11 June 2016 – by David Hatcher
Insurance companies have further increased their presence in UK real estate lending and now account for nine of the 28 big-ticket lenders active in the market.
According to Savills’ 2016 Financing Property report, AIG, Aviva, ING, Legal & General, M&G Investments, MetLife, Pricoa, Rothesay Life and TIAA Henderson all originated and held two or more real estate loans of £100m or more during the year to 31 March.
By number, insurers now eclipse German banks (six), UK clearing banks (four), US investment banks (four), alternative lenders (three) and other international lenders (two) in the big-ticket lending market.
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The activities of insurance companies in the UK real estate market have increased markedly during the past four years, with £8.6bn lent by them last year, a 58.5% rise on the year before and a 238.2% increase on 2012.
Insurers have become more active in the real estate market in order to match their annuity liabilities with interest paid by landlords, generally through longer-term deals, and have gained market share from traditional bank lenders, which have reined in their lending since the financial crisis.
Last year William Newsom, Savills’ senior director and author of the report, said that the UK real estate lending market was in a “Goldilocks period” in which it was “not too hot and not too cold”. But he added that in the final quarter of last year margins started to increase and LTV ratios started to decrease.
Click here to read the full story and a Q&A with William Newsom
