Syndicated loan market fails to keep pace in a testing year

The volume of syndicated real estate loans fell sharply between 2015 and 2016, according to Dealogic’s latest figures. Daniel Cunningham reports.

Syndicated commercial real estate lending volumes in the EMEA region were down by almost 40 percent year-on-year in 2016, reflecting reduced dealflow across the European property markets, the latest figures published by financial data provider Dealogic show.

A total of €48.6 billion of real estate lending was done through 201 syndicated deals in 2016, down from €79.1 billion in 2015. Last year’s volumes were slightly higher than in 2014, when around €48 billion of lending was shared by lenders.

Dealogic specified the volume of syndicated lending which was non-recourse, accounting for 58 percent of business. In total, 126 deals were non-recourse, equating to €28.4 billion of volume.

Dutch bank ING proved to be Europe’s most prolific player in the syndicated CRE debt markets, topping Dealogic’s tables for recourse and non-recourse lending as both mandated lead arranger and book-runner.

Bank of America Merrill Lynch and UniCredit also played important roles arranging non-recourse deals last year.

“Attracting new capital to the sector will be vital given the headwinds the market faces in 2017 after a turbulent 2016,” says Jean-Maurice Elkouby, head of syndication at ING Real Estate Finance.

“To do that, the market needs to be visible and open to give new investors an insight into activity levels and key players, and these league tables help to do that.”

The UK remained the hotbed of European syndicated property lending activity, despite the market turmoil created by the EU referendum vote.

With €11.6 billion across 33 deals, the UK represented a 24 percent market share last year, even though volumes were down 51 percent.

In the UK, Lloyds Banking Group was the most active MLA, co-ordinating 13 deals totalling €1.5 billion, followed by €1.1 billion by Barclays across nine deals and €1 billion by Wells Fargo, also across nine deals. Volumes were also down in France and Spain. In the French market, €8.4 billion was donelast year, down from €14.3 billion in 2015. In Spain, last year’s volumes reached €4.8 billion, short of the previous year’s €5.5 billion. In France, Credit Agricole was the most active MLA, with 21 deals closed totalling €2.2 billion. In Spain, Santander was the major syndicator, arranging 17 deals with €911 million of lending.

Dealogic launched the league tables in 2014, supported by the Commercial Real Estate Finance Council Europe.