INTERVIEW Pricoa open to working with traditional property lenders in Europe

Pricoa Mortgage Capital foresees working alongside traditional real estate banks as it seeks to expand in Europe, according to Bryan McDonnell, head of European originations at the US-based firm.

In an interview with PropertyEU, McDonnell said Pricoa Mortgage Capital had underwritten €1.2 bn of loans in Europe so far this year and was on track to double new business over the whole of 2015.

Today, Pricoa’s loan book in Europe totals €2.3 bn, which it has built up in the past four years. Of that, around 50% is lent against offices, 25% against logistics and the rest against alternative asset classes, such as student housing and hotels. Pricoa is mainly operating in the UK and the Netherlands, although it is looking at opportunities in other countries to support its pan-European expansion, according to McDonnell.

Traditional lenders
For McDonnell, alternative lenders such as Pricoa can work in tandem with traditional lenders: ‘We offer long-term loans, which can be around 15 years. Part of our portfolio is fixed rate as there is momentum around that. Our LTVs don’t normally exceed 65% and we hold our own debt. We don’t typically offer LTVs in excess of that as we think that LTVs of 75% or more can get you into trouble if the markets slide.’

One advantage for alternative lenders is that they are not subject to the regulations that plague traditional lenders. (UK lenders are constrained by Basel III and the Bank of England’s slotting regime.) ‘Our aim is to be smart and to offer flexible, long-term loans, which range from anywhere between five to 15 years, with 10-year terms really our sweet spot,’ he added.

PropertyEU Magazine
The full interview with Bryan McDonnell of Pricoa appears in the November edition of PropertyEU Magazine.

Not yet a subscriber? Take a free trial today or subscribe here