19.02.10

By Jennifer Rigby

North-west property bankers revealed the new tight terms on which they will work at the North West 2010 Conference organised by Property Week last Thursday

Santander: Banks can call the shots

Speaking at the event in Manchester, Derek Bald, head of real estate finance north-west for Santander, said: “If there are no legacy issues, banks have the opportunity to look at the market and pick and choose to an extent. Banks can call the shots.”

Bald’s positivity may stem from the fact that Santander has a very limited legacy problem in the north-west — only a very small book it inherited from the takeover of Alliance & Leicester in 2008.

Santander now has targets for lending in the north of England and Scotland, including Leeds, Newcastle and Glasgow.

It is aiming for transactions of between £25m and £30m — and larger for “club” deals whereby banks pool together to lend — at a 60%-65% loan-to-value ratio. It hopes to build relationships for long-term lending with people who understand the business.

It also aims to lend on investment or development transactions across the student accommodation, hotels and office sectors with prelets in place.

Despite Bald’s unique position, the other four bankers speaking at the event agreed with him.

Co-operative Bank: Will back existing clients

Phil Basten, head of property finance at the Co-operative Bank, explained he would lend to its long-term clients.

“We will back existing clients and there could be some development finance in there for clients with a long track record. LTVs will be 60%-65% with margins at 2.25%.”

Deutsche Postbank: Looking for quirky deals

Gareth Jones, assistant director for real estate finance at Deutsche Postbank, said there was so much competition to lend on prime assets that it could be difficult to negotiate this type of transaction.

Jones, whose bank is targeting deals of between £10m and £60m at 65% LTVs on an average margin of 2.25%, said of prime property investment opportunites: “Either the debt-backed buyers are nowhere near the price or we look and then say the yield is artificially low.

“We are being priced out of prime by other banks who are keener to lend, so we have to look at more quirky stuff — development, new clients, but derisked.”

Investec Private Bank: Amateurs are gone for good

Richard Heggie, head of Investec Private Bank in Manchester, which is known for mezzanine finance rather than long-term lending, agreed with Basten. “We would like to lend on quality to good clients,’” he said. “The amateurs are gone for good.”

He also said that, where there were legacy issues, communication was key, and stressed that most banks feel that the best “receiver” to “work out” problem assets is the original client.

Barclays: We want quality assets

David Hardcastle, head of property finance for the northern region at Barclays, said good-quality property and relationships were key.

“We want quality assets. We might go up to 85% loan to value for a nice 25-year lease,” he said.

He also said the bank was keen to continue its existing funding relationships with housebuilders Bellway, Persimmon and Barratt.

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Source: Property Week (www.propertyweek.co.uk)