The CMBS market is spluttering back to life. Deutsche Bank is working on a securitisation of a £300m loan used to fund last month’s purchase by Blackstone of west London office scheme Chiswick Park. And this week it emerged that UBS is looking at a £500m securitisation backed by student housing assets owned by the University Partnerships Programme.
The two deals – if they come off – are being watched closely. Other banks – including BNP Paribas, Credit Suisse and, curiously, Royal Bank of Scotland – are also considering a return to the market.
These are tentative steps on the road to redemption. The US, it won’t surprise, is further down that road. Some $8bn (£4.9bn) of CMBS bonds have been sold this year. Total issuance is expected to be around $35bn. It’s a significant sum but a lot less than the boom years, when $35bn of CMBS bonds were sold every month.
On this side of the pond the industry has been more cautious. Nevertheless, CMBS has an important role to play in plugging the yawning lending gap in commercial property.
According to last month’s Lenders’ Expectations report from Jones Lang LaSalle, big-ticket lending deals of more than £100m will remain scarce. Some 70% of respondents to the study believe that CMBS will not return to pre-2006 levels until after 2014. A sizeable chunk doubt it will ever return to those levels. But a decent number believe the CMBS market will return within the next couple of years.
If it does, it will be another financing option in a market that is desperately short of them. And, without encouraging a repeat of past recklessness, that has to be a good thing.
Census makes sense for property
The government is making a great play of the need for us all to fill in the latest census. “Help tomorrow take shape,” is the advertising carrot. Do so online by 6 May or risk a £1,000 fine, is the regulatory stick.
From a property perspective, the results – which will start to seep out in the summer – will profoundly influence the coming years. Housing needs will be highlighted and likely demand for schools, hospitals and even retail defined.
Rapid growth in the number of older people in the UK has already seen yields for healthcare assets harden by around 100 basis points to 6.5% in recent months. They could move in further once the census results are published.
King Sturge sees a ripple effect. We are likely to be a nation of 69.6m by 2033, a 10m increase in 25 years. Our housing stock is already woefully inadequate. That growth and a lack of developable land will force developers to perhaps look to land currently given over to industrial uses.
April may be quiet and there’s certainly water to be trodden in many regions over the next two to three years. But the trends that will be highlighted by the census add up to opportunity for the property industry – to develop, regenerate and invest.
Congraluations John Nelson
Congratulations John Nelson, the new chairman of Lloyd’s of London. Nelson will resign as deputy chairman of Kingfisher but plans to continue as chairman of Hammerson once he joins the insurance market in October.
Chairing Lloyd’s is a high-profile job; natural disasters in Japan, New Zealand and Australia have only made it more so.
From a property perspective, the timing is significant. With banks all but out of the lending market, insurers are expected to step up their exposure to the sector in the coming years. That places Nelson in an interesting and influential position. His counsel will be much sought.
