KLM Real Estate, the retail and leisure advisory practice, has joined forces with Bircroft Private, the boutique real estate debt adviser, to collaborate on property transactions. CoStar News can reveal.
The tie-up is the latest example of leading real estate advisory practices establishing partnerships with a debt specialist to offer lending advice at all stages of the acquisition or sale of assets.
Another significant example was Art Capital, the private credit specialist founded by Tim Vaughan, former managing director at Brotherton Real Estate, and Stuart Blieschke, who previously led KKR’s private credit business in Australasia and North Asia, with backing from advisers ACRE Capital, RX London and Hong Kong-based TTB Partners.
The larger brokerages such as CBRE and Knight Frank have enlisted debt specialists in-house times as investors seek early stage advice on debt availability.
The move also follows the recruitment last year by KLM of Nick Sewell and the launch of KLM Asset Partners, an asset management and investment business led by Sewell and Mark Bennett.
KLM Real Estate is a specialist retail and leisure agency that recently celebrated 35 years in business, with CoStar news catching up with the team in a recent profile. Bircroft Private was established in 2010 by a former team from financial services group Dawnay Day and delivers tailored funding solutions to assist with the development, purchase, re-financing and restructuring of property assets and portfolios. It acts on behalf of property companies, family trusts and high-net-worth private individuals throughout the UK and Western Europe across all sectors and has placed £12 billion of debt with lenders worldwide.
Mark Bennett, a KLM partner focusing on the investment and development market, told CoStar News: "The tie up with Bircroft is a bolt-on that adds the debt piece to our advisory work. So many clients were asking us to advise on what the debt markets were looking like before committing to transactions and so it was important to have a more formal relationship with that expertise."
Tom Robinson, director, Bircroft Private, said: "The market for lending to retail has picked up strongly in the past three years after previously being incredibly selective, and this is about us more formally working together so that the correct advice about debt availability can be given early on. There is a lot of new money looking at retail again that does not necessarily have that expertise in the asset class. There are nuances to advise on capex, about refinancing and the debt terms available and the information required by lenders. The return of the clearing banks has really made the market much more competitive."
Mark Selwood, director, Bircroft Private, added that the return of high street lenders had changed the dynamics of the market, as well as the increasingly robust performance of centres and occupiers. "There are really three levels to the market. The high street banks at 50% to 55% leverage is around margins of 1.5 basis points to 2. Then at 60 to 65% leverage where debt funds are, margins are in the high 2 basis points, and then at 65% to 70% the debt funds are asking for 3.5 basis points to 4.5. The point is as long as the debt is not locked in at some point it can be refinanced with the high street banks at cheaper rates."
Robinson says competition to lend to retail has seen situations such as a recent refinancing process for a high street supermarket take place with three high street banks were "fighting for the opportunity".
For Bennett the move is part of an overall drive by KLM Real Estate to provide the full service for its clients across investment and development and their wider portfolios.