MetLife has targeted an annual UK senior debt lending appetite of at least £750m this year and will continue at this pace to take the US insurance company’s senior loan book on this side of the Atlantic to around £3.5bn by the end of 2015.
MetLife’s 2013 £750m lending appetite excludes the £160m five-year senior loan extended to Ivanhoé Cambridge’s TPG-managed £265m acquisition of Woolgate Exchange, which although funded last month, was counted in 2012’s lending haul, also at £750m.
Since re-entering UK real estate lending in 2011, MetLife has closed around £1.25bn worth of deals in more than 20 transactions, with last year’s £750m lending tally comprised of seven deals with an average in excess of £100m.
MetLife targets good secondary and prime assets, what are considered “stabilised” assets owned by experienced commercial real estate investors, at LTVs typically between 50% and 65%.
MetLife’s core lending appetite is across office, retail, warehouse and central London hotel, with the current circa £1.25bn UK senior loan book around 45% weighted towards offices.
The London-based UK lending team, headed by Paul Wilson, also has access to a separate pool of capital – in the hundreds of millions of pounds – from which they can deploy in mezzanine transactions, at between 50% and 75% LTV.
In addition, on a very selective basis, MetLife will consider lending senior debt against prime assets which are considered unstabalised, but with a compelling turnaround business plan proposition.
Within MetLife’s separate capital markets team, the insurer lender has participated in the syndication of loan-on-loan financing in Germany.
The UK office, however, is not likely to expand its senior debt ambitions beyond the UK in the near term.
This year is expected to see MetLife originate longer-term debt, having closed only five-year deals so far. As a balance sheet-only lender, to match the insurer’s long-term liabilities, MetLife provides floating as fixed debt.
In addition to financing Ivanhoé Cambridge’s Woolgate Exchange acquisition with £160m, MetLife also closed a five-year £169m senior loan to finance Hines and HSBC Alternative Investments’ £290m joint venture acquisition of the Broadgate West office development complex in the City of London.
Last May, MetLife also extended a five-year £125m senior loan, as part of a two lender club with RBS, to fully refinance the specialist retail warehouse fund Hercules Unit Trust’s dual-currency REC 4 Retail Parks CMBS.
MetLife also provided a 50% share of five-year £186.6m senior debt facility with DekaBank to finance Segro and Moorfield’s £314.7m acquisition of the UK Logistics Fund in January.
Last autumn, MetLife hired Barry Worth as an origination director from Nationwide, to work alongside Gary Waistnidge. No further hires are likely this year.
MetLife’s originally entered the UK real estate lending market at the turn of the century, when the US insurance giant originated and bought B-notes from below CMBS transactions as well as junior loans.
MetLife is the largest life company commercial real estate lender in the US with a $41bn loan book, including originating $9bn in commercial real estate loans last year split approximately two-thirds new business and one-third refinancings.