Ballymore takes first development loan since exit from Nama
Sean Mulryan's Ballymore has drawn down its first loan following the repayment of its €3.2bn Nama debt and exit from the agency last December.
In its first foray into the investment loan market since the financial crisis, Investec Structured Property Finance provided the UK-registered Ballymore Developments with a loan of Stg18m.
The mortgage, the details of which were registered with the UK companies office on April 13 last, has been extended to allow for the improvement of two light industrial sites Ballymore owns in Silvertown in East London.
The improvement works will be carried out while Ballymore applies for residential-led planning for the sites, according to a report carried by Estates Gazette.
An examination of the mortgage charge documents shows that the loan is a limited recourse facility, which prohibits Investec from seeking to "recover any payment or repayment" from any of Ballymore's other assets.
Commenting on Investec's decision to support Ballymore's development at Silvertown, the company's co-head of origination, Mark Bladon told Estates Gazette that it reflected the kind of deals Investec would continue to target.
Bladon said Investec would look for clients with secondary assets that high street banks might shy away from on the grounds that require value-add asset management, and as such, seem riskier. Investec expects to lend up to Stg£100m per client, with individual loan facilities of between Stg£5m and Stg£50m.
"I don't see us competing with the German banks on 25-year FRI (full repairing and insuring) leases to City offices. When people talk about a flight to safety, it comes back to City offices with a long lease, which Santander or whoever would happily do all day long," Bladon said
"We're talking more client-led investment transactions than just trying to put Stg£250m into the commercial real estate investment market in central London," he added.
Referring to Investec's lending strategy within the context of the uncertainty surrounding Brexit, Bladon said: "Now is not the time to be doing marginal deals. It's probably not the time to over leverage.
"It's not the time to be backing clients without strong track records. But for deals that do the opposite, why wouldn't you keep going?"