Refinancing dominated in 2012, with new deals proving more difficult to close as agendas shifted
But the mood in Cannes this year is markedly different. There is a real sense that this year will be the time when green shoots – seen in patches over the past 18 months – might just start to bloom. The UK’s real estate sector,
in many areas, has been stable for long enough now that many have felt confident in calling the bottom of the market. New swathes of Far Eastern, Canadian and Antipodean capital are flowing onto our shores, particularly in London, and returns on development are starting to look increasingly attractive. For our part, we have set down a significant marker with plans to invest up to £7bn of new lending into the sector. This will be across the full spectrum of our lending operations, from global corporates through to mid-market and SME. Last year saw lower volumes, with around
two-thirds on refinancing deals among our existing customer base and the remainder on new to bank business loans. This year we
would like to reverse this pattern. A continuous focus on sustained deleveraging
has strengthened our balance sheet and created capacity to grow in a sustainable, balanced way akin to our group risk appetite, which means that our ability to finance real estate has improved considerably. Times have certainly changed. But we have
not forgotten the lessons of recent years which, when coupled with the impact of increasing regulation, ensure that we will be seeking to maintain relatively conservative balance sheet management. For situations where longer-term loans or
larger ticket sizes are needed, banks can work with alternative sources of funding to structure packages. Indeed, collaboration is now a fact of life that is here to stay, particularly among larger deals. The good news is that we have the firepower to
go it alone on big-ticket lends, with our sweet spot in the £75m-£150m range.
Richard Heath, head of corporate real estate, Lloyds Banking Group
New swathes of Far Eastern, Canadian and Antipodean capital are flowing onto our shores, particularly in London