loan book (November 2018): £2.25bn

Sam Mellor and Chris Bates
Mellor and Bates: spearheading Barings’ real estate lending

Barings Real Estate Advisers, a subsidiary of US insurer MassMutual, has expanded its geographic spread into continental Europe after several years focusing on the UK, in addition to its home market of the US. The firm has now originated more than €290 million of transactions in Germany, Spain, the Netherlands and Ireland.

In October 2018, Barings hired Sam Mellor, formerly a real estate debt specialist with hedge fund Chenavari Investment Managers, to spearhead a continental European lending drive. In August, it provided a €40 million construction loan on a Spanish retail park. The 36-month loan, provided to investor Kronos Investment Group and its unidentified joint venture partner, will finance the development of a property in Dos Hermanas, outside Seville. The firm also said that its continental European deals since the last top 40 included speculative logistics development facilities in Madrid and Barcelona.

In the UK, the firm reported providing a £100 million, 40 percent loan-to-value loan secured by a mixed-use portfolio across the country.

The firm was granted a new pan-European lending mandate of $450 million. Since 2013, the firm’s London-based real estate lending operation, led by former Royal Bank of Scotland banker Chris Bates, has lent on behalf of MassMutual, although the firm told Real Estate Capital last November that it planned to widen its capital base by inviting outside investors into its real estate debt strategy.

Blackstone Real Estate Debt Strategies

  • All types of real estate lending

  • Active across western Europe

  • Lending in 2018: €2.2bn

  • Lending in H1 2019: €1.2bn

  • Loan book: $5.1bn

In May, Bloomberg reported private equity giant Blackstone was seeking $5 billion for its fourth real estate debt-focused fund, Blackstone Real Estate Debt Strategies IV. If the firm, which is one of the most prolific real estate fundraisers out there, is successful, it will boost its already significant firepower in the property debt markets.

Globally, during 2018, Blackstone’s property lending business, Blackstone Real Estate Debt Strategies, provided gross loan commitments of $14 billion. The European share of business was €2.2 billion across 11 deals. An additional €1.2 billion was closed in nine deals during the first half of this year.

The strategy employed by BREDS is to lend across all property asset classes and across the capital structure, including mezzanine and whole loans, corporate debt, development finance, preferred equity and securitisations.

Transactions closed in Europe since the last top 40 in October included a £185 million (€205 million) mezzanine loan, secured by a UK leisure portfolio.

In the transitional whole loan space, BREDS provided a €337 million facility in December to Värde Partners to finance a portfolio of eight hotels, featuring 1,154 keys, across Italy, France, Hungary and the Czech Republic. The hotels are subject to a £76 million refurbishment and repositioning programme.

Another whole loan deal was BREDS’ £102 million loan secured by a 200,000 square feet office building in central London, which is subject to a £57 million refurbishment project.

“The team continues to broaden its investment approach globally and capitalise on its ability to navigate structural complexity, providing financing solutions where traditional capital is scarce,” a spokeswoman commented.

In Europe, BREDS is led by real estate division managing director Michael Zerda.

Cain International

  • Development lender

  • Active in the UK, Italy

  • Lending in H1 2019: £550m

  • Loan book: £1.5bn

Cain International, the London-based real estate equity and debt investor, is a new entrant to this annual list. The firm is a selective lender – indeed, it did not write a loan in 2018 – but when it does decide to invest through debt, it usually makes headlines due to its ability to finance interesting schemes and write large loans.

John Cole, head of debt Cain
Cole: Cain’s head of debt

A prime example was its £385 million (€419 million) six-year construction loan, provided in June, to private equity firm Henderson Park and residential investor Greystar, to fund the 894-unit Nine Elms Parkside build-to-rent residential tower in London.

In June, it provided a £56 million loan to finance the Landsby, a 101-room high-end retirement living scheme in Stanmore, north London. The scheme is being delivered by specialist later living developer and operator Elysian Residences.

Cain specialises in development whole loans. Since it began lending in 2014, it has financed properties including high-end central London apartment schemes and new-build offices. The firm’s website says it has committed $2.57 billion since 2014, including in the US.

Cain expanded its debt strategy into continental Europe this year. In July, it provided a €120 million bond financing to the Italian developer Barletta Group. The 3.5-year development bond will fund the construction of two hotels in Italy to be operated under the Soho House and Rosewood brands.

Last autumn, the firm completed the purchase of a majority stake in UK principal lender Fortwell Capital, providing it with £400 million of investment capital and gaining exposure to the short- and medium-term property loan market. In the first half of 2019, Fortwell provided £260 million of whole loans, ramping up its business from £80 million in 2018.
John Cole is Cain’s head of real estate debt. In January, he hired former Barclays real estate banker Graham Keable as a principal in the debt team.

Cheyne Capital Management

  • Senior, mezzanine, special situations lender

  • Active across Europe

  • Lending in 2018: £949m

  • Lending in H1 2019: £616m

  • AUM: £2.6bn

London-based alternative investment management company Cheyne Capital keeps a relatively low profile in the property lending market but has a reputation for sourcing interesting financing deals. The real estate debt team is focused on direct property lending, including senior loans to value-add assets and higher yielding loans, as well as securitised debt and selected special situations deals.

Of its £616 million (€671 million) of new lending in the first half of 2019, Cheyne reported providing £458 million of senior loans, £151 million of mezzanine loans and £7 million in special situations deals.

Most of its 2018 business, which totalled £949 million, was senior debt, with just £20 million of mezzanine and £20 million of special situations deals.

On the fundraising front, Cheyne told Real Estate Capital it had raised £100 million for its publicly listed vehicle, Real Estate Credit Investments, since the end of September 2018, increasing the vehicle’s assets under management to £335 million. Cheyne has not raised capital for its private real estate lending funds since October, following the £600 million closing of Cheyne Real Estate Credit Fund V in July 2018.

The next vintages in Cheyne’s private real estate lending strategy will be launched later this year, the firm said. Cheyne is targeting a combined fundraise of £1.5 billion for CRECH VI and VII with a first close for both funds expected in Q4 2019.

Cheyne’s real estate debt business is led by Ravi Stickney and has a total team of 29 people. Since the beginning of 2018, Cheyne has expanded its French origination team, helping it close €300 million of deals in the country since then. In Q1, the firm opened an office in Berlin.

Since October, Cheyne closed a second transaction with Quintain to support the development of its build-to-rent residential scheme at Wembley Park in north London.

DRC Capital

  • Senior, whole loan, mezzanine lender

  • Active across Europe

  • Lending in 2018: £729m

  • Lending in H1 2019: £514m 

  • Loan book: £1.8bn

On 30 September 2018, Savills Investment Management, the international real estate investment manager, completed its acquisition of a 25 percent stake in the independent private real estate debt fund manager DRC Capital. Savills has the option of acquiring the remaining 75 percent of the company in 2021.

“The joining with Savills Investment Management is a compelling fit in terms of the vision to serve investors who are increasingly seeking a single point of access to the capital structure,” says Steve Emsley, DRC’s chief financial officer.

Since the last top 40, DRC has continued to grow its lending business. In the first half of 2019, it provided £514 million (€562 million) of loans, of which 14 were whole loans, accounting for £497 million of lending. The remaining £17 million was divided between two senior loans.

The firm is on target to exceed its 2018 volumes of £729 million. Last year’s volume also included 14 whole loans, totalling £522 million, as well as seven senior loans, totalling £172 million, and a £35 million mezzanine loan.

In its early years, DRC began by raising capital for high-yield and mezzanine lending, although it has expanded into the whole loan and senior loan markets in recent years. The firm held a final close of its £700 million UK Whole Loan Fund in November. Since October, the firm reported raising £607 million of third-party capital across its strategies.

In late May, DRC, as mezzanine lender to the Harrogate portfolio of three UK shopping centres, indicated it would take over the equity of the portfolio, after its owners, Oaktree Capital Management and London & Associated Properties, decided not to inject equity following a loan breach.

ICG-Longbow

  • Senior, whole loan, mezzanine, development lender

  • Active in the UK

  • Lending in 2018: £694m

  • Lending in H1 2019: £195m

  • AUM: £3.7bn

ICG-Longbow provided its largest-ever senior loan in October 2018; a £125 million (€136 million), 60 percent loan-to-value facility to Pall Mall Estates, a family office and longstanding client of the lender. The loan was secured by an industrial and mixed-use portfolio located across the UK.

Martin Wheeler, co-founder of ICG-Longbow
Wheeler: co-founder of ICG-Longbow

In April, the firm completed the deployment of its third senior debt fund, with a series of loans to Leeds-based student accommodation and apart-hotel operator Park Lane Properties. The loans totalled £55 million. ICG-Longbow Senior Debt Programme Vintage III had closed on £370 million in August 2017.

In December, ICG-Longbow provided a £49 million facility to a hotel and leisure group to refinance a portfolio of six regional Park Inn hotels and fund capex to implement a rebranding and repositioning programme.

In the first half of 2019, ICG-Longbow provided £168 million of senior loans, £23.7 million of whole loans and £4.3 million of preferred equity. Its 2018 total of £694 million comprised £409 million of whole loans, £258 million of senior loans, plus £27.7 million of mezzanine, joint venture equity and preferred equity.

Since October 2018, when we last published the Top 40, ICG-Longbow has raised £309 million of third-party capital. The firm is among the top fundraisers in the European real estate debt fund industry, coming second in our Debt Fund 20 ranking, published in June, having raised $4.74 billion from third parties in the five years from 2014 to 2018, inclusive.

ICG-Longbow was founded as Longbow Real Estate Capital in 2006 by Kevin Cooper and Martin Wheeler, who remain co-heads of real estate UK. Since the financial crisis, the firm has established itself as a leading non-bank provider of property debt in the UK. The firm is the real estate business of UK asset manager Intermediate Capital Group.

LaSalle Investment Management

  • Whole loan, mezzanine, development, special situations lender

  • Lending in 2018: £378m

  • Lending in H1 2019: £680m

  • Loan book: £1.1bn

Of the just over £1 billion (€1.1 billion) of loans arranged by LaSalle in Europe in 2018 and the first half of 2019, £623 million was written across eight mezzanine loans with £436 million across 10 whole loans.

In H1 2019, £283 million was provided in six whole loans, with £398 million accounted for by three mezzanine loans. Among them was a deal LaSalle said was one of Europe’s largest mezzanine transactions of the last 12 months, a £181m mezzanine loan for the acquisition of a large, mixed-use portfolio of assets mainly located in and around London.

Amy Aznar, head of debt LaSalle
Aznar: LaSalle’s head of debt and special solutions

Other recent deals included a £58 million whole loan for the development of a build-to-rent scheme in Liverpool and a £110 million whole loan for the refinancing of a 42-storey tower in London, comprising 200 build-to-rent units and a hotel. Other whole loans included a €30 million refinancing of an international school in Dublin and a £46 million refinancing of a London data centre, which the firm argued demonstrated its willingness to finance alternative assets.

Since October 2018, LaSalle has closed on €600 million of commitments for a new whole loan programme, which enables the firm to provide loans to 80 percent loan-to-value, focused on western Europe and the Nordic countries. It also extended its residential finance programme with fresh commitments of €159 million.

In late 2018, LaSalle purchased a $1.2 billion majority stake in Latitude Management Real Estate Investors’ commercial real estate debt fund business. The acquisition formed part of a strategy to expand its debt business in the US.

LaSalle’s debt team is led by Amy Aznar, based in London.

LGIM Real Assets

  • Senior lender

  • Active in the UK

  • Lending in 2018: £865m

  • H1 2019 lending: undisclosed

  • Loan book at 31 March 2019: £2.5bn

LGIM Real Assets, the investment management arm of UK insurer Legal & General, has returned to this list following a three-year absence, after ramping up its real estate lending activities.

It appointed Blackstone and Royal Bank of Scotland alumna Lorna Brown as its head of real estate in January 2018 as part of a drive to grow its property loans business, in what one debt market participant said at the time was a “statement of intent” from the insurer.

Lorna Brown
Brown: joined LGIM in 2018

The insurer provides fixed and floating rate debt on behalf of pension fund capital for terms ranging from three to 15 years. It currently limits its activity to the UK in deals up to a loan-to-value ratio of 65 percent.

Speaking to Real Estate Capital in May 2018, Brown said: “We look to underwrite senior risk, but we are able to look at short- and long-duration loans on a range of properties including operational assets. We can back assets subject to active business plans; it’s what people might expect of an alternative lender.”

In 2018, LGIM provided £865 million (€949 million) of senior loans in the UK market. It did not disclose its H1 2019 total.

Deals included February’s £420 million loan to investor/developer Almacantar for the long-term financing of the commercial element of 1 and 2 Southbank Place in London, on which WeWork has a 20-year lease. In June, it provided a £285 million long-term financing to a subsidiary of Glasgow City Council to support the settlement of an equal pay liability. The facility was secured on 473 commercial properties located in and around the city.

In Q4 2018, it provided a 15-year loan to finance the acquisition of 55 Gresham Street, a City of London office building, which was purchased by Ella Valley Capital, for a reported £179 million.

M&G Real Estate Finance

  • Senior, whole loan, junior, development lender

  • Active across Europe

  • Lending in 2018 £868m

  • Lending in H1 2019 £665m

  • AUM (May 2019) £4.3bn

In the first half of 2019, M&G Real Estate committed £665 million (€726 million), to investments including transitional and development loans. The H1 2019 volume was across seven loans in the UK, Ireland and Italy, of which £523 million was senior debt.

In 2018, M&G committed to £868 million of loans across nine loans in the UK and France. Of that total, £784 million was senior debt, £69 million was junior and £15 million was stretch senior.

John Barakat
Barakat: leads M&G debt strategies

Since October, when the last Top 40 was published, M&G reported raising more than £344 million for the fourth, fifth and sixth vintages of its Real Estate Debt Fund strategies. In addition, the firm has £84 million of approved commitments, expected to close imminently. A spokeswoman adds that the firm has closed on more than £1 billion for its latest Real Estate Debt Fund commingled strategies to date.

In addition, the firm has raised £700 million for segregated mandate vehicles since October.

Recent lending deals included Project Gate in Q2 2019, which involved a refinancing and development financing of two office assets and a residential property in London’s Mayfair area. The deal includes the speculative development financing of one of the office buildings.

In the first half of 2019, M&G reported increased dealflow from continental Europe. In July, M&G provided a €117.5 million whole loan to Meyer Bergman to refinance and fund the repositioning of the Corti di Baires mixed-use retail and residential scheme in Milan.

The business is run by John Barakat.

MetLife Investment Management

  • Senior lender

  • Active in the UK, Ireland, Netherlands

  • New lending in 2018: c. $1bn

  • New lending H1 2019: $318m

  • Loan book: $4.3bn

MetLife Investment Management, the institutional asset management business of US insurance giant MetLife, increased its European commercial mortgage lending by 3.6 percent in 2018, with just under $1 billion of loan originations by its European lending business.

This contributed to $13 billion in commercial mortgage loans originated globally, increasing its total commercial mortgage assets under management to $62.4 billion. The lender’s European loan book continues to grow and now accounts for around 7 percent of the global book.

The portfolio’s highest concentration is offices, but also includes industrial, hotel, retail, private rented residential and student accommodation.

In the first half of 2019, the insurance firm provided $318 million of new lending. Since the start of 2018, the insurer’s deals have included a $277 million loan on a trophy office building in London’s Canary Wharf. In continental Europe, MetLife has provided two retail loans in the Netherlands, including the refinancing of the Maxis Muiden shopping centre near Amsterdam for Angelo Gordon and Dutch asset manager Cairn Real Estate. In Ireland, MetLife provided loans for private rented sector accommodation in Dublin and Cork.

Pipeline deals in Europe include student housing and office loans, the firm said. The firm’s focus is on stabilised, or near-stabilised real estate, with loan-to-value concentrated between 55 percent and 65 percent.

Capital for the strategy comes from MetLife Investment Management’s clients, with the platform being open to third-party investors. Gary Waistnidge is the head of the debt team for MetLife’s UK office.

Nuveen Real Estate

  • Senior, junior, development lender

  • Active in UK, Ireland, Spain

  • Lending in 2018: £1.4bn

  • Lending in H1 2019: £219m

  • Loan book: £4bn

Investment manager Nuveen Real Estate made its first debt investment in Ireland in Q1 2019, with £68 million (€74 million) provided in the country. The lender is understood to have provided finance to support the €145 million acquisition of Dublin’s Charlemont Exchange office building by Savills Investment Management on behalf of clients of Korea’s Vestas Investment Management.

Nuveen is aiming to expand its lending into the Spanish market in Q3, with a £15 million loan in the pipeline.

The firm closed £219 million of loans in total during the first half of 2019 and reported an additional £750 million in execution at the half-year point. The UK accounted for £151 million of H1 lending, as well as £721 million of the loans in the pipeline. Its overall H1 lending included £114 million of senior debt and £90 million in whole loans. Deals included a £56 million four-year loan to finance the purchase of 15 Fetter Lane in London by an international investor in May.

In 2018, Nuveen lent in the UK exclusively, deploying £1.4 billion. Nuveen reported 2018 whole loan lending – which it defines as senior loans with loan-to-value of more than 60 percent – of £859 million, with senior at £459 million and the remainder in junior loan deals.

Nuveen’s recent activity has been weighted towards lending in the office sector, with £166 million in H1 and £650 million in 2018. Last year, it also lent £351 million in the retail sector and £278 million to residential.

The firm also secured two new separate account mandates with Korean investor Samsung SRA and Finnish pension fund Ilmarinen since last October. The size of the mandates was not divulged.

The real estate platform of Nuveen, the TIAA-owned investment management firm, rebranded from TH Real Estate in January.

PGIM Real Estate

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

  • Active in the UK and western Europe

  • Lending in 2018: £1.1bn

  • Lending in H1 2019: £465m

  • Loan book: $5.5bn

The property lending business of PGIM Real Estate, which is part of US-based Prudential Financial’s global investment management business, divided its activities between senior and value-add lending strategies in the 18 months to the end of June 2019.

Andrew Macland
Macland: runs PGIM’s European property debt business

In 2018, it provided £702 million (€767 million) of senior debt, with the remaining £400 million deployed in value-add loan deals. The split was more even in the first half of 2019, with £250 million deployed in seven transactions with a total £753 million property value and £215 million in senior loans. However, at the mid-year point, PGIM reported an additional £509 million of senior loans was due to close across six deals.

The firm’s European real estate loan book is divided between $4.5 billion of senior debt and $1.1 billion of value-add lending. Since 2009, when the firm launched its European property lending programme, it has raised and invested more than $8.5 billion of capital. In 2018 and 2019 to July, it had raised $1.8 billion from third parties for real estate debt investment strategies.

Lending deals have included a £172 million financing deal with UK student housing provider Vita Student for nine purpose-built student accommodation properties collectively valued at £550 million, located in six UK cities.

In April, it provided a €350 million loan for its affiliated insurance company portfolios, alongside specialist insurer Rothesay Life, for the World Trade Centre in Amsterdam, owned by a CBRE Global Investors office fund. The loan had an eight-year term.

In June 2018, PGIM named PGIM Real Estate chief executive Eric Adler as chairman of the real estate business, aligning its real estate equity and debt platforms. PGIM Real Estate’s European debt platform is led by Andrew Macland.

Rothesay Life

  • Senior lender

  • Active in the UK and other selected European countries

  • Lending in 2018: c. £1bn

  • Lending in H1 2019: £600m

  • Loan book: £2.5bn

In the last year, Rothesay has announced itself as a serious contender in European real estate finance. The London-based specialist insurer does not often originate loans, but when it does see the opportunity to make a real estate debt investment, it can go big.

In January, it finalised a £689 million (€780 million) loan to South Korea’s National Pension Service to fund the sale-and-leaseback of Goldman Sachs’ European HQ at Plumtree Court, in one of the largest loans against a single London asset so far this year, though Rothesay included it in 2018’s figures. The five-year facility, provided at a loan-to-value ratio below 60 percent, was understood to be priced below 150 basis points.

Harish Haridas
Haridas: head of real estate debt at Rothesay Life

Rothesay has been quietly building a real estate loan book since 2015, when it provided a £220 million financing of motorway service areas in southern England. Other recent deals include the £180 million, five-year financing of the Sanctuary Buildings office property in London for South Korea’s Hana Financial Group and Kiwoom Securities, also in January. In April, it provided a continental European loan, writing a €350 million facility alongside PGIM Real Estate to refinance the CBRE Dutch Office Fund for eight years.

Former Royal Bank of Scotland and Morgan Stanley banker Harish Haridas is the firm’s head of real estate debt. In a March interview, he told us Rothesay could be expected to provide around £1 billion of property lending per year. The firm, which was launched by Goldman Sachs in 2007, is now owned by Blackstone, GIC and MassMutual. It specialises in insuring annuities provided by other parties, rather than offering insurance products to the public.

Starwood Capital

  • Whole loan, development, mezzanine, bridge lender

  • Active across Europe

  • Lending in 2018: $779m

  • Lending in H1 2019: $610m

  • Loan book: $2bn

Starwood’s 2018 European lending volume, almost $800 million, outstripped 2017’s $650 million, helping grow its loan book by $400 million to $2 billion since the last Top 40 list in October.

The private investment firm lends in Europe through its US mortgage REIT, Starwood Property Trust, and its listed debt vehicle, Starwood European Real Estate Finance Limited. In Q2, it raised £40 million (€43 million) for SEREFL – a quasi-permanent fund – bringing its total to £420 million.

SEREFL’s March factsheet showed 64 percent of invested assets were in whole loans, with mezzanine accounting for 30.1 percent. A stand-out recent mezzanine deal was its €104 million loan to finance a portfolio of 165 assets located across the Netherlands, Germany and Finland, split equally between its two sources of capital.

The UK, Ireland and Spain are considered Starwood’s core lending markets. In November, it closed a €19.5 million whole loan in Madrid, secured by a mixed-use office and hotel property, bringing its total Spanish lending to €182 million. In the UK, Starwood is understood to have provided £250 million in Q1 to support Blackstone’s purchase of events venue operator NEC Group, secured by its Birmingham exhibition centre.

Lorcain Egan, managing director with the firm, says the debt business has a run rate of $1 billion for the last 12 months: “The dividend on the property trust and European fund has been constant. We have evolved the lending strategy to deliver that performance, despite the pressure on returns. For example, early in the cycle, we did a lot of development deals, followed by a gap where it was hard to justify the risk-adjusted returns, but now we are lending against development opportunities again.”

A recent example of Starwood backing construction finance was its £41.25 million mezzanine loan in December, for a prime mixed-use scheme in London.


Click here to access Part 1 and Part 2 of Europe’s Top 40 Lenders list