Lloyds Bank Commercial Banking’s commercial real estate teams wrote £9 billion of new loans during 2015 as the UK clearing bank continued to increase its lending to the sector.
In 2014, Lloyds had provided £7.4 billion of funding across its CRE teams including through its SME commercial property business. However, in 2015 the bank’s housebuilder clients were moved to another area of the bank, making like-for-like comparisons with 2014’s figure difficult.
The 2015 total comprises the total volume of commercial property sector lending including funding underwritten and then syndicated or distributed in the capital markets as well as debt finance provided and held on balance sheet.
“2015 marked another successful year of support for real estate clients and evolution of our business model,” commented John Feeney, managing director and global head of commercial real estate at Lloyds Bank.
“We’re proud to have increased funding to the sector and completed a series of landmark transactions. Through our steadfast support for clients, we’ve played a part in the revitalisation of our property and communities, contributing to jobs and growth across every part of the UK,” he added.
Lloyds distributed its largest-ever volume of debt last year. In early 2015, the bank said that it intended to increase its distribution activities by placing originated debt in the loan and bond markets as well as arranging bonds, US private placements and CMBS deals. The opportunity to securitise didn’t materialise.
Data published last month by Dealogic showed that Lloyds was mandated lead arranger on 12 syndicated real estate finance loans with a combined deal value of €1.9 billion last year.
“We … increased distribution volumes significantly and to record levels, providing a number of funding partners access to core UK commercial real estate credit,” Feeney said. “The strength of our sourcing and structuring capabilities, working in partnership with our debt capital markets teams, has allowed us to continue to expand our support for clients while maintaining strong balance sheet discipline. Together with our prudent approach to lending this has delivered a robust portfolio risk position.”
Last year’s deals included a £280 million participation in a £680 million financing of Qatar Investment Authority’s purchase of the HSBC Tower in London’s Canary Wharf. Qatar National Bank and DekaBank also participated in the Lloyds-led deal. Lloyds also provided a £147.5 million whole loan to support BMO Real Estate Partners’ acquisition of Parkgate retail park in South Yorkshire.
The bank provided several development financings including £62 million to fund Allied London’s new 300,000 sq ft office development at Number One Spinningfields in Manchester and a £133 million loan, alongside Wells Fargo, to support Lone Star’s Two Fifty One development in London’s Elephant & Castle.
Looking forward to this year’s business, Feeney said that the bank expects an active year but alluded to a change in market conditions.
“There are a diverse range of tools at our disposal to support our clients once again in 2016 and, while we remain mindful of changing market dynamics, we continue to see many attractive funding opportunities,” Feeney said. “We expect this to be a very active year for our business particularly outside London in key centres such as Manchester, Birmingham, Bristol and Edinburgh.”
Lloyds Banking Group announced in its full-year results last week that its total UK direct real estate lending was down from £21.6 billion in 2014 to £19.5 billion during 2015. The bank defines total UK direct real estate lending as exposure directly supported by cash flows from property activities.
The exposure is held across the Commercial Banking division as well as its Wealth and Run-off units. The run-off element of the book reduced from a gross £3.3 billion to £1.1 billion during the year.