Legal & General Investment Management has provided a three-year loan to a fund managed by GreenOak Real Estate.
The loan is worth £39 million ($50 million; €44 million), according to a company announcement. It has an all-in interest rate of 2.4 percent.
The facility has a shorter term than most of the debt provided by L&G in the past. “For the past two years I’ve been making it clear we were willing to do five-to-seven year debt,” Steve Boyle, lending manager at L&G, told PDI. “We hadn’t gone down to three.”
Boyle added his firm is lending shorter term now due to demand from borrowers. “I think it’s driven a little bit by the fact that the banks are not as competitive as they have been recently,” he said. He also noted banks are starting to offer long-term financing, an area where traditionally insurance companies like L&G have prospered.
“There’s been a bit of a sea change where some of the banks are providing longer-term debt,” Boyle added. To counter this, he noted some insurance companies are moving into the short end of the market.
The provided facility replaces existing bank financing. L&G also recently refinanced a real estate loan for property developer Citygrove. That financing was arranged over a seven-year term.