HSBC?s net European commercial real estate loan book has risen by US$464m over the first six months of this year to $32.56bn, taking the global bank?s entire European property lending exposure to $40bn after ?other property-releated loans? to the region.
Last December,?HSBC provided around ?260m towards Land Securities? ?1.05bn revolving credit facility, with a headline margin for the UK?s largest REIT of just 120 basis points over three-month LIBOR.
Across the five additional global regions ? Hong Kong, the rest of Asia Pacific, Middle East and North Africa, North America and Latin America ? HSBC?s global commercial real estate corporate loan book rose by $773m to $74.71bn at the end of June, according to the bank?s interim results published today.
Inclusive of ?other property lending? to non-coporate clients, the aggregate of HSBC?s commercial real estate and other property-related lending was US$115bn at the 30 June, broadly in line with 31 December 2011, representing 12% of the bank?s global multi-sector loan book.
HSBC?s exposure to commercial real estate lending continued to be concentrated in Hong Kong, the UK and North America.
Across its entire loan book, only $3.2bn are impaired and a further $30m are past due. HSBC renegotiated ?2.39bn of global real estate loans over the first six months of the year, which the banks said were predominantly in the UK.
In its interim results, HSBC said: ?The commercial real estate sector, particularly in the UK, continued to face weakening in property values and a reduction in institutions funding commercial real estate lending.
?The commercial real estate mid-market sector continued to experience higher levels of renegotiation activity than is evident with larger corporates, where borrowers are generally better capitalised and have access to wider funding market opportunities.
?In all cases, in assessing the acceptability of renegotiated loans, we consider the ability to service interest as a minimum and reduce capital repayments if possible.
?In the UK, many regions were negatively affected by weak growth in the economy, though London and the South East continued to exhibit relative strength. We are closely monitoring re-financing requirements in the UK market over the next two to three years.?
HSBC said that its exposure to Spain?s troubled commercial real estate sector ?remained insignificant?.
jwallace@costar.co.uk
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