ING continues Portuguese drive

Dutch bank ING has continued its lending drive in the Portuguese market with a €43.5 million financing of Marathon Asset Management’s first property investment in the country.

The New York-based fund manager will use the five-year loan to fund the purchase of an office real estate portfolio of 13 assets located in Lisbon, including the capital’s iconic Marconi and Santa Maria office buildings. The 30,323 square-meter portfolio, with a market value of €80 million, represents an opportunistic investment for Marathon.

“We will invest further into the properties to improve their appearance and value,” said Alvaro Travesedo, senior vice-president at Marathon.

“We believe the Portuguese market will perform strongly in the coming years and are committed to growing our footprint in Portugal. We hope to make additional acquisitions over the coming year.”

ING also has faith in the Portuguese market. The bank entered the local office market last year, and has already provided €150 million of debt to the sector in Portugal.

Its first office loan was announced last May, when it backed Global Asset Capital, a private equity and venture capital firm specialising in structured finance and real estate, with €40 million to refinance three buildings in Lisbon.

Competition for the financing of real estate transactions has become high within the banking sector, with a pressure on margins set to increase, a recent report from CBRE on the Portuguese market noted.

CBRE has put average senior margins on prime office assets in Lisbon at 2.5 percent. Although competition could bring margins down, a premium to more established markets remains.

Investment in commercial real estate is expected to remain active, with projections to be up by almost 20 percent on the record value of €2.2 billion reached in 2017, CBRE noted.

With advisory firm Oxford Economics projecting a GDP increase of 2.2 percent for 2018, Portuguese economic growth is expected to continue boosting office demand in Lisbon and Porto. CBRE predicts a decrease in vacancy rates and the increase in prime rents in Lisbon’s business district by 5 percent throughout 2018.

“Fundamentals in the real estate market in Portugal are stronger than ever. The economy is growing at a pace never seen since the beginning of the century; the demand, for both residential units and office spaces, remains robust, but the supply is scarce to meet the demand, and has been pressing the increase of selling prices,” the report from CBRE stated.

Last year, foreign banks led major real estate financing operations carried out in Portugal, but CBRE expects an increase in transactions in 2018 with more involvement from national banks as they resolve their solvency problems.