Wave of loans shows banks’ backing for regional projects

Banks fund development and asset management in Midlands and North

“Over the past nine to 12 months we’ve seen an uptick in regional activity”

UK clearing banks RBS Corporate and Institutional Banking, Lloyds Bank Commer­cial Banking and Santander have provided more loans supporting development and asset management in regional property markets.

Lloyds’ mid-markets real estate team closed large loans in the Midlands and South West (see more), while RBS and Santander have made a £44m, five-year loan for UK Land Estates and Highcross to buy out their joint-venture partner in the North East Property Partnership (NEPP).

RBS and Santander’s facility is secured against a North East industrial and office business parks portfolio. Each bank took a 50% stake in the financing.

NEPP was set up in 2004 when the Regional Develop­ment Agency (RDA) sought a private-sector partner to manage and operate its North East commercial property interests for a 10-year period.

The interest in NEPP was held by the Homes and Communities Agency. UK Land Estates now plans to develop and improve the business parks.

In Scotland, RBS client the Ediston Opportunity Fund, which is backed by Europa Capital, has just completed its latest development, speculatively: 145 Morrison Street, Edinburgh, which has 27,000 sq ft of grade A space.

The bank has also advanced £8m of development finance for a 234-bed Glasgow student accommodation project by McDonald Estates.

Stuart Heslop, regional managing director of real estate finance, whose team led the deals, said deal volumes had been thin, “but over the past nine to 12 months we’ve seen an uptick in regional activity, supported by relative stability in economic indicators.

“Institutional funds have cash and are deploying it, as well as family offices and private institutionally backed funds, which have been sitting on equity for a couple of years and now see value in acquiring and developing in the regions.”

The bank has recruited Phil Sherwood and Jamie Drummond as new directors in Scotland.

Lloyds gives mid-market lift to Midlands assets

Lloyds mid-markets real estate team has refinanced £82.8m of debt for a 14-property portfolio owned by Midlands-based IM Properties, replacing Clydesdale Bank – which is quitting UK real estate lending – and Santander.

IMP MD Tim Wooldridge said the company wanted a lending relationship that provided “a firm footing to grow and strengthen our portfolio over the medium term. In many locations, the supply of good quality industrial space in particular is shrinking.”

IMP’s portfolio comprises distribution warehouses, retail parks, industrial and office space, including Purley Way Retail Park in Croydon. IMP has a land bank of sites with consents at a number of Midlands distribution locations.

The bank also arranged £38m of funding for regional investor/ developer Eagle One, including a development loan to expand Alphington Retail Park in Exeter and a partly pre-let unit at Shield Retail Centre in Bristol. The loan also refinances existing debt from RBS and Clydesdale (see more).