Syndicated commercial real estate lending volumes in the EMEA region were down by almost 40 percent year-on-year in 2016, reflecting reduced deal-flow 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 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.
The actual number of syndicated loan deals dropped by 11 percent between 2015 and 2016, with last year’s volume originated across 201 transactions.
Secured property lending accounted for a larger share of the syndicated property lending market, rather than debt originated at the corporate level. Non-recourse lending accounted for 58 percent of business, the research showed. In total, 126 deals were non-recourse, accounting for €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.
As MLA in the non-recourse part of the market, ING led 45 deals with a total volume of €4.4 billion. Bank of America Merrill Lynch and UniCredit also played important roles arranging non-recourse deals last year. In the unsecured lending market, ING was mandated lead arranger in 52 deals totalling more than €5 billion of lending. Credit Agricole, Natixis and BNP Paribas were the next most active in this part of the market.
“Attracting new capital to the sector will be vital given the headwinds the market faces in 2017 after a turbulent 2016,” said 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, coordinating 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 done last 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.
Europe’s largest syndicated real estate financing of 2016 was a €1.2 billion loan to French REIT Foncia Groupe SAS in July led by Natixis and including BNP Paribas, Credit Agricole, ING and UniCredit. In the UK, a club of banks financed Canary Wharf Group’s retail properties at London’s Docklands with a €781 million loan in November.
Dealogic launched the league tables in 2014, supported by the Commercial Real Estate Finance Council Europe.
“The transparency and efficiency of European CRE debt markets has been hampered by the lack of an effective securitisation market in recent years. At the same time, regulation is generally making it more expensive for banks to hold exposures on balance sheet,” said Peter Cosmetatos, chief executive of CREFC Europe.