AEW Europe sees better property loan terms

LONDON (Reuters) - Lending terms for AEW Europe's property purchases are significantly better compared with over a year ago, although most banks are still selective on who else can borrow, its chief executive said on Monday. The property investment unit of French bank Natixis (CNAT.PA) has seen loan margins charged by lenders halved to 100-150 basis points from 18 months ago and is looking to raise up to 300 million euros ($366 million) for a new fund.

"The situation has changed dramatically ... it used to be extremely difficult to get leverage, but it is now easier. We've had no issues financing deals," AEW Europe chief Christian Delaire told the Reuters Global Real Estate and Infrastructure Summit.

Delaire said banks at the start of 2009 were also unwilling to lend to property buyers without syndicating a loan with other banks, although there are at least two lenders now willing to lend for deals over 75 million euros.

Most banks are still only willing to lend to buyers they trust or with a strong track record, however, he said.

The gap between demand for real estate debt and credit offered by European banks may hit 115 billion euros in the next two years, a report earlier this year said, an advantage for funds that are cash-rich or still able to borrow.

AEW Europe, which manages 16 billion euros in assets, is targeting an initial close by end-September for its first open-ended Pan-Europe real estate fund, to be benchmarked to the Investment Property Databank index and leveraged at up to 40 percent.

Delaire, a French national who joined AEW in 2009 from AXA SA's (AXAF.PA) real estate arm, said he continues to favor Britain, France and Germany for property buys, although a recent run-up in prices has meant fewer attractive deals in Britain.

"We still see opportunities but the turnaround of the UK market has been especially sharp and quick ... so we are still looking at opportunistic deals in the UK but fewer than a year ago," Delaire said.

(Additional reporting by Cecilia Valente and Raji Menon; Editing by David Holmes)

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