Top 40 European lenders, part 3: The insurers and debt funds

In the third of three installments, Alicia Villegas, Lauren Parr and Doug Morrison highlight those most actively providing finance to Europe’s real estate markets. In this section, we highlight the alternative lenders.

Welcome to Real Estate Capital’s Top 40 European Lenders 2017. Now in its fourth year, this list is intended to highlight those most actively providing liquidity to Europe’s property markets today.

Here, in the third of three installments, we highlight the insurance companies and the debt funds that made the list.

A note on methodology. In arranging the Top 40 by lender type, there is inevitably some overlap; a few of those included in the insurance lender list also have significant third-party debt-fund businesses. However, organisations are limited to one entry each, categorised by the overriding nature of the company.

To see the first installment of this list – the UK and German banks – click here. To see the second – the other European banks and the North American banks – click here. As previously stated, Real Estate Capital would like to hear your feedback:




• Senior, whole loan, mezzanine and development lender
• Active in the UK, Germany, France, Belgium, Spain, Ireland, Czech Republic, Italy and the Netherlands
• 2016 new lending undisclosed
• $4bn-$5bn loan book

US insurer AIG expects to provide between $1.5 billion (€1.26 billion) and $2.5 billion in real estate loans into the European market in 2017; in line with last year’s target range for lending volumes but with the risk profile adjusted, says Tom Fewings, global head of CRE finance.

Despite a “Brexit overhang” in the UK, Fewings still sees “interesting opportunities” in the country, depending on the type of assets and lending. “Offices in the City linked to the finance sector are potentially the most at risk,” Fewings says.

The firm’s stand-out deal over the past 12 months came in the UK residential sector – the insurer was part of an £800 million lending club that financed the Wembley Park redevelopment, to build 4,800 new homes.

Around 50 percent of AIG’s European lending is in the UK, while Germany and Ireland are also significant markets. The insurer is actively looking at the Netherlands, and it is reviewing Spain and Italy, where it sees a “lot of potential”.

AIG’s loans vary from £20 million to £500 million and from one year to 30 years in maturity. “AIG is not only a life insurance firm, but it is also a property and casualty insurance company, and hence we have both long- and short-dated liabilities that we are looking to match with our investments,” Fewings says, adding that, due to still low interest rates globally, “it’s a tempting time for borrowers to lock in long-dated fixed financing”.



• Senior, whole loan lender
• Active across Europe and the US
• €1.1bn new lending in 2016
• €5.5bn European loan book

Allianz’s participation in the financing of London’s CityPoint in March was a
stepping stone in the firm’s UK lending strategy, leading to further diversification of its European debt portfolio, notes Roland Fuchs, head of European debt.

Allianz helped finance 55 Baker Street

In September, it took a £212 million participation in the financing of London’s 55 Baker Street.

“As a result of Brexit, debt could be the right instrument to enter the market at this point in time. With a debt investment, you have a risk buffer if you don’t go into the 70 or 80 percent loan-to-value space,” Fuchs says.

The move to boost the UK loan portfolio is part of the German insurer’s strategy to be a “truly” pan-European debt lender, with increasing real estate loan books not only in Europe, but globally. In 2016, the firm’s debt portfolio grew to €14.7 billion as it added €1.9 billion in the US and €1.1 billion in Europe.

In terms of European loan volumes, the target for this year is to underwrite between €1.5 billion and €2 billion. “We are almost there as of today,” Fuchs says.

In December last year, Allianz closed one of its largest deals, providing €366 million for the co-financing of a pan-European portfolio across seven countries, to Invesco Real Estate.

More recently, the firm has extended its €5 billion book of European commercial real estate lending into Italy, by co-financing a primary mixed-use development in central Milan; its first debt deal in the country. In February, it entered the Spanish office sector with a Madrid financing.

Allianz started lending in Germany in 2011, focusing then on France. Since 2013, the insurer has already lent in more than 10 European countries, including the Netherlands, Sweden and Ireland. In the latter, the firm provided a €290 million loan to finance BVK’s Liffey Valley mall near Dublin in June.

Targeting the office, retail and logistics sectors, Allianz provides loans ranging from €150 million and €300 million and a sweet spot of seven years and above.



• Senior lender
• Active in UK, France, Germany,
• £925m new lending in 2016
• £9bn loan book

Aviva Investors’ strategy to expand its real estate debt offer, including floating-rate finance and European property lending, has made “material” progress this year, says Gregor Bamert, the firm’s head of real estate finance.

“Aviva can now provide something very similar to what a bank is offering” Gregor Bamert, Aviva

It now provides floating-rate property finance for three to seven years through the Aviva Investors Alternative Income Solutions Fund – which can allocate up to 40 percent to real estate finance, as well as several segregated funds and mandates which total more than £1bn.

“Aviva can now provide something very similar to what a bank is offering. This complements the firm’s traditional long-term, fixed-rate loan offering,” Bamert notes.

So far this year, Aviva has offered £250 million in real estate senior loans for a broad variety of assets. The asset manager started lending in France through its European real estate debt fund in 2016, which has provided nearly €300 million of loans.

“We have a big focus and presence in France, a market with strong economic fundamentals. In the rest of Europe, we expect to see more opportunities, even when the market continues to be highly competitive,” says Barry Fowler, managing director of the alternative income solutions fund.

The first UK debt fund, which is run by James Tarry, started investing more than three years ago and is now fully invested and redeploying capital from repayments. The fund is invested in a broad spread of assets including offices, retail, hotels and industrial.

“Three years ago, Aviva had one product in one country and one source of capital, it now has a whole variety of products and capital sources and has lent in the UK, France, Netherlands and Germany. This provides a broad spectrum of transactions to support both borrowers and investors,” Bamert says.

Although it looks across different markets in Europe, Aviva Investors’ core market is the UK. Late last year, it provided a £115.5 million, 15-year term loan to Manchester-based property firm Bruntwood to support its regional UK development and investment drive.




• Senior, whole loan lender
• Active in France, Germany, UK, Spain, Netherlands, Italy and the US
• €3bn lending in 2016
• €10.5bn loanbook

AXA Investment Managers – Real Assets’ status as the largest, non-bank lender in European real estate is beyond question but the French group is clearly moving from an expansionist strategy to one of consolidation.

“We want to remain super-cautious” Timothe Rauly, AXA IM-RA

In 2015, the business invested €4.5 billion in real estate debt. Last year, it was down to €3 billion. It is likely that 2017’s total will be around €2.5 billion.

As well as lending in-house insurance money, it has a major debt fund business. The group has recently closed on its 10th commingled senior debt fund (CRE Senior 10), successfully meeting its €1.5 billion target – but again, this will be just over half the size of its predecessor, which closed on €2.9 billion in August 2015.

“If you try to grow too much in the last part of the cycle, you risk losing your track record and your traction with investors. We want to remain super-cautious, so our risk appetite is lower than it was,” Timothé Rauly, who took over from Isabelle Scemama as head of funds group earlier this year when the latter was promoted to overall CEO of the firm, told Real Estate Capital in May.

Lending is done primarily through syndicated loans although its participation on behalf of clients can be up to €400 million. It is understood to have taken a £200 million slice of the £334 million senior loan Morgan Stanley provided to Brookfield for the acquisition of London’s CityPoint tower earlier this year.

Overall, the firm aims for pricing to be 200bps over three-month Euribor. The strategy is to identify loans that offer the best relative value in its core western European markets and in the US. Alongside mainstream property, the firm is increasingly considering alternative sectors such as student accommodation.

“We invest where we feel comfortable with a deal, and if we are comfortable we are able to do a large ticket,” adds Rauly.



• Senior, whole loan, mezzanine, development lender
• Active in UK and targeting continental Europe
• £380m new lending in 2016
• £1.1bn loan book

US insurer MassMutual began a London-based real estate lending strategy in 2013, hiring former Royal Bank of Scotland banker Chris Bates for its subsidiary – then known as Cornerstone Real Estate Advisers and since rebranded as Barings Real Estate Advisers.

The unit, which lends on behalf of a separate account mandate for its parent organisation, ramped up its origination in 2016 with a total £380 million of deal volume contributing to £1 billion of lending since inception. In 2017 to date, the firm has closed £272 million of loans and has £338 million in the pipeline.

In May, it financed Corestate’s UK debut, with a circa £30 million loan to finance the purchase of the historic Royal Liver Building in Liverpool. Last December, it completed a £40 million extension to an existing £80 million loan to Empiric Student Property, secured by a portfolio of 25 operating assets.

Last year, the firm began to lend high-yielding, floating-rate debt, expanding its products from fixed-rate lending. So far, it has originated £210 million of high-yield debt, generating 6 percent to 9 percent IRR. Deals included the refurbishment of a student accommodation scheme in Bristol.



• Senior, whole loan, junior and  development lender
• Active in UK and major western  European markets
• €1bn new lending in 2016
• €7bn-plus loan book

“We tend not to focus on plain vanilla deals but increasingly on opportunities where borrowers are looking for something that involves complexity, speed and certainty of execution,” says M&G’s real estate finance head, John Barakat.

The group recently completed a £230 million refinancing of Northern Trust’s portfolio of industrial, trade and office parks, a whole loan held across M&G funds. Barakat believes there are few non-bank lenders that could do a deal of this size on their own. “It serves to illustrate that we like being able to write and keep large loans for our own investors,” he says.

Besides a stretched senior fund, M&G also invests in mezzanine debt and makes senior loans on behalf of its parent company, UK insurer Prudential, as well third-party clients. Indeed, although owned by an insurer, M&G lends more third-party money.

In the coming year, Barakat expects to be doing more on the development finance front. “We continue to try to source assets for our investors whom, like institutional investors globally, continue to search for yield, which has become harder to find. Development finance involves an additional element of risk than investment lending, therefore it offers higher returns,” he says.

M&G will look at real estate markets in the UK and Europe where development makes sense from a risk perspective. “It won’t be all sectors or locations, or all parts of the cycle,” says Barakat.



• Senior lender
• Active in the UK and Ireland
• $500m new lending in 2016
• $3.5bn loan book

MetLife’s lending volumes were reduced in a restrained market last year, although this was the case for several UK-focused lenders. However, the US firm reports that it is on track to return to its more typical annual volume of more than $1 billion in 2017.

This is being achieved by targeting an increased volume of business outside central London – historically its main source of deals. As well as central London offices, retail and a hotel, regional UK deals this year have included retail parks and offices. It has also been transacting smaller deals, starting at £50 million.

“We’re looking to broaden our spectrum of activity a little,” says Gary Waistnidge, a director in London, citing the private rented residential sector.

“We’re hoping to replicate our success in the student accommodation sector over the past few years by refinancing out development loans on build-to-rent projects as they stabilise,” he says.

About 10 percent of MetLife’s loan book relates to Ireland and continental Europe, which it is looking to grow. In particular, MetLife sees the opportunity to deploy capital in the Netherlands. “We’re seeing opportunities in the office and retail sectors, in context of a recovering economy and strength of real estate fundamentals,” says Waistnidge.



• Whole loan, mezzanine, development, preferred equity lender (PGIM RE), senior, whole loan lender (PGIM REF)
• Active in UK and western Europe
• £500m new lending in 2016
(PGIM RE); €450m (PGIM REF)
• €3bn loan book (PGIM RE);
€3.1bn (PGIM REF)

PGIM, the asset management arm of US insurer Prudential Financial, has two distinct real estate lending businesses. PGIM Real Estate focuses on higher-yielding lending and predominantly lends third party capital, while PGIM Real Estate Finance is more senior-focused and lends a mixture of in-house insurance money and third party funds.

PGIM Real Estate’s more than £1 billion equity-raising for its latest vehicle, PRECAP VI, which closed in March, demonstrated continued investor demand for real estate debt and confidence in the US insurance company’s track record.

“We’ve been very successful post-Brexit because banks have been much slower,” says Andrew Macland, head of UK business.

Most of PGIM RE’s deals in 2017 have been in the 55 percent to 75 percent loan-to-value range. “In an uncertain market, we’ve been focusing on capital protection and good risk-adjusted returns,” Macland says.

Earlier this year, the group refinanced a City of London office for a UK property company. In April, it extended a debt facility to UK-based real estate investment trust GCP Student Living.

Meanwhile, PGIM Real Estate Finance, has “taken advantage of borrowers looking to diversify their lending relationships”, according to Bryan McDonnell, head of European real estate finance. Notable deals include a £50 million, 15-year loan for the acquisition of the Fox Court office building in London’s Midtown in April, and a £90 million, 10-year loan for Tritax Big Box REIT in March.

Activity has also picked up on the continent, where the firm has formed a dedicated team led by David Gingell.

“We’re seeing more varied loan requests. This trend works well for someone that can provide a range of loan styles and terms,” McDonnell says. In August, PGIM REF closed a four-year logistics loan in Madrid and recently closed a 10-year, 40 percent LTV office financing for Cromwell in the Netherlands.



• Senior, whole loan and mezzanine lender
• Active in the UK and selected European countries
• £300m new lending in 2016
• £1.4bn loan book

In the first six weeks of 2017, TH Real Estate deployed almost half of the €1 billion target set by its parent company, New York-based insurance and pension fund TIAA, to invest in UK property debt. The firm originated about €400 million of property loans for TIAA’s segregated account, and is on track to meet its target ahead of the year end, says Shawn Kaufman, director of debt strategies.

Seoul: TH has secured mandates from South Korean investors

One of the firm’s largest deals so far in 2017 was a £136 million loan for a student accommodation complex in Birmingham. More recently, the firm closed a £100 million-plus mezzanine loan for a central London office property.

The segregated account provides fixed-rate loans of up to 25 years secured against institutional-grade, core property at a maximum 65 percent LTV for senior loans and up to 75 percent LTV for subordinated mezzanine positions. The programme can also lend in Spain, the Netherlands and Ireland.

In addition, its UK-focused CRE debt fund provides whole and mezzanine finance of up to around 75 percent LTV. With about €350m of loans provided mainly in London and the South East, the fund is “essentially fully deployed”, Kaufman says. “We anticipate launching a follow-on fund with a similar profile to the first one,” he adds.

In July, the firm secured a new mandate from The Korean Teachers’ Credit Union to invest alongside the debt fund. The mandate followed earlier Korean mandates issued for real estate whole loan investments by Dongbu Insurance Company and Dongbu Life




• Senior lender
• Active in the UK
• £450m lending in 2016
• £2bn loan book

AgFe has built a business in the UK, providing senior debt in situations from which the clearing banks have pulled back. In the post-referendum UK market, with the banks even more risk-averse, AgFe has sourced business through regional and portfolio financings, predominantly to domestic investors, with a £30 million average ticket size.

The firm has not been immune to the slowdown in the UK market, with its 2016 annual volume down from around £800 million in 2015. Natalie Howard, head of real estate at the firm, says that around £600 million has been originated in the past 12 months – a significant total given the market backdrop.

“The service we offer is very much as a Libor plus 150-300 lender, providing a high degree of certainty of execution on the term sheet,” says Howard.

AgFe is also on the fundraising trail. A first close on two funds is expected by year end – a second senior fund, which is targeting £800 million in total, and a ‘higher-yield’ fund, targeting £400 million, which will provide senior debt to transitional properties.



• All types of real estate lending
• Active across western Europe
• €2bn new lending in 2016
• €3bn loan book

“The business has moved in different directions this year, including our first two European construction loans totalling £500 million,” says Michael Zerda, Blackstone Real Estate Debt Strategies’ head of Europe.

“The business has moved in different directions this year” Michael Zerda, BREDS

BREDS wrote a £175 million loan facility secured against Harbour Central at 2 Millharbour, a PRS scheme in London’s Docklands, for global client Greystar in March. In June, it issued £325 million of debt to Consolidated Developments for St Giles Circus in the West End.

“With local banks pulling back from development lending there’s an opening for alternative lenders,” notes Zerda, who says BREDS will look at it selectively.

The firm has also been active in acquiring performing and sub-performing debt directly from banks, as well as financing other buyers of bank debt. It played a minority role in Blackstone’s £11.8 billion of buy-to-let mortgages from UKAR in March.

BREDS is investing for the $4 billion-plus BREDS III fund, as well as on behalf of Blackstone’s mortgage REIT in the US and a newly raised vehicle targeting lower-leverage mezzanine investments.

The firm backed Carlyle earlier this year with a £150 million whole-loan programme to help build out its co-working platform, in October 2016 financing Storage Mart’s acquisition of the UK’s largest self -storage portfolio, sold by Big Box, with an £83 million loan.

In Europe, BREDS has completed 10 transactions this year – including financings secured by office and industrial space in Germany, France and the Nordics.




• Senior, whole loan, mezzanine lender
• Active in the UK, Germany, France, Benelux and Scandinavia
• £350m new lending in 2016
• £1bn loan book

Among the first movers in non-bank CRE lending, DRC has been a consistent debt provider – particularly on complex deals. The group provided a £60 million mezzanine facility to partially fund Aermont’s takeover of film studio owner Pinewood Group last September – a deal it executed within a strict timeframe. In May, it provided a £42 million, 30-month development loan to Evans Randall to part-finance the construction of 90 Fetter Lane, an office scheme in London’s Midtown.

On the continent, where up to half of DRC’s business originates, the firm is appraising “a fair few acquisitions” says Steve Emsley, chief financial officer. It recently financed a student accommodation portfolio in the Spanish market, which it entered last year alongside the Italian market, and is working on a similar scheme in Germany.

The independent debt fund manager is investing and raising for its third, high-yielding vehicle (with a £600 million hard cap), expected to reach final close in the next couple of months. It has fully deployed the €250 million it initially collected from institutional investors for its senior loan programme in 2014 and is in the process of investing subsequent capital of the same amount. In the coming year DRC expects to raise a further €250 million for the strategy.

With AUM now approximately £1.7 billion, DRC is weighing investor demand for a new type of debt fund aimed at the UK.



• Senior, whole loan, mezzanine,
development lender
• Active in UK, with European
expansion plans
• £650m new lending in 2016
• £3bn loan book

ICG-Longbow has shrugged off any Brexit-induced market uncertainty
this year and is expanding on several fronts – notably residential development finance.

Through its £427 million segregated UK development lending mandate,
the firm has closed its first London deals – a £135 million loan to LBS Properties for a scheme in Canary Wharf followed by a £90 million loan to Avanton in Battersea.

The fund is nearly fully invested but ICG-Longbow has carefully avoided the difficult high-end market and stuck to deals where the underlying housing supply-demand dynamics are compelling.

“Whereas before this year we had been wary of London pricing, we’ve been able to invest off rebased exit assumptions and are seeing better risk-adjusted returns in London although that hasn’t stopped us from finding deals elsewhere in the south of England,” says co-head Martin Wheeler.

ICG-Longbow has also closed on a £370 million capital-raising for its Vintage III senior debt fund. “We’re still seeing strong interest from institutional investors for investment-grade, quality senior loans, matched by demand from borrowers,” he says.

“One of the features of the market over the last year is continued retrenchment of the banks, especially from the mid-market.”

Significantly, this UK specialist is looking to expand into European markets later this year. Wheeler adds: “This is less about the negatives in the UK and more about finding interesting opportunities to explore in Europe.”



• Senior, whole loan, mezzanine and development lender
• Active in UK and selective European locations
• £214m new lending in 2016
• £1bn loan book

In the first half of 2017, LaSalle Investment Management raised £600 million of fresh capital for the third funds across its two lending strategies; £334 million for its latest mezzanine and whole loan fund, plus £264 million for its third residential finance pot.

“Mezzanine has settled at more sustainable levels” Amy Aznar, LaSalle

One of the early movers into the mezzanine lending space in 2010, LaSalle has adapted its high-yield strategy to remain relevant to the market; pairing with senior lenders to approach sponsors with complete financing packages, or simply underwriting whole loans with the intention of selling down the senior slice and creating a mezzanine piece.

Speaking to Real Estate Capital in July, debt boss Amy Aznar said: “Early on, just after the financial crisis, pricing on mezzanine was much wider because there was a massive dislocation in the finance market, and while standard mezzanine was in the 12 percent to 14 percent range, it has now settled at more sustainable levels – between 7 percent and 11 percent.”

This year has seen a move outside its main UK market, with a first foray into Spain. In July, the firm originated a €100 million-plus loan against a Spanish student housing portfolio for sector specialist GSA.

Looking forward, the firm is targeting a final close this quarter of the latest mezzanine and whole loan fund on around £750 million.



• Whole loan, development, mezzanine, bridge lender
• Active across Europe
• $880m new lending in 2016
• Circa $1bn loan book

The $880 million of new European real estate lending completed by Starwood
Capital in 2016 was its highest annual total since the strategy began in 2012.

Based on business already secured and a “robust” pipeline, the firm expects to originate a similar amount of business in 2017, says Duncan MacPherson, the head of European debt.

Starwood manages two public debt vehicles: US mortgage REIT Starwood Property Trust, with more than $11 billion of assets, and Starwood European Real Estate Finance Limited (SEREFL), with a market capitalisation of more than £400 million.

“The two vehicles often invest together, giving us the firepower to provide larger loans to our clients,” MacPherson says, adding that SEREFL expects to raise new capital to add to the pipeline as required.

A stand-out deal was the £285 million loan provided alongside GIC to finance Davidson Kempner’s £500 million acquisition of the NCP car park portfolio last December. In April, SEREFL provided a €68.5 million senior debt facility to M7 Real Estate’s central European fund. This year, the fund also provided an €18.85 million loan for the acquisition of an office development in Dublin and lent €46 million to finance the purchase of a Barcelona-based hotel.

“We have flexibility to invest across Europe, but we are currently seeing the best opportunities for alternative lenders in the UK, Ireland and Spain,” MacPherson says.