Lloyds Bank Commercial Banking’s real estate division wrote £8.6 billion of new lending in the UK market during 2016, down from £9 billion in 2015.
The bank reported that the total volume was written across its commercial real estate unit as well as the SME commercial property business, which handles sub-£12.5 million financing requests. The £8.6 billion total represents the total volume of new lending provided directly on Lloyds’ balance sheet as well as volumes underwritten by the bank and distributed in the capital markets, the volume of which was not specified.
John Feeney, managing director and global head of commercial real estate at Lloyds Bank, argued that 2016’s lending volumes were strong considering the backdrop of weaker investment volumes in the UK market: “In a year in which market volumes fell by around 30 percent, this performance underlines our strong and enduring commitment to UK real estate.”
Feeney noted an increased provision of development finance last year as well as the bank’s distribution activity, which he said distributed “far more UK CRE risk than any other bank, which places us in a strong position to source sometimes volatile liquidity on behalf of our clients”.
The UK’s clearing banks faced difficult market conditions during 2016 due to the increased risk profile of UK commercial real estate after the Brexit vote and a slowdown in investment activity in the quarters preceding and following the referendum.
Lloyds’ lending activity includes property acquisition funding, revolving credit facilities, working capital and development finance as well as bond and loan market funding through its capital markets team.
Last year’s deals included the £185 million financing of the development of a designer outlet village at London’s O2 Arena, a £23 million funding agreement for the mixed-use Fox Valley scheme near Sheffield and a £45 million deal with affordable housing provider Pocket Living. In December, Lloyds completed a £409 million refinancing with Lazari Investments in which it combined arranging a £118 million, 10-year loan via group insurance company Scottish Widows with a £291 million, five year-facility in a three-bank club.
As part of its Green Lending Initiative, Lloyds provided around £70 million to developers and asset owners in Scotland, Yorkshire and the South West of England. The programme allows borrowers to achieve a margin discount of up to 20 basis points by agreeing to fulfil targets linked to environmental performance.