The UK property arm of the world’s 16th largest company has been approaching a number of property investors, informing them that it is open for business.
It is understood that the division is looking to lend senior debt on big-ticket deals of around £200m to £250m.
One source said: “GE felt if it got into the “200m-£250m bracket there is no real competition from rival lenders and it could charge a scarcity premium.”
While it is common for banks to lend around 50%-60% loan to value, it is thought GE might go further up the leverage curve as it is not subject to the constraints of the Basel II capital regime, which apply to traditional lenders.
The move by GE Real Estate has come about because there is liquidity in the US capital markets, where GE Capital can issue commercial paper, which it can then lend against.
The UK real estate division, led by Ilaria del Beato, historically participated in the lending market by originating mezzanine debt but moved into the equity space in the mid-2000s when the debt market became too competitive.
It returned to lending in 2007 by buying debt including a €1.2bn (£960m) loan portfolio from finance group Capmark and a £2bn portfolio from mortgage specialist Bradford & Bingley.
Last week it emerged that insurance giant AIG is also planning to resume property lending, issuing securitisations and buying debt in the UK.
The firm is rebuilding its European real estate division in London and has poached Stewart Hotston from loan servicer Hatfield Philips to help spearhead its return.
AIG was not a significant real estate lender in the last cycle, but it has been attracted by the current risk return profile. This is buoyed by the Solvency II regulation, which imposes an effective 0% capital adequacy requirement for insurers lending to real estate up to 75% loan to values.
GE Real Estate declined to comment.
Bridget.O’Connell@estatesgazette.com
