NEW YORK CITY-After closing 18 commercial real estate loans totaling more than $1.1 billion in 2011, financial services firm ING Real Estate Finance (USA) is taking a more conservative approach in 2012. Given the Eurozone crisis and market volatility in the States, Michael Shields, managing director of ING Real Estate Finance (USA), tells GlobeSt.com that he predicts deal volume will be “slightly less,” but still active.
“For European banks in particular, there is less capital for growth,” Shields says, noting that the company will attempt to maintain a flat balance sheet throughout the year. “We are only going to be able to lend out what gets re-paid. We’ve had a lot of repayments, and we are working on some other things that will free up some capital. It depends – if you have half a billion dollars to repay, which we will probably have at least that, if I get unexpected repayments of another $200, $300 or $400 million, we will have some additional capital.”
Last year, ING Real Estate Finance closed on a $100 million refinancing of Metropolitan Tower at 142 W. 57th St. in Midtown Manhattan, a class A office building owned by a joint venture of BlackRock and L&L Holding Co. The firm also closed on a $72.8-million term loan with Invesco Real Estate secured by assets Invesco owns throughout the country, including a 20,000-square-foot retail condo located at 512 Broadway in Manhattan, an industrial property in Dallas and a multifamily property in Denver. In addition, ING completed a $70-million term loan on behalf of a joint venture of Brookfield Office Properties and private equity giant Blackstone Group to refinance 1550 & 1560 Wilson Boulevard in Arlington, VA.
In 2012, Shields says ING will be “most successful” in the retail and transitional office asset classes, as well as redevelopment and lease-up situations. And in contrast from the flight-to-quality trend in the New York market, he adds that opportunity exists in office properties that are “not as stabilized.”
“The life companies are going to be really competitive for the pristine, stabilized properties,” he says. “We need additional pricing for every European bank, so doing a no-brainer deal in Manhattan is not going to hit out hurdles.”
In New York in particular, Shields says ING looks for challenging transactions. “To do a deal in Manhattan, we need some complexity, something that could be in transition or a redevelopment, but we’re not going to do ground-up construction,” he says, noting that cities with high residential activity outside the five boroughs will also be targeted. “Office is still tricky, but retail and multifamily, you can find a lot of good assets in a lot of different markets,” he says.
Shields, who provides oversight of the company’s $6.7 billion US real estate loan portfolio and ING’s commercial real estate worldwide, described the firm as “very well-positioned” despite concerns over the Euro.
“We’ve taken a lot of steps since the last crisis began to sell assets and raise capital even with this latest European crisis flare-up,” he says. “We are in pretty good shape comparatively to all the other European banks. We are not going to be as busy as we’ve been in the past, but we’re still in business and we are still looking at deals and we are still going to be able to do some deals. Not a lot of European lenders can say that.”
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