ICG Real Estate is seeing a ‘noticeable’ increase in attractive lending opportunities which it is exploring on a cautious basis, the real estate asset management division of Intermediate Capital Group said on Thursday.
In a statement announcing its full year results, the alternative lender said that while it virtually suffered no impact from the coronavirus crisis, pipeline enquiries have risen sharply over the past two weeks, although in times of such uncertainty the company may not be able to raise new share capital and take full advantage of the opportunities.
The increase in pipeline is due to a combination of lenders withdrawing from or re-pricing previously agreed transactions; sponsors opportunistically looking to acquire assets at favourable prices and/or reduced liquidity in the debt markets with fewer lenders actively looking at new deals.
Opportunities are believed to include both institutional quality assets where slightly higher LTVs are required than currently available in the banking market; and value-add / repositioning plays where the focus over the next 6-18 months will be on business plan delivery.
While the market is not yet seeing significant levels of distress or refinancing requirements, largely because lenders have generally been supportive in agreeing covenant waivers and maturity extensions for existing clients, this part of the market is expected to increase in the second half of the year.
The company currently holds around £40 of cash. In the year ended 31 January 2020, ICG Real Estate posted a profit after tax of £6 mln, up 16% year-on-year. The group’s investment portfolio comprises ten loans with an aggregate principal balance of £121 mln.