Columnist and author Peter Bill comments on Joe Valente's (JP Morgan) latest research note, the state of property lending in the UK, the race to build two speculative office towers in the City of London, and F&C REIT's name change to BMO Real Estate Partners.

Columnist and author Peter Bill comments on Joe Valente's (JP Morgan) latest research note, the state of property lending in the UK, the race to build two speculative office towers in the City of London, and F&C REIT's name change to BMO Real Estate Partners.

Joe Valente doesn’t look much older than he did nine years ago, in June 2006. That month, the then head of research at DTZ called the top of the UK market. Today, at 58, Joe looks a bit more crumpled. Four years with Allianz from 2007-11, and the last four as head of research at the European Real Estate Group of JP Morgan Asset Management, have taken some toll. Warning: Joe is feeling a bit 2006-ish again.

On 2 June he issued a note headed 'That time of the property cycle again...' containing Bank of England warnings on lending terms getting a little loose. 'A timely warning given the emergence of finance for speculative development emanating from some banks still in public ownership' said Valente, who added a coded, but specific warning, about London.

Read the mood music, not the words: 'In Central London, schemes delivering 4.5 million square feet of new office space were launched in the past six months - the second-highest level of development starts in over 20 years. Whilst the pick-up in development activity is clear, the impact on market balance and the prospects for rental growth is much more difficult to gauge.'

The words of a gloomy man. A man less gloomy is William Newsum of Savills, who gave his matchless annual report on the state of property lending in the UK on 2 June. Lending is up 50% to £45 bn. The debt mountain has shrunk 46% from its 2010 peak. 'Never before have I seen investment yields so low,' said Newsum, 'and never before have I seen the cost of money so low.'

Newsum was never going to say out loud what might be worrying him. Maybe nothing. But he is a very wise man. He mentioned that mezzanine debt is taking LTVs into the 80% range and gave much emphasis to the emergence of new lenders. Savills un-earthed 46 new ‘non-bank’ lenders this year, on top of 52 last year and 52 the year before, taking the total to 150 in three years. 'Is there too much competition?' he asked with a grin.

Twin tower race
Bang! The race to build two rival speculative towers in the City of London by 2018 has officially begun. On May 7 Brookfield took the decision to give subsidiary Brookfield Multiplex the go-ahead to build the 37-floor superstructure of 100 Bishopsgate. The target date for completion of the 900,000 sq ft skyscraper on a cleared and ready site adjacent to the Heron Tower is the final quarter of 2018.

The world’s biggest fund property manager has long been monitoring the likelihood of a re-start on The Pinnacle stump further up the street. A restart became real in mid-February when Europe’s biggest fund manager, AXA, announced a £300 mln deal to buy the site from a failed Arab consortium.

On 15 June AXA’s Anne Kavanagh and developer Sir Stuart Lipton unveiled what was to crown the stump: a 278-metre high, 62-floor skyscraper, containing 1.4 million sq ft of lettable space called 22 Bishopsgate, to be built - by late 2018. More interesting than the dull name is that PLP Architects have added 40% more floor space than contained in the original 'Helter Skelter'. Space that will add at least £500 mln to the value of a tower that defies nick-naming because it looks looks like, well, a tower.

Agents Knight Frank and GM Real Estate are already promoting the pleasures of working within 100 Bishopsgate, which will have five large lower floors of 44,000 sq ft against the regular 20,000 sq ft floors at Number 22. The twin towers will add 2.3 million sq ft of space in one year. Brookfield and AXA have taken what amounts to a £3 bn bet on London. Which is very courageous.

REIT muddle ends
When is a REIT not a REIT? When it’s a £7.5 bn property fund manager called F&C REIT. Happily that confusion ends on 8 July. Then the 140-strong money manager changes its name to BMO Real Estate Partners. A brand switch to reflect last year’s purchase of its parent, investment managers F&C, by the Bank of Montreal.

Junior is 30% owned by London property figure Leo Noe and his business partner Ivor Smith. The pair sold their business to F&C in 2008. The Canadian bank now holds a 70% stake. Two-thirds of the business is in the UK, the rest in Europe. 'The BMO deal is a clear opportunity for us to grow,' says business development director Angus Henderson, the highly engaging 38-year-old son of former Land Securities boss, Ian Henderson. How about Germany? 'We continue to like A locations in secondary cities.' France? 'We hope to do some club deals.' Anything else? 'We hope to come out with some pan-European products in future.' More on 8 July perhaps?

Peter Bill is the author of Planet Property and former editor of Estates Gazette