September 2015 Issue

Renshaw Bay is latest niche real estate fund firm to find bigger buyer When Jon Rickerts, head of real estate finance at Renshaw Bay, came to agree GAM’s takeover of the business he part owns, there was only one topic at the front of his mind. “If you just viewed it as a financial transaction, […]

New Basel III capital regime regulations are discouraging US banks from financing development. The Basel III ‘super-capital’ charge for so-called high-volatility commercial real estate (HVCRE) loans came into effect at the start of the year, intended to curb the sort of excessive construction lending that created big losses during the recession.

Lenders and borrowers say that as many as 70% of US property debt deals now involve advisers

As the world continues to get smaller, financial markets more interconnected and capital sources more diverse, the need to understand capital demand drivers when investing in commercial real estate is paramount. Wherever that capital is within the capital stack and whether it is defined as active in debt (via banks, insurers, M-REITs, mezz funds), preferred or common equity, the distinction is in the apportionment of risk and the associated risk-adjusted returns.

A growing range of intermediaries is both brokering debt for borrowers and acting as outsourced origination platforms for lenders. James Wright, head of real estate finance at new market entrant Capita Real Estate Finance, surveys the market’s changing landscape The role of an intermediary or broker, which has primarily been to source and obtain secured real estate debt on a client’s behalf, has expanded in recent years.

Mortgage Real Estate Investment Trusts, beloved of yield hunters, have started to feel the heat, with net margins compressing and interest rates increasingly volatile ahead of an expected rate hike by the Federal Reserve.

When the pros and cons of mortgage REITs were last debated in the UK, in a 2012 Treasury review of REITs, the idea of an equity-based vehicle investing in property debt, but not the assets, was too much of a stretch for the policy wonks; they dumped their mortgage REITs file into the “too difficult” box.

Our roundtable panel of property experts discussed how 2015 has unfolded so far, a year that saw a general election in the UK, and where the opportunities and the risks lie ahead. On the lending side were Paul Dittmann, head of senior commercial mortgage finance at M&G Real Estate, and Colin Sanders, chief executive of specialist lender Omni Capital. Simon Marriott, head of UK real estate at investment manager Valad Europe, and Ed Daubeney, head of debt advisory at agent DTZ, gave the borrowers’ perspective.

Real Estate Capital market commentary • A number of jumbo refinancings took place over the summer, the largest being Aviva’s £936m to refinance Criterion Capital’s £1.8bn London assets and redevelop the Trocadero in London’s West End. In another, AIG, Legal & General and Rothesay Life agreed to provide £900m for Secure Income REIT’s UK hospital and leisure portfolios in a deal due […]

Private real estate debt funds August 2015 PERE Research and Analytics’ monitoring shows 68 debt funds in the market this month, seeking a total of $33bn. These include one new global fund, Colony Capital’s Distressed Credit & Special Situations Fund IV, which is seeking $2.5bn. Atlanta-based Quadrant Real Estate Advisors has launched two funds, targeting […]