L&G to step into property lending

Legal & General has become the latest European insurer to step in the property lending business in an attempt to fill the debt gap left by retreating banks. The Financial Times has reported that the UK's fourth largest insurer has appointed Ashley Goldblatt, who has worked in the company's fixed income team, to prepare a strategy to invest into debt in the UK commercial property market.

PropertyEU revealed earlier this month that Germany's leading insurance group Allianz is planning to spend EUR 1 bn on property loans in Germany in 2011 in what would be the insurer's first foray into property lending in Europe.

'We aim to spend approximately EUR 400 mln in the first half, if of course we can find attractive opportunities,' the company's CEO for Germany Stefan Brendgen told PropertyEU at MIPIM.

Depending on whether the venture in Germany is successful, the company will look at expanding its debt-origination business in Italy and France at a later stage, he said.

The move into property lending by Europe's largest insurers has been prompted in part by the new Solvency II regulations for insurers which require them to make higher provisions for equity investments and which make lending an attractive option.

Allianz Real Estate is already active in property lending in the US, but would be the first Continental insurer to move into this segment in Europe. US insurer Metlife is already looking at this market in the UK, with the first financing deal being signed last month - the £107 mln (EUR 127 mln) joint refinancing of the Credit Suisse International HQ in Canary Wharf, London.

AXA Real Estate is also looking at the European real estate debt market, but is not active as a direct property lender. In January the French insurer raised EUR 350 mln in the first close of a pan-European debt fund.

Italian insurance group Generali is also believed to be considering a move into property lending. A company spokesperson declined to comment on the rumours.