Debt advisor of the year
Winner: BBS Capital
Runner up: Eastdil Secured
While BBS Capital may operate on a smaller scale than the market’s largest real estate debt advisory shops, it was prolific during 2017. In total, the London-based firm arranged £650 million (€734 million) across 44 transactions with a total property value of around £1.1 billion.
The boutique firm has been active for around 15 years. “I’ve never seen a market that is this advisory-friendly,” says the firm’s co-founder Adam Buchler.
“The UK market is becoming increasingly advisor-led, gradually following the US model. There is a greater need for investors to use intermediaries to help navigate a market with an increasing number of lenders with different specialities.
“A quality advisor will know who can deliver what terms in which timeframe to optimise the client’s positions.”
The BBS client base is weighted towards private clients including family offices and property companies, although it does have institutional clients.
“Our typical client uses us as an extension of their finance team. We co-ordinate with their in-house team and external professionals to ensure a seamless process,” says Buchler.
Most of its business is in the UK market, although 2017 also saw deals in Germany and Spain. In total, it sourced debt from 15 lenders, ranging from UK clearers to niche non-bank players, of which six were new to the firm. Deals ranged from investment deals on prime property to sub-two-year bridge financings.
“We saw a marked increase in the volume of short-term loans that we arranged, reflecting market conditions where speed of performance is paramount.”
Loan servicer of the year
Winner: Mount Street
Runner up: CBRE Loan Services
London-based Mount Street had a year of change in 2017. Germany’s Aareal Bank bought a 20 percent stake in the business; it acquired the portfolio management company of defunct German bank WestLB’s legacy loan book and with it a €22 billion workout mandate; and it expanded into the Netherlands, Greece, Ireland, Spain and the US.
Founding partners, Ravi Joseph and Paul Lloyd also completed the management buyout of the firm’s seed investor, US private equity real estate firm Greenfield Partners, which provided the principal capital for Mount Street at its launch in 2013.
The acquisition of the €22 billion mandate brought last year’s new business for Mount Street to €35 billion. Excluding the purchase, the firm posted growth of €12.8 billion, which compares with €4.3 billion in 2016.
“I certainly believe that 2017 was a pivotal year for Mount Street as we continued to expand our market share and improve our service levels, the growth of nearly €13 billion confirms this,” Lloyd says.
Last year’s outstanding deal was the full repayment of the Orazio Italian CMBS loan, Lloyd explains. Initially, the non-performing loan, with an original size of €185 million, did not receive acceptable bids. Exploiting a restructuring route, Mount Street did the first successful full-redemption workout of an Italian loan in a CMBS deal, securing the full repayment of the senior loan.
Loan portfolio seller of the year
Runner up: UK Asset Resolution
Spain’s largest lender, Santander, pulled off one of the most interesting loan portfolio transactions in Europe last year. The bank bought struggling Banco Popular for a nominal €1 and subsequently formed a joint venture with US fund giant Blackstone to take ownership of the €30 billion property book, retaining an interest in the upside.
For a price understood to be about €5 billion, Santander sold to Blackstone a 51 percent stake in the portfolio transferred from Banco Popular. The portfolio consisted of bank-owned properties with an original value of around €18 billion – as well as non-performing loans carrying a €12 billion face value. The sale, agreed in August last year, was valued at €10 billion – a steep discount to the €30 billion gross book value.
Santander kept 49 percent of the joint venture, in a move that has positioned it to take advantage of the clean-up of the distressed property portfolio, amid growing momentum in the domestic real estate market on the back of Spain’s economic recovery.
Announcing the deal, Rodrigo Echenique, chairman of Santander, noted the interest generated in the transaction among international investors was “a clear sign of confidence” in the Spanish economy.
By moving the book off its balance sheet, Santander also had a 12 basis points boost to its core capital ratio. The deal allows the bank to capitalise on Blackstone’s know-how in managing real estate to grow the portfolio’s value, comprising €12.6 billion in land, €8 billion in residential property and €2.1 billion in retail assets.
Loan portfolio buyer of the year
Runner up: Cerberus Capital Management
Blackstone closed two major loan portfolios purchases in 2017.
In April, the US private equity firm bought, along with UK insurer Prudential, an £11.8 billion (€13.3 billion) performing mortgage book from UK Asset Resolution (UKAR), the government-mandated ‘bad bank’.
The deal, mostly involving performing buy-to-let local mortgages from former UK building society Bradford & Bingley, was as one of the largest government asset sales in Europe during the year.
UKAR said at the time the price of the deal was at the “upper end of expectations”. The book value of the loans was £12.2 billion, with most of its borrowers on an interest rate of 2 percent.
In August, Blackstone closed the €30 billion joint venture with Spanish bank Santander to take on the real estate book of Banco Popular. For a price of about €5 billion, the fund giant bought a 51 percent stake in a portfolio comprised of real estate assets worth around €18 billion and non-performing loans of €12 billion. The real estate assets of the portfolio were written down to approximately €10 billion.
“This significant investment reflects our continued confidence in the robust recovery of the Spanish economy,” Jon Gray, global head of real estate at Blackstone, said when the deal was announced.
The private equity firm won an auction process in which Apollo and Lone Star were also competing. Blackstone submitted “the best offer in terms of both its value and management plan”, Santander said in a statement at the time.