Investec writes £400m of UK CRE loans in H1

Investec Structured Property Finance committed to provide more than £400 million (€442 million) in senior loan facilities in the first half of 2017.

The bank, which had around £200 million of redemptions in the first six months of the year, has doubled its property lending volumes from H1 2016.

Investec’s real estate debt financing totalled about £500 million during 2016.

The bank has lent against various real estate schemes across the UK, in a diverse mix of use classes including residential, purpose-built student accommodation, commercial, build-to-rent residential and retirement living.

“We don’t have certain targets to hit, we’re very much a client lender, we know who are the major players in those sectors and tend to back clients that are normally very well capitalised,” Mark Bladon (pictured), co-head of origination at Investec Structured Property Finance, told Real Estate Capital.

Key deals in H1 included the £85 million loan, provided alongside Lloyds, for a development in east London owned by Anthology, a platform established by Oaktree Capital Management. The loan illustrates a “strong appetite” from major global private equity firms, Bladon said.

The development facility is part of the three recent loans of about £100 million provided to real estate funds backed by major global private equity and asset managers. These have taken Investec’s total lending in the real estate fund sector to £400 million in the last three years.

Bladon said demand remains bullish for prime residential in zone 2-6 London locations. However, he noted that the high-end market had become more illiquid in the last six months. “For properties of more than £1 million worth, over £1,000 per square foot can be quite slow to sell,” he said.

In H1, Investec lent another £100 million to developers of student accommodation in prime locations including London, Southampton, Bournemouth and Newcastle. The move was evidence that student accommodation fundamentals remain in place, as it can be considered as “a sort of counter-cyclical or quite defensive property sector”, Bladon said.

“We have noticed more interest in purpose-built student accommodation in the last five years. It provides better security and more services in just one bill, it’s more convenient.”

Bladon does not see a major impact from Brexit in purpose-built student properties, as overseas students from non-European countries such as India and China still prefer this type of accommodation.

In April, Investec provided £47.7 million development finance for a student accommodation scheme in east London. The two-year facility was provided to Curlew Student Trust, a joint venture launched in 2013 by CBRE Global Investment Partners and Curlew Capital, to finance the Mannequin House scheme in Walthamstow.

The same month, Investec provided an £18 million loan to Ballymore Group, representing Ballymore’s first debt financing since it exited the Irish National Asset Management Agency. The deal also marked Investec’s return to investment lending since 2006.

“During 2017 we will be looking to originate more investment financing, alongside growing the development loan book,” Bladon said at the time.