DEN BOSCH, Netherlands, November 18 – Adelaer, the largest independent commercial real estate financing broker in the Netherlands, has sealed an exclusive ‘white label’ deal to utilise the €5.0 billion pan-European fintech platform of Germany’s FinLoop in the Benelux countries. The move is expected to accelerate the pace of digitalisation and international capital markets funding in Dutch property finance.
The volume of domestic bank loans for commercial real estate in the Netherlands has plummeted 40% since 2011 to around €60 billion in 2020 in the wake of the Global Financial Crisis, as Dutch lenders have been forced by increasing regulation to reduce their capital weighting exposure to property to the least risky core sectors of the market. A decade ago, the volume of domestics bank loans for commercial real estate was closer to €100 billion.
The retreat of the banks has created a widening funding gap, estimated by Adelaer at €3.0 billion a year, to finance development projects vital to future targets for the built environment in the Netherlands. These range from the need to construct 1.0 million homes over the next 10 years, to address the affordable housing crisis; the transition to new uses of emptying retail properties on Dutch High Streets, ravaged by competition from e-commerce and the Covid-19 pandemic; to the requirement to achieve the decarbonisation of the total real estate stock in cities by the EU’s ‘Green Deal’ deadline of 2050 through investment in carbon neutral refurbishments and developments in a sector that contributes around 35% of the Netherlands’ carbon emissions.
Daan Reekers, Founder and Chief Commercial Officer, at Adelaer, said: “The Dutch commercial real estate industry urgently needs a way to plug the growing financing gap left by the gradual withdrawal of traditional domestic bank financiers if we are meet the multiple challenges facing our cities, from the affordable housing crisis; to the retail transition and the decarbonisation of the built environment to tackle climate change. Adelaer has signed an exclusive ‘white-label’ deal with FinLoop to utilise their pan-European fintech platform for the Benelux, because harnessing the leading technology to achieve the digitalisation of the financing process is going to be the fastest and most efficient way of increasing and diversifying sources of funding via the international capital markets. We believe the Adelaer-FinLoop platform could ultimately become the model for a future digital Dutch real estate bank, which is needed to anchor the financial stability and growth of the largest economic sector in the Netherlands.”
Reekers was addressing the ‘Adelaer Symposium 2021’ in the southern Dutch city of Den Bosch on Thursday, headlined: ‘Is it time for a new Dutch real estate bank?’
Pan-European commercial real estate loan transactions completed via the FinLoop platform have expanded rapidly during the course of the Covid-19 pandemic, in common with other German-origin fintech leaders such as listed domestic mortgage powerhouse Hypoport and consumer bank N26, as businesses and individuals have become more confident in conducting financial transactions securely online.
Lending volumes on FinLoop have surged from around €400 million in the first quarter of 2021 to a projected €5.0 billion by year-end, fuelled by demand from the DACH markets. That total is roughly equivalent to the annual total volume of commercial real estate financing in the UK from debt fund financing and approaching the average yearly new loan book of PBB Deutsche Pfandbriefbank, one of the largest German commercial real estate lenders. Some 1,500 bank and alternative lenders are now registered on the FinLoop platform with financing transactions rising in particular for more challenging development projects and in sectors hardest hit by the pandemic, such as hotels, retail and offices.
Thomas Schneider, CEO and Co-founder of FinLoop, said: “FinLoop has achieved rapid growth in the volumes of pan-European commercial property loans transacted over its platform since the start of 2021. This is partly due to the growing confidence of financial markets in using proven and secure fintech applications during the Covid-19 pandemic, but it is also a result of both real estate lenders and borrowers coming to the realization that FinLoop reaches a far broader spectrum of closely matched counterparties; facilitates much faster deal closings and offers greater cost and loan processing efficiencies, than traditional bank and other funding channels. So far, no deal has gone unmatched among registered users of our platform. We expect our white-label agreement with Adelaer, which turns over around €1.0 billion in transactions a year, to result in the Dutch market taking a larger share of total loan volumes as its access to the deep pan-European pool of commercial real estate financing expands. We are also working on processing borrowers’ loan applications through ESG filters that will allow banks, alternative lenders and investors to select their counterparties on the basis of their climate and societal impact credentials alongside traditional financial risk metrics.”
Sylvester Eijffinger, Emeritus Professor Tilburg University, told the Adelaer symposium: “The increasing burden of regulation is strangling the access of developers and real estate investors to financing through traditional banking channels in the Netherlands. We need deeper and more diversified access to international capital markets, as is the case in the U.S. and UK, through a Dutch real estate bank that can issue high credit-rated asset-backed bonds, which will boost both the liquidity and stability of the financial system. Unfortunately, such a bank would be heavily regulated under Basel IV capital weightings, which means other forms, such as a ‘near bank’, or a fund, are perhaps more favourable options. Such an institution would also offer the €1.7 trillion pensions sector in the Netherlands, the largest private institutional capital pool in the EU and the fourth biggest in the world, alternative investments to ultra-low or negative yielding government bonds as it transitions to a new collective defined contribution regulatory system over the next five years. Dutch pension money could be used to solve the Dutch affordable housing crisis and fund the decarbonisation energy transition in the built environment, while providing our pensioners with decent and secure retirement incomes.”
Adelaer Financial Architects is a high-end financing and brokerage boutique that stands out for its creative contribution to financing solutions. When advising, mediating and supervising financing for business customers, our “architects” think out of the box and know how to close optimal and contemporary deals. If you are a developer, investor or foreign investor, we will take care of your search for Debt or Equity.
Adelaer also specializes in committing suppliers outside the traditional channels, such as pension funds, insurers, investment funds and international banks. These parties are often willing to finance where Dutch banks do not, at more competitive conditions. In addition, Adelaer has an extensive network of real estate investors who are interested in acquiring projects, both during the development or construction phase and after completion.
Finloop is the first fully transparent and open Pan-European B2B real estate debt platform. FinLoop enables commercial Real Estate debt market participants to increase their agility, speed, and scale through effective digitalization, whilst lowering costs. The platform widens access to a broader pool of lenders and borrowers, shortens the time needed to close loans and lowers loan management costs and the size of team required. FinLoop offers distinct products which enables customers to digitalize at their own pace and to their specific requirements. This fast-growing B2B Real Estate debt platform currently offers 1,500 lenders and has an estimated total turnover of €5bn in 2021 already. With an estimated investment market size of €3.5 trillion and an annual transaction volume of €300-400bn, the European Real Estate Debt Market offers tremendous potential for growth.
With its variety of products, FinLoop is also an efficient tool for brand sensitive high-volume users to obtain fully tailored solutions to their specific criteria and requirements. The White Label module gives larger FinLoop users the best of both worlds by providing an independent and fully tailored software solution that is still connected to the whole CRE debt market. It is a technology set-up that is available on- or off-premises with a personal database and server provider choice.
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Steve Hays,Bellier Communications
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