In February US insurance giant MetLife funded £117.5m (€209m) of a £186.6m senior mortgage loan facility for UK Logistics Fund (UKLF), to acquire a portfolio of UK properties.
The portfolio consists of 14 prime logistic warehouses and one development site in 12 locations across the UK and totals more than 371,600 m2. Borrower UK Logistics Limited Partnership is a joint venture between Moorfield Real Estate Fund II and SEGRO.
DekaBank participated with MetLife to fund the remainder of the senior mortgage loan facility. Laxfield Capital, the debt origination, execution and loan management business, worked with MetLife on the transaction.
Just prior to that, Met Life signed an £85m loan agreement with the West End of London Property Unit Trust, which is managed by Schroder Property and advised by Grafton Advisors.
The six-year loan is secured by fixed charges over various assets owned by the trust and the cost of the initial drawing under the facility reflects a fixed rate of 3.64% a year. Laxfield Capital worked with MetLife on this deal too.
Seeking diversified portfolio
According to Paul Wilson, regional director, Europe, of MetLife Real Estate Investments: “We invest primarily for the US general account into diversified real estate.”
MetLife has been involved in the real estate business since 1878 as a mortgage lender, developer and owner. MetLife maintains a portfolio worth more than $48bn (€36.3bn) invested in real estate products including equities and commercial mortgages.
The real estate division has more than 130 professional staff located in nine regional offices in key cities throughout the US as well as international operations in London, Mexico City, Toronto and Tokyo.
The company’s investments include retail, office, full-service hotel, multi-family, industrial, senior and student real estate, plus portfolio and structured transactions.
Its real estate division originated more than $11bn in commercial loans last year, beating the $8bn it wrote in 2010, and making it the company’s largest production year ever.
Last year it expanded its overseas business, writing $600m of loans in Mexico and $800m in London.
“In Europe, we are active only in the UK and as a senior lender. Our whole loan portfolio for general accounts is $40bn and we are contributing to that portfolio as a senior lender. MetLife looks for larger loans on prime assets, typically office, retail, warehouse distribution, maybe central London luxury hotels,” says Wilson.
“We have done five-year terms and typically the average loan-to-value ratio is around 60%. Our deal sizes tend to be between £100m and £150m, although we can go above that.”
The company does not have a specific target in loan writing but estimates that in the first quarter of the year it closed deals worth some £190m.
According to Wilson: “Over the past six months in the UK we have lent on London offices, and covered most property types including logistics and retail. They have all been straight debt deals.”
Focusing on the UK
He evaluates different markets based on the returns they offer and for the near term is focused on the UK; MetLife is so far not keen to expand elsewhere in Europe.”
“The company has been in the UK marketplace on junior debt or senior loans for over ten years, so we are a committed lender. But we really only just became a notably active senior lender in the past 18 months.”
MetLife is looking for more large transactions and prime deals with experienced borrowers. Its focus tends to be on London but it has provided loans for warehouse property transactions in the UK regions.
“We can look outside London if we can find the right type of transactions. Over the past two years, MetLife hasn’t done any office deals outside of the capital. There are definitely good opportunities for senior lenders in the UK and we’re happy to be active here, where we want to expand,” says Wilson.
There is a small team in the London office, headed by Gary Waistnidge and backed up by staff resources from the US.
www.metlife.com
