A new world order has emerged in European real estate debt in recent years. And with it, the cast of key individuals the market needs to know in order to do business has shifted.
Lending is no longer the preserve of traditional UK, French and German banks, while investors are now looking to innovative workout structures and debt deals for high-yielding opportunities.
There has been, and continues to be, a raft of insurance firms and fund managers moving in to the provision of debt, targeting the gap in the market left behind by retreating banks such as Eurohypo and Société Générale. Legal & General, AIG, MetLife and Aviva are just a few looking at the senior debt space.
This increase in the availability of senior debt is also likely to help the growing number of mezzanine debt funds which have so far been largely starved of activity due to restricted lending opportunities.
Debt investing is also gathering pace, with a number of large loan portfolio deals completing at the close of 2011, including Royal Bank of Scotland’s £1.3bn Project Isobel sale and Lloyds Banking Group’s £900m Project Royal.
As part of this debt evolution new names and faces have joined the stalwarts of the market, while other have reinvented themselves. There has been a migration of talent from agents and fund managers to banks – such as the moves by former Savills chief executive Aubrey Adams and L&G’s Helen Gordon to RBS.
As banks sell legacy loans, some key figures with the knowledge and experience of those positions and borrowers have transferred to the new owner – notably Lorna Brown’s move from RBS to Blackstone.
For these reasons, EG canvassed some of its key contacts to ask: who are the most important figures working in UK real estate debt today?
Their answers helped to structure our new top debt players list, which looks significantly different from the one EG published two years ago.
Borrowers saddled with too much debt and asset managers purchasing for appointments will see some familiar faces from the workout teams. The rest of the list is made up of those with the balance sheet and appetite to undertake new lending, and those that have been active – or are tipped to be active – in the loan sale market.
Debt investors
Angus Dodd, managing director, Lone Star Management UK
Under Dodd’s leadership Lone Star has completed two major European debt deals in the last 12 months – with more expected to following. In December the private equity firm won one of the most competitive loan sale auctions carried out last year when it beat rival Cerberus to take control of the £900m Project Royal book from Lloyds Banking Group. The former fund manager who joined Lone Star from JER Partners in April 2010 has also successfully bought part of the Bundesbank Excalibur portfolio.
Joseph Pedlow, managing director, real estate debt strategies, Blackstone
Joseph Pedlow is a managing director of the Blackstone Group focused on Blackstone real estate debt strategies in Europe. He is based in London and led the private equity firm’s successful bid for the £1.4bn RBS Project Isobel loan book which will be housed in its real estate debt strategies platform.
Lorna Brown, co-head BREDA, Blackstone
Until the end of last year, Brown was head of UK real estate restructuring within Royal Bank of Scotland’s global restructuring group. However, following Blackstone’s deal to take a 25% stake in a fund set up with the bank to work out £1.3bn of real estate loans in the Project Isobel deal, Brown switched allegiance. She is now leading a new 12-strong division, Blackstone Real Estate Debt Advisors, alongside Doug Kirkman, which will manage the Isobel and other loans. Kirkman will concentrate on the real estate side of BREDA’s activities, while Brown will focus on technical loan restructuring.
Ron Rawald, partner, head of European real estate, Cerberus companies
“If you don’t know his name yet you will soon” was how one market source described Rawald. The American who heads European real estate at the private equity company, got his firm on the shortlist for both the Project Isobel and Project Royal deals and is determined to bring the firm’s global distressed debt investing experience to the UK. Prior to Cerberus Companies in early 2006, he was with Fortress Investment Group in Frankfurt.
Mary Ricks, executive vice-chair Kennedy Wilson
Ricks is executive vice-chair of Kennedy Wilson and chief executive of KW Commercial Investment Group. She joined the company in 1990 and at the end of last year relocated to London to oversee its share in €2.6bn of Irish real estate investments it made last year. The California-based property company made a bold entry into Europe in 2010 completing three deals including its purchase of Bank of Ireland real estate management business, and the purchase of a £1.8bn portfolio of UK commercial loans.
Existing and emerging lenders
John Barakat, head of real estate finance, M&G Group
Barakat joined M&G Investments in 2008 as head of real estate finance, and fund manager of the M&G real estate debt fund. M&G provides commercial mortgages from 0-80% loan to value on income producing properties in Western Europe and is one of the only lenders able to provide a “one stop” solution to borrowers seeking higher leverage. Barakat previously spent 17 years at Goldman Sachs.
Jeffrey Dishner, head of real estate acquisitions, Starwood Capital Group
Starwood is another firm which is expected to be active on both the debt investing and lending side. In summer 2011 the US private investment firm announced plans to raise a new £1bn fund targeting senior debt for non-prime property, as revealed by EG’s sister publication EuroProperty. Dishner relocated from Connecticut to London last August to increase it European presence.
Ashley Goldblatt, head of real estate lending, Legal & General
Legal & General’s much-anticipated entry into UK real estate lending took a step closer when at the beginning of last year the firm announced the appointment of Goldblatt. The former fixed income manager at AXA Investment Managers is to spearhead the task, and although no deals have yet been signed off the firm is reported to be vying against another new entrant – AIG – to refinance a £100m Bank of Ireland senior debt facility for Unite.
Adrian Poole, new business origination manager, Aviva UK
Aviva’s Poole was nominated on the grounds that “he must be one of the few people in the industry, if not the only one, who could write a cheque for £200m on his own account”. Aviva started the year by agreeing a £120m loan to Shaftesbury and The Mercers Company and is rumoured to have completed another two major deals since.
Paul Wilson, regional director, Europe, MetLife Real Estate Investments
In 2010 MetLife was one of the first US insurance giants to move into the origination of senior loans, spotting the gap left by the credit crunch – with many more US firms now eyeing this space. Wilson, who has been with the life company since 1987, has participated in a number of deals through its partnership with Laxfield Partners, most recently jointly providing £187m to SEGRO and Moorfield for their £314.7m purchase of the UK Logistics Fund.
Susan Geddes, head of real state finance, UK corporate banking, Santander
Geddes is in an enviable position among lenders with no legacy loan book to deal, and a mandate to expand the business. Abbey, which is part of Spanish giant Santander, was completely absent from real estate lending through the boom years. Now it is seen as one of the banks with the greatest appetite to lend.
Brendan Jarvis, head of European real estate, Barclays
Barclays is the British bank with the greatest appetite for lending. Following the merger of the two sides of its real estate business. Barclays Commercial and Jarvis’s Barclays Capital into a new entity, Barclays Corporate, in 2010 the bank has been actively providing finance to clients including St Modwen and Canary Wharf as part of a group development facility for 25 Churchill Place.
Stuart Hoare, vice-president global transaction services, Citigroup
Citigroup is the name that has been linked with the financing of two major debt deals. Along with Royal Bank of Canada it jointly provided around £300m to Lone Star on Royal and is rumoured to be providing finance for the private equity fund’s Excalibur deal too. Stuart Hoare is the man you need to know.
Bernhard Scholz, management board member for real estate and public investment finance business, Deutsche Pfandbriefbank
Until a month ago the man in the market for Deutsche Pfandbriefbank was head of real estate finance international, Harin Thaker. However, after announcing that he was leaving the lender, his responsibilities for managing origination across the bank’s international markets passed to his boss and board member Scholz. At the time, the bank said a replacement for Thaker would be announced in due course, as the bank prepared itself for a “medium-term sale” following its rescue and nationalisation by the German government in 2008.
Steve Williamson, managing director, real estate finance, Deutsche Bank
Williamson is seen as one of the smartest lenders in the business. The bank has been behind the only two UK securitisations since the market closed following the boom, and has also been actively syndicating debt, including the £350m facility used to finance Kennedy Wilson’s purchase of £300m senior debt to refinance Blackstone’s Mint hotel portfolio.
Restructuring
Aubrey Adams, head of property, Royal Bank of Scotland
The former Savills chief executive has his feet firmly under the desk at RBS after being appointed head of property within RBS’s global restructuring group last September. His role includes responsibility for West Register, RBS’s vehicle which acquires property from financially distressed situations and creates value with a view to exiting.
Stephen Eighteen, head of non-core real estate, Royal Bank of Scotland
Eighteen is getting on with the difficult job of running down £36bn of loans across 12 different countries seen by the bank as “non-core”, before 2013, without incurring huge loan writedowns. This involves the bank’s exit from almost all overseas property lending and includes one of the two flagship UK loan sales of 2011, the £1.4bn Project Isobel deal to Blackstone.
John Mulcahy, head of asset management, Nama
One of a seven-strong management team for Ireland’s national “bad bank”, Mulcahy is the man in charge of the division responsible for working with debtors, receivers and joint-venture partners to identify, develop and manage assets controlled by Nama to increase cash flow.
Andrew Wilson, head of solutions, corporate real estate business support unit, Lloyds Banking Group
A former LandSecs business development director and chief executive of Global Switch, Wilson, as Lloyds’ optimistically named “head of solutions”, is responsible for heading a larger specialist real estate team focused on delivering the bank’s work out strategy.
Richard Dakin, managing director and head of corporate real estate, Lloyds Banking Group
Dakin, the former head of major corporate lending at Lloyds TSB, is the man overseeing the restructuring of a huge portion of Lloyds’ £89bn global property loan book. The problem loans are mainly those inherited as part of Lloyds’ takeover of HBOS in 2008.
Others you need to know…
Lynda Shillaw, Managing director of corporate real estate, Lloyds Banking Group
Not withstanding its billions of pounds of legacy real estate debt, Lloyds Banking Group has returned to the UK property lending market with an annual target of £1bn. Lynda Shillaw, managing director of corporate real estate at Lloyds, is tasked with undertaking this fresh lending drive.
Max Sinclair, head of London team, Eurohypo
Sinclair, as head of Eurohypo’s London team, oversaw the bank’s expansion to become UK property’s blue-chip lender involved in a wide variety of high-profile deals including arranging £320m of debt to Olayan Group for its Knightsbridge Estate. In November last year, parent Commerzbank abruptly curtailed the division’s activity with a temporary suspension of new business. However, with the expectation that the bank will be back in the market come June, Sinclair is still a need-to-know.
Cyril Courbage, Fortress Investment Group
Cyril Courbage is the man in the frame at global real estate investor Fortress Investment Group. Courbage, who was the former European head of real estate at Deutsche Bank, has been bought on as the firm looks to launch a European senior debt fund. The fund, which is thought to have board approval, will be targeting the absence of senior debt available to finance non-prime UK and European real estate.
Helen Gordon, head of West Register, RBS
Gordon, already a well-known face in the fund management sector following a term as property director of Legal & General’s Life Fund, joined Royal Bank of Scotland in October last year. She will take responsibility for the bank’s West Register vehicle which was set up in the 1990s to handle the bank’s own distressed assets and now has a significant portfolio, principally pubs and hotels. Gordon’s reports include James Rownie who is the UK head of West Register.
Paul Coates, head of UK commercial property lending, RBS
As RBS looks to make good on new-lending guaranteed to government, Coates is in charge of lending the cash.
Isabella Scemama, head of commercial real estate finance, Axa Real Estate
Scemama holds the purse strings to Axa’s €1bn European debt fund, which has invested in deals across offices, shops and hotels, and was part of the club that financed Carlyle’s White Tower buy.
Ilaria del Beato, managing director, GE capital real estate
The US giant has re-entered the UK debt space, buying debt from other lenders. It has ambitions to provide senior debt on big ticket deals where competition is scarce.
