Loan-to-value ratios are getting interesting. They dropped to around 40% following Lehman’s collapse; contrast that with last week’s Morgan Stanley refinance of a Green Property loan at an 83% LTV.
But it’s not just LTVs where the sands have shifted. Borrowers are trumpeting the attractive margins they are able to secure. Hammerson this week signed a £415m unsecured revolving credit facility with a syndicate of nine banks at an initial margin of 80 basis points. “Another milestone on our journey to further reduce Hammerson’s cost of debt,” said chief financial officer Timon Drakesmith.
A longer-term deal is Goldman Sachs’ refinancing of Logicor’s circa £970m UK portfolio with a five-year loan at a margin of just over 200 bps. Here too the LTV is a little over 70% (p35).
These and other deals illustrate the renewed desire of investment banks to win large deals and take on risk. How long can this low-margin, high-LTV environment last?
Next month’s Props awards lunch continues a fine tradition. Over the past 24 years the Props has raised over £8.5m, funding more than 1,850 powered wheelchairs for sick and disabled children and young people throughout the UK. Supported by EG, this year the Props is introducing a new award: CEO of the Year. A high-powered judging committee has drawn up a shortlist – I’ll tell you the long list over a drink some time – and we want to ensure EG readers help determine the winner of this coveted crown. Details of how to vote are on page 93, and each vote will raise more money for those much-needed wheelchairs, so do please take part.
With few apologies, I will return briefly to agent M&A. Savills bought two US firms this week – Californian tenant-rep stalwart Cooper Brady Partners and occupier-focused Vertical Integration – as well as one in the UK, rural and resi specialist Smiths Gore. LSH continued its acquisition spree, buying Manchester retail adviser Tushingham Moore.
But the much-mooted, daddy of all deals also appeared to move forward this week (p30). DTZ is said to be preparing a $2bn bid for Cushman & Wakefield, which would propel it to number two (behind CBRE) in the global rankings.
It is early in the process for sure – DTZ’s private equity backer TPG is more in money-raising mode than fund-deploying – but it is a mouth-watering prospect that would knock all other recent corporate activity into a cocked hat.
Estates Gazette has been nominated six times in this year’s magazine industry Oscars, the PPA Awards. EG is vying with the likes of The Economist, the Sunday Times and Country Life in the awards, which will be presented in June. With berths on the Magazine of the Year and Event of the Year shortlists among others, the recognition is for the whole EG team, but a special mention for Jack Sidders and Emily Wright, who are both shortlisted for Writer of the Year.
M&G perhaps more than anyone has been quietly getting on with PRS (p30). This week its UK residential property fund agreed to forward purchase more than 200 private rented sector homes in west London. At a time when there is more talk than action in the sector, it is worth noting this is M&G’s third large PRS deal since the fund’s launch in 2013. It is possible to stand out in a crowded market.
This week EG launches a new reader poll, The REview. In association with Trowers & Hamlins, the survey will gauge reader views each month on all that affects the property business. We are kicking off, as you would expect, with a focus on the most uncertain general election in living memory. With Labour promising a mansion tax and rent controls – and the Conservatives committed to a referendum that could see us exit the EU – which party offers the brightest future for property? And what do you see as the country’s priorities? Keep an eye on your inbox, @estatesgazette on Twitter and on EGi for details of how to have your say.
damian.wild@estatesgazette.com
