RBS closes two regional property loans for Ares Real Estate worth £50m

Royal Bank of Scotland has funded two five-year senior loans secured by regional assets acquired by Ares Real Estate Group, formerly AREA Property Partners, together worth just under £48m.

RBS (proper) logoRBS has agreed a £34.03m senior loan secured by AREA Property Partners and Sovereign Land’s joint venture £56m acquisition of the Lion Walk Shopping Centre in Colchester, reflecting 60.7% LTV.

AREA and Sovereign Land acquired the leasehold on Colchester shopping centre in February initially in an all-cash buy from LaSalle Investment Management’s UK Ventures fund. The freehold on the asset is owned by Colchester Borough Council.

Suzanne Avery, managing director, real estate finance London and Sustainability, said: “We are delighted to continue our support of AREA with this acquisition of Lion Walk Shopping Centre, Colchester.

“Whilst much of the lending market is focused on funding in central London, we also see great opportunities to support our clients outside central London on acquisitions where fundamentals point to a good level of sustainable rental income acquired at sensible prices.”

Ares Real Estate Group’s Wilson Lamont said: “We are delighted to continue our longstanding and close relationship with RBS through the acquisition of Lion Walk. This transaction continues our strategy of buying high quality assets in strong regional centres.”

Sovereign Land, as asset manager, has programme of asset initiatives will improve income and enhance value for the 205,000 sq ft shopping centre which has more than 40 shops, including M&S, BHS, Boots, WH Smith, New Look, TopShop/Topman & River Island. In addition, Fenwick’s group is planning to invest £40m in a new department store on the High Street.

RBS’ second just funded deal for the former AREA Property Partners was a £14m senior loan to finance a £20m acquisition of a B&Q store in Derby, reflecting a 70% LTV.

In the first half of the year, RBS has closed around 100 deals, with around 40% undertaken by the bank’s regional teams as RBS aims to continue to geographically diversify its current good bank property loan book.

In its interim results published two weeks ago, RBS reported a 3% reduction in its segmented UK Corporate property loan book segment, to £24.1bn.

RBS’ £24.1bn corporate property loan book is approximately 50/50 split between the bank’s corporate and institutional business (CIB), focused on larger investors and developers, and business & commercial, focused on SMEs.

Origination levels within CIB are currently running at circa £1.9bn, split between circa £1.1bn of refinances and around £0.8bn of new facilities.  Around 60% of this total £1.9bn lending in in the first half of 2013, or £1.1bn, has been undertaken by the REF London business, headed by Avery, with balance in the regions.

jwallace@costar.co.uk

About CoStar News

Finance Editor, CoStar News
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