Term Sheet: Aviva and NatWest work sustainability into loans, LendInvest makes key hires as it eyes growth, Sexton takes on Trimont’s top job

Aviva Investors and NatWest make sustainability a key part of their loans to Primary Health Properties; UK specialist lender LendInvest's key hires as it targets loan market growth; Trimont’s Bill Sexton takes on the top job at the loan servicer; and more in today’s briefing, exclusively for our valued subscribers.

What’s happening?

Sustainable healthcare
Primary Health Properties, one of the UK’s biggest investors in modern healthcare facilities, has been busy sorting out its finances. The listed company announced last week it had refinanced several loans with a new £200 million (€236 million) facility from UK insurance company lender Aviva Investors, and had renewed its existing £100 million facility with UK bank NatWest [read the announcement here].

Both loans are notable for the fact they have been structured to incorporate measures to keep the borrower focused on the sustainability of its assets. The Aviva loan, which has a 15-year term and carries a fixed rate of 2.52 percent, includes key performance indicators based around PHP’s existing built environment targets, focused on EPC ratings and new developments being built to BREEAM standards. If PHP meets the conditions, it gets a margin reduction. In the NatWest loan too, KPIs and a subsequent margin reduction have been worked into the deal. Gradually, green considerations are becoming a critical feature of European real estate loans.

Appetite for disruption
LendInvest, the London-based specialist property lender, is aiming to grow, in its own words, to “disrupt the property finance market”. Following the company’s IPO in July, it is aiming to scale its business, through which it offers short-term, development and buy-to-let mortgages in the UK market. Its latest move is to make two senior hires to bolster its business. Omega Poole, a property lawyer and debt adviser, has been hired as head of capital raising, from law firm Mishcon de Reya, where she worked within its debt advisory team. Also, Robert Pritchard, formerly chief operating officer at residential development finance firm Urban Exposure, has joined as head of fund management. Pritchard oversaw the restructuring of Urban Exposure and the return of capital to its shareholders. As specialist lenders grow their capital sources, several are becoming significant players in the real estate finance market.

Vive el ESG
Ares Management’s real estate business has made its latest major bet in the European residential space, with the formation of a public-private partnership with the Community of Madrid – an autonomous community of Spain that includes the country’s capital – to develop more than 3,600 affordable rental housing units across 13 municipalities. In exchange for investing €400 million in the projects, Ares will receive a concession of a 50-year ground lease from the community. For John Ruane, co-head of European real estate equity at Ares, the partnership is part of the company’s ongoing investment in projects “with a focus on positive social and environmental impact”.

US gateway city revival
US gateway markets could be edging back onto lender agendas as valuations are resetting and borrowers are asking for lower leverage than prior to the pandemic, affiliate title Real Estate Capital USA reports. Ares Management is an example, making loans on a selective basis in US gateway office sectors (sign in or registration required), and in a bigger way than prior to the covid-19 pandemic. Bryan Donohoe, partner and head of real estate debt, is of the mindset that office and lodging assets in those markets were largely overvalued before the health crisis. “There are now green shoots appearing in gateway cities where office utilisation has been increasing and we expect this will continue as a trend through the middle of next year,” he said. “We can now invest in these gateway markets that have had prices reset and are now attracting strong capital positions out of the equity side.”

Person in the news

Sexton swaps London for Atlanta
One of the European real estate loan servicing industry’s most well-known figures is relocating Stateside to take the top job at his organisation. US firm Trimont Real Estate Advisors hired Bill Sexton – who had previously co-founded London-based servicer Mount Street in 2013 – to grow its European business in 2018. Three years later, Sexton is relocating to Atlanta to become the new chief executive officer of Trimont’s global business. He takes over from Brian Ward, who had led the company since 2016, and will become a senior adviser to Trimont to assist with the transition.

Speaking to Real Estate Capital Europe in December 2020, Sexton said the covid crisis had led to lenders increasingly relying on their loan managers to provide asset management functions and advice, as they managed their loan portfolios through the uncertainty created by the pandemic [read more here].

REC Europe Awards 2021

We want to hear from you!
Europe’s real estate lenders have continued to deal with the fallout of the covid-19 pandemic during 2021. But, for many, the gradual recovery of the continent’s property markets has signalled the opportunity to do more business. The stand-out organisations and transactions in Europe’s property lending market this year will be recognised in the Real Estate Capital Europe Awards 2021. As we prepare to compile the shortlists across 33 categories, we want to hear your highlights from a year of challenges and opportunities.

If you believe your organisation deserves to be considered for an award, we are inviting you to click HERE to submit your achievements in 2021 so far – the deadline is midday UK time, Friday 19 November. Voting will open in December, with the winners announced in our spring 2022 edition, and online at recapitalnews.com in March next year.

Data snapshot

Risk on
Investors have preferred value-add and opportunistic strategies so far in 2021, with those two strategies on track for the highest share of annual fundraising in years, according to affiliate title PERE‘s Q3 Fundraising Report.

Loan in focus

A later living loan
According to Nick White, associate director at the London-based property lender Fortwell Capital, high-quality retirement village schemes are “essential in the UK and will continue to require significant funding from alternative lenders to meet the required level of development”. White was speaking following his company’s £52.1 million loan to a joint venture between retirement village provider Audley Group and Schroders Capital’s UK Retirement Living Fund, advised by Octopus Real Estate, for a new scheme near Leeds, in the north of England.

The loan will fund the construction of Scarcroft Park, a 128-unit scheme in an affluent Yorkshire village. The scheme will comprise 22 cottages and 106 two-bedroom apartments. Fortwell clearly sees financing such projects as good lending business – since 2014, the company has provided around £400 million of funding to care home developers and operators.

Today’s Term Sheet was prepared by Daniel Cunningham, with Samantha Rowan and Kyle Campbell contributing.