Big PH firms turn to real estate in Europe

Top Philippine conglomerates, like most of their peers in the region, have been picking up European real estate as a way to diversify, officials from Dutch financial giant ING said.

One recent deal involving a Philippine investor is the acquisition by tycoon Andrew Tan of Torre Espacio, a 224-meter, 56-storey tower that is considered one of the iconic skyscrapers in Madrid.

The property was acquired by Tan in November 2015 from Spain’s Grupo Villar Mir of international construction group OHL.  ING Bank was the sole underwriter and mandated lead arranger for the 280-million euro, seven-year loan to finance 50 percent of the acquisition price.

In a statement Thursday, ING Bank Manila country manager Consuelo Garcia said Europe—particularly Spain, which has close historic ties with the Philippines—was a good destination for Asian investors because of good valuation, transparency, ease of doing business, specialized high-tech sector, among other factors.

“Apart from its European and global expertise, ING has always had a strong underwriting capacity for sizable, complex transactions such as this one,” she said. The bank also boasts of a global network across 40 countries in Asia, Europe, the United States and Latin America.

Robert Scholten, head of ING Real Estate Finance (REF) Asia-Pacific, a unit of ING Wholesale Banking, considers deals such as the Torre Espacio acquisition a “foretelling of deals to come.”

Demand for European commercial real estate from Asian investors, including those from the Philippines, is seen to grow due in part to their need for diversification of assets under management, the increase in buying opportunities and the attraction posed by lower interest rates and the Euro-US dollar exchange rate.

“It is likely that the outbound investment trend from Asia into Europe and also into other continents, including the Americas and Australia, for core quality real estate assets will continue to increase over the coming years,” Scholten predicted.

Scholten cited the growing number of sovereign wealth funds, life insurance companies, asset management funds and family offices from almost every country across Asia as some of the parties investing in Europe. “Well-informed real estate investors are becoming increasingly aware that some of the overseas markets could offer interesting value propositions,” he said.

ING REF deems itself well-positioned to cater to the influx of cross-border investments with its leadership position in real estate finance. Scholten noted that ING had over 220 dedicated real estate financing experts in eight of the most liquid markets in Europe, teams in New York, Australia, Hong Kong, and Singapore.

“Our global connectivity and local presence are particularly relevant to the current outbound investment strategy of Asian investors,” he said.

In 2015, ING REF closed 80 deals amounting to Euro 9.5 billion in total loan value, a post-global financial crisis record year of real estate lending for ING.  Out of these transactions, 15 involved Asian institutional investors and family offices as well as new investor segments such as Asian sovereign wealth funds—representing a double-digit percentage market share of all Asian institutional investment in Europe.

For her part, Garcia pointed to the “very close and seamless collaboration” among ING Bank Manila, ING REF Asia Pacific and ING REF Spain, and its syndications team in the successful closing of the Torre Espacio deal “within a very tight timeframe.”

In the Philippines, ING Bank is a key player in financial markets, mergers and acquisitions (M&As), and specialized sector financing such as utilities, power, and infrastructure. It was the first foreign bank to upgrade into a universal bank in 1995. It has closed more than $17 billion worth of M&A deals for the government and its clients.