Bayern LB set to increase UK exposure with plan to write £500m in new loans

Bayern LB is targeting £500m of new business in the UK this year, on a par with the volume of lending it provided in 2010. This will amount to an increase overall, because new lending was matched by repayments last year. Its two biggest 2010 deals, closed at the end of the year, were a £335m refinancing of City office building Bishops Square for a fund of JP Morgan, with a club of five other banks; and its sole refinancing of a joint venture between British Land and Tesco.

The bank’s holding in Bishops Square is now £90m. In the Tesco/British Land deal Bayern LB provided a £185m, seven-year loan, which the joint venture used to repay the existing debt facility secured on eight Tesco superstores and one Tesco-anchored retail park. Mike Worley, Bayern LB’s London head of real estate finance, said: “It was typical of the deals we like to do, with a good tenant and long leases. “We made a bid and our advantage was that we said we could do the whole loan.”

Its other two big deals in 2010 were taking part in the syndicate that refinanced 5 Canada Square for Evans Randall and arranging another to provide £200m to Workspace. Bayern LB will also step up its real estate business in its core German market and in other selected European cities. It has received credit approval for its first Scottish deal for several years. Bayern LB’s UK loanbook has remained relatively stable at a little over £2bn over the past few years.