Who are the men and women controlling billions of pounds worth of UK property debt? Mike Phillips reveals the key figures heading the banks’ restructuring teams and providing new loans
In two moves, Lloyds Banking Group summed up the paradoxical nature of UK property banking last week. No sooner had one of its divisions pushed Swayfields, the motorway service station developer, into administration than colleagues in another division made a return to lending with an £82m development loan for Trinity Walk in Wakefield (6 March, p41).
As highlighted by these contrasting stories, the teams at Lloyds and their peers across the banking sector face two main challenges: how to deal with the bad loans written during the boom, and how to start furnishing the market with new debt.
How the banks approach those challenges is vital to the sector’s recovery. The actions of the workout teams have the potential to move the needle in terms of values, and the banks’ approach to new lending will determine whether the gears of the investment market start turning properly again.
For these reasons, EG canvassed some of its key contacts to ask: who are the most important bankers in UK property today? The answers that came back helped to form the top 10 list that appears over the page.
Borrowers saddled with too much debt and asset managers pitching 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.
If these people are not already in your contacts book, it is time to make their acquaintance.
Restructuring
Richard Dakin
Managing director, business support unit, 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. Dakin leads a team of around 500 people who focus exclusively on property loans.
The team is hoping to restructure these loans and find ways to work with investors to put more equity into deals, so that the bank will not have to add to the estimated £18bn of property loan losses it reported in 2008 and 2009.
Dakin has already overseen integration of the workout teams from the two banks, a vital part of the process.
Mark Collins
Director of solutions, Lloyds Banking Group
Lloyds drafted in former Land Securities chief operating officer Collins last autumn. His task was to find out how the bank could reduce its exposure to its legacy loan book.
However, Collins has to do this without crystallising losses. He has been leading the special solutions division, which works within the business support unit. The team is thought to be setting up a vehicle, provisionally called Tennyson, that will buy up and hold assets where the bank has been unable to find a restructuring solution with the original borrower.
This is the division of Lloyds that can sell off portfolios and bundles of loans, undertake securitisations, or even form new property firms to work through assets, and Collins calls the shots.
Lorna Brown
Head of UK property restructuring group, Royal Bank of Scotland
Brown heads a 100-strong team tasked with restructuring “stressed” loans, which, once the restructuring is complete, either return to the core property loan book or go into Stephen Eighteen’s non-core division, which is where they are run down or spun off. Brown’s team is making progress, and is bringing in joint venture partners to work out distressed situations, with Delancey and Rockspring among the partners used so far.
Brown explains: “The global restructuring group has the toolkit needed to support borrowers, including new lending or equity investment from us where required, extending loans if we can see potential value recovery down the line, or occasionally debt-for-equity swaps.”
Stephen Eighteen
Head of property, non-core bank, Royal Bank of Scotland
Eighteen has the job of running down £36bn of loans 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.
It is understood that in many cases RBS will not continue to participate in refinancings on club deals, where it is one of a number of lenders, when loans become due. However, it will consider selling off loans to investors, and floating them or securitising them – a potential source of deals.
Despite the recent market upturn, Eighteen says: “There will not be a flood of sales, but there will be increasing pressure on occupiers that will affect income. Refinancing risk is not just a risk, it is a certainty.”
Harin Thaker
Head of international real estate, Deutsche Pfandbriefbank
From his base in London, Thaker has two roles. He oversees the bank’s workout team, which will work with the new “bad bank” DP is seeking to create, in order to hive off most of its non-core real estate loans and public-sector lending. However, Thaker also oversees DP’s drive to expand international lending by ¤2bn this year.
Getting the balance right will be crucial. “Banks won’t be dumping assets on the street at distressed prices,” Thaker says, “because that would mean further write-offs, and banks needing to recapitalise again, which would be difficult. We have the ability to take things onto our own balance sheet, if need be, although no bank wants to become a property company.”
Jim Brydie
Head of lending, Anglo Irish
Having been promoted last December, Brydie will oversee the nationalised Anglo Irish bank’s colossal property loan workout programme.
The former head of its London branch, he will be responsible for restructuring loans within the bank’s circa ¤19bn UK loan portfolio. He will also be responsible for liaising with NAMA, the body set up to deal with problem loans held by Irish banks, into which Anglo will put almost ¤6bn of UK loans from developers such as Ballymore. There is an increasing worry that Irish banks will sell off the higher-value UK assets over which they have control, rather than their more troubled Irish property loans. Brydie will decide if this is the case with Anglo.
Lending
Susan Geddes
Head of real estate finance, UK corporate banking, Santander
Geddes is in an enviable position among lenders – no legacy loan book to deal with, 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.
It recently completed a deal to fund Delancey’s purchase of 40 Holborn Viaduct, EC1. “We’re ahead of our budget for Q1; we’re a balance-sheet lender and can deploy it in any way we think is safe and profitable,” she says. “In 2010, you’ll still see club deals dominate larger financings, but banks are willing to hold more on their balance sheets, so borrowers will be able to finance larger deals.”
Richard Payne
Head of property investment, Barclays Corporate
Brendan Jarvis
Head of European real estate, Barclays Capital
Barclays this week completed the merger of the two sides of its real estate business, Payne’s Barclays Commercial and Jarvis’s Barclays Capital, into a new entity, Barclays Corporate (see p36).
Barclays is now the British bank with the greatest appetite for lending. The bank has completed three big-ticket deals in the past three months; funding the purchase of Brindley Place in Birmingham by Tritax, and Victoria House in WC1 and 20 Columbus Courtyard in Canary Wharf for M1 Real Estate.
Steve Williamson
Managing director, real estate finance, Deutsche Bank
Williamson is seen as one of the smartest lenders in the business. Deutsche recently gained a Pfandbrief licence, which will give it greater lending capacity as it can refinance in the covered bond market, and with its £140m deal to fund the purchase of 5 Churchill Place, E14, by a Saudi consortium, it pulled off a truly innovative move. The bank sold the junior portion of the debt to Singapore sovereign wealth fund GIC, and has an agreement in place to do similar deals in future.
“Not enough deals requiring debt are coming through,” says Williamson. “Cash buyers can outbid borrowers. There is risk appetite among lenders for better secondary, where tenant mix provides diversification of risk.”
Max Sinclair
Head of UK division, Eurohypo
Sinclair, as head of Eurohypo’s London team, has overseen the bank’s expansion to become UK property’s blue-chip lender. And the bank has been at the table in almost every major financing of the past year, including the £525m Lakeside deal, and the £340m Telereal Trillium refinancing. Sinclair has also backed borrowers on riskier deals, such as the £128m debt facility for the purchase of Industrious by Max Property Group.
Sinclair says: “2009 finished strongly, and 2010 started as positively, but we’re seeing signs of things slowing down. As we approach the general election, and the possibility of a hung parliament, banks may become nervous if there is the possibility of a double-dip.”
Others you need to know
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