Situs’s recent move from Canary Wharf to Gracechurch Street in London’s Square Mile reflects the changing nature of the company’s client base, from investment banks to include balance-sheet-lending institutions and private equity firms.
The global real estate finance advisory platform is hoping to provide advice and ongoing asset management services to a range of potential clients seeking to take advantage of the anticipated wave of loan portfolio sales coming to market in the wake of new financial regulations and the desire of many banks to offload legacy loan books.
According to director Hugo Raworth, “We have seen several large loan portfolio sales in Europe so far, and at present we can see another five or six on the horizon. One of the reasons so few trades have taken place so far is that the market has lacked clarity. But the more trades that take place, the more clarity will come through, leading to more trades.
“This year and next I can see a move among the larger European banking institutes to exit non-core jurisdictions. They may also sell the management responsibility for those loans and we can step into the shoes of the bank and take this on,” says Raworth.
The Texas-headquartered Situs has evolved from being primarily a real estate advisory business into a real estate financial advisory and asset management-focused company.
Assisting Credit Suisse
Between 2004 and 2008 Situs worked with Credit Suisse First Boston on its loan platform and assisted the investment bank in the disposal of its loanbook.
Situs has also assisted a number of other banks with large loan trades to date. Last year Situs formed a joint venture with state-backed German lender HSH Nordbank to manage its €3bn Nordic real estate loan book as the bank progressed its restructuring efforts.
HSH is winding down its non-core businesses – selling activities not compatible with its current strategy – and restructuring its balance sheet.
The joint venture, called Situs Nordic Services, is based in Copenhagen, and provides third-party loan servicing and real estate advisory services across the Nordic region.
“Our unique selling point is that when we look at taking on mandates from banks, we are able to take on their staff too. In the case of HSH we took on a team of 21 as part of taking on the book. Both parties win, in that the staff remain motivated and involved, and we get a platform to build on in order to secure new business.
“We want to do this sort of venture again and are having a number of conversations with some buyers and sellers of debt to this end. What we say to buyers is, if you have your own servicing infrastructure to look after the loans, great. If you don’t and we are advising you as a buyer, then we can take on the asset management of that book if you buy it,” says Raworth.
According to director Ryan Smith, who looks after the company’s advisory work: “Over the past two years, our mandates have been to provide updated real estate valuations, loan underwriting, loan loss projections and loan structure analysis. This has evolved into acting for both buyers and sellers of real estate debt. Institutions looking to sell portfolios are increasingly taking our information as a basis for going through to an eventual sale.”
In recent years Situs’s European division has advised on more than €70bn of real estate and debt-related instruments and provides loan servicing on a portfolio of more than €20bn. The company is rated as a special and primary loan servicer by Fitch Ratings and Standard & Poor’s and approved by Moody’s.
Situs is one of five firms advising the Irish Treasury through Nama to evaluate due diligence and perform debt valuations on acquired loans.
www.situs.com
