Stretched LTV loans write a whole new lending story

More lenders are writing high LTV loans to sell on chunks later, reports Alex Catalano In Europe, whole loans have been gaining traction. “Whether it’s banks or debt funds like ours, there is a lot of activity in this space,” says Rob Harper, head of Europe at Blackstone Real Estate Debt Strategies. “Whole loans” is a term loosely applied to financings at higher-than-senior loan-to-value levels, organised by one lender, usually with the intention of selling part of it. They can take different forms, and the term can be a confusing one. Barclays, for example, provided £335m for Oaktree’s and Patrizia’s purchase of three UK business parks from MEPC, dubbed Project Aviemore. The bank kept the senior and the mezzanine was provided by Highbridge Capital Management. Jason Constable, head of specialist real estate at Barclays, says: “Our aim is to be the principle originator of the entire loan and distribute the risk as appropriate, as we did on Project Aviemore, but we will work with trusted counterparties to club the facility from day one, or to participate in a senior syndication run by a junior lender.” Investment banks have previously been the main whole loan providers; they were commonly used for CMBS before the crisis. More recently they have used them for big financings, syndicating or selling most of both tranches.