1 Banks were still in the game
Europe’s banking sector is undoubtedly under pressure when it comes to managing exposure to real estate in a rising rates environment. However, while bank lenders are widely reported to be more cautious than this time last year, the awards demonstrated such lenders are still able to close major financing transactions. Germany’s Aareal Bank – the Bank Lender of the Year: Europe – provided a €586 million logistics financing across three countries, for example. Another deal, voted Europe’s investment financing transaction of the year – a £1 billion (€1.1 billion) refinancing of London’s King’s Cross estate – was done by a bank, US lender Morgan Stanley.
2 Experienced sponsors were favoured
Among transactions across the awards categories, real estate companies with long track-records typically feature as the sponsors. Longstanding European investment managers, deep-pocketed US private equity firms, large-scale real estate investment trusts, and experienced development companies frequently crop up throughout the awards. The Borrower Finance Team of the Year: Europe award, for example, went to Blackstone – one of the industry’s biggest names. Refinancing transactions also played a big role in the deals put forward in nominations. In a challenging market, lenders seemed to favour the counterparties they trust the most.
3 Lenders want sustainable transactions
It was apparent throughout the nominations process that debt providers recognise the value in financing assets with sustainability credentials. Nominees were keen to tell us about the environmental plus-points of the deals they had completed, or to point out the certifications their sponsors are aiming for in development funding deals. Those investing in and financing the built environment are under increasing pressure to address environmental and social issues. There are differing opinions as to how effectively the real estate industry is embracing sustainability, but there is at least a recognition among lenders that doing so is imperative.
4 Prime retail has takers
Physical retail may not be top of many lenders’ wish lists, but large financings of shopping properties – albeit at the prime end of the scale – proved pivotal in the awards. PIMCO Prime Real Estate’s €466 million refinancing of a cross-border malls portfolio, Aareal Bank’s €360 million retail parks refinancing and BNP Paribas’s funding of the capital expenditure for southern Italy’s largest outlet scheme served as examples of major transactions in the sector. Property owners still see a place for the best-performing retail in their portfolios, and it seems some lenders share that view.
5 Beds and sheds stayed popular
Throughout the awards, residential-based assets cropped up in deal examples, suggesting ‘beds’ sectors continued to be viewed as a safe bet by property lenders. A variety of asset types within that grouping was subject to lending deals in 2022. For example, UK manager Cheyne Capital, which was voted Lender of the Year – Residential: Europe, completed financing deals for high-end retirement housing, a sector which lenders are increasingly keen on. In recent years, logistics was also a target for lenders. Some eased off the sector in 2022, spooked by low yields in a rising rate environment. However, logistics continued to attract debt financing, as the activities of lenders including Blackstone Real Estate Debt Strategies showed.