Legal & General Investment Management has provided a three-year property loan, hinting at an increased appetite from the insurer to provide terms more typically associated with banks.
The £39 million (€44 million) loan was written to a fund managed by GreenOak Real Estate. It carries an all-in interest rate of 2.4 percent and is secured against a 160,000 square feet mixed-use property in London’s Whitechapel area, including housing for the private rented sector and commercial space, which GreenOak plans to eventually refurbish.
The facility is the shortest-term debt L&G has provided to date. “For the past two years, I’ve been making it clear we were willing to do five- to seven-year debt,” Steve Boyle, lending manager at L&G, told Real Estate Capital’s sister publication, Private Debt Investor. “We hadn’t gone down to three.”
Boyle said his firm is lending shorter term now due to demand from borrowers. “I think it’s driven a little bit by the fact that the banks are not as competitive as they have been recently,” he added. He also noted that banks are starting to offer long-term financing – an area where, traditionally, insurance companies such as L&G have prospered.
To counter this, he noted, some insurance companies are moving into the short end of the market.
The provided facility replaces existing bank financing. L&G also recently refinanced a real estate loan for property developer Citygrove. That financing was arranged over a seven-year term.
Debt advisory firm CAPRA Global Partners advised GreenOak in the financing.