Spain's lending space less attractive as competition rises

Spain has seen a major shift in the availability of, and access to, debt capital over the course of 2014, and has consequently become a far less attractive market for lenders to be in, according to Norbert Mueller, managing director of German lender Pbb Deutsche Pfandbriefbank.

‘Last year we could secure new business at a very low gearing and at good margins. Today we have many more competitors including US banks looking to syndicate the debt, as well as other German lenders. Margins, even for higher LTVs, have reduced significantly,’ said Mueller, speaking at the Expo Real trade fair held last week in Munich.

Pbb was one of the first foreign lenders to reopen for business in Spain with the grant of a €61 mln refinancing facility in 2012 to British Land's PREF for its Nassica Retail and Leisure Park in Getafe and the Vista Alegre Retail Park in Zamora. In the same year the German lender also granted a €13 mln facility to Investec GLL Global Special Opportunities Real Estate Fund for the acquisition of two logistics warehouses located at Ontigola in the Toledo region of Spain.

According to Mueller, investors in Spain should remain cautious as market fundamentals continue to be weak. ‘In the rental market the situation is still difficult even though yields are compressing on the investment front due to growing competition in the market,’ he noted.

Spain has seen a massive rush of capital into the property market but the lack of core product is forcing investors to move towards higher risk assets, according to Marcus Lemli, head of investment Europe at broker Savills.

'The product for institutional players is currently not available because the local Spanish institutions do not want to sell at this pricing levels,’ commented Lemli. 'I see however good availability of institutional quality product in the logistics sector,' he added.

Thomas Schmengler, managing director of German asset manager Deka Immobilien, agrees that there is currently good value in Spanish logistics. ‘We are looking around for this type of assets in Spain because the price is not so high and we can find opportunities at a yield of 8%. We believe it makes sense now to invest in logistics assets in Spain.’