Laxfield Capital is set to be appointed originating partner to US giant Mass Mutual, the latest big insurer to enter Europe’s property lending markets
US insurance giant Massachusetts Mutual (Mass Mutual) is ready to start lending senior debt on UK property deals, under the brand of its real estate advisory business, Cornerstone. It is expected to announce Laxfield Capital’s appointment as its UK originating partner soon.
Nick Pink, Cornerstone Europe’s London-based chief investment officer, declined to comment on the appointment but said his US colleague, Rob Little, had just visited London, “partly to cement the relationship with the originating partner, who will help us get into the market and be comfortable with the processes. I don’t see any reason why we won’t be looking at doing deals in the next month or so if we’re presented with the right stock.”
The appointment would be a coup for Laxfield, set up by Adam Slater and Emma Huepfl, with Cornerstone becoming their third large client. The firm already originates loans for US insurer MetLife and German bank Münchener Hypothekenbank. At the start of the year Laxfield had £1bn of loans under management. Pink said Mass Mutual’s first deals were likely to be financing London offices, which he acknowledged to be the most competitive sector in the restricted lending market.
But Cornerstone intends to consider lending to other sectors and parts of the country “quite quickly”. He added: “A benefit we have over others is that although Cornerstone Europe hasn’t been in debt lending, we can get comfortable with the real estate fundamentals and are here to help our originating partner and colleagues in the US.”
Laxfield will look for billateral deals of between £30m and £40m and up to a maximum £100m. Pink said Cornerstone might invest around £300m in the first 12 months, subject to finding the right transactions. Like most life companies, Mass Mutual prefers seven-to-10-year loan terms on fixed rates.
The US insurer’s commitment is part of a trend of non-bank lenders entering the market, attracted by the improved margins and the opportunity left by the retreating banks. Prudential of America’s Pricoa Capital has also just opened for UK lending and was spreading the word at the MIPIM property exhibition last month. Pricoa’s expansion into Europe via the UK is led by Andrew Abernethy.
Caroline Snowden, a director of JC Rathbone, which advises banks and property companies on sourcing and structuring debt, said teaming up with experienced originators was a quick, effective way to get into the market. “The opening of new insurance lenders is a positive step as it increases lending liquidity in the market,” she added. Pink said that after getting established in the UK Cornerstone planned to move into other European lending and could raise third-party capital for senior debt investing, as it already does in the US.
Other new entrants who have started originating debt in Europe include Allianz in Germany; AXA in France, UK and Germany; and AIG and Legal & General in the UK. GIC and GE Capital are also taking debt participations. Those looking at aggregating capital for senior lending include Goldman Sachs, Starwood, Fortress, CBRE Global Investors and Henderson.