INTERVIEW WITH ÁLVARO MORALES,
REAL ESTATE FINANCE DIRECTOR AT ING, FOR IBERIAN PROPERTY
Where is ING’s strategy heading? Is Portugal a good location to strengthen international expansion?
ING is present in Portugal for more than 20 years through a full branch (or a “Sucursal” using the Portuguese term).
Our operations in Portugal are focused on the wholesale banking market, with the Portuguese team working in coordination with the Group’s specialized product teams – namely debt capital markets, financial markets, transactional services, strategic products, amongst others -, sector experts – from real estate, infrastructure, energy, TMT, just to name the most relevant sectors – and the sustainability and innovation teams, to offer our clients the bank’s major capabilities and knowledge.
How do you evaluate the situation of the real estate market in Portugal?
Portugal is a natural market for ING where we are very active in the core segments in the main capital cities. The Portuguese real estate market has performed very well during these last years. Obviously, during the pandemic there were certain typology assets like retail that were more directly affected but the trend has changed in the post Covid-19 era and performance has returned to levels seen before the outbreak of the pandemic. Performance of the core office segment, however, was robust and proved to be resilient during and after the pandemic where the impact has been minimal and, in some cases, insignificant.
Logistics and residential (especially PRE) are the market darlings with strong investor demand in Spain. We have also seen strong investor appetite for these asset classes in Portugal, however thwarted by the lack of core product in a market that is still consolidating. This is good news for us as opportunities are coming to the fore which we are currently analyzing and open to finance.
We are fully committed to the Portuguese market as shown by the level of financings provided to-date across the segments we are active in. To-date up to EUR 130m has been deployed for the financing of core offices in Portugal. We are taking a strong stance in food retail where we are currently working on a high value underwriting deal. Despite the challenges finding core opportunities in the logistic segment, wehave been able to secure our first deal of c. EUR 60m to be closed in the coming months, and we expect to be the first of more logistic assets and portfolios to finance.
What are your expectations for the future?
ING has been in the Portuguese market for many years and our portfolio has proven to be very resilient to challenging market circumstances. Real estate investment is key for investors to hedge against inflation. In that sense, we intend to continue following our clients through offering high value added (HVA)/tailor-made products. In the medium run, we anticipate natural adjustments in the yields profile consequence of increase of interest rates. Notwithstanding, Portugal is an attractive market for our investors, and we will be there to support our client in their investments’ strategies.
Why do clients select ING?
ING is one of the top five largest real estate banks in Europe. We have dedicated commercial real estate specialists in all major commercial real estate markets globally who are known for their robust track record and extensive market expertise.
Our expert real estate teams are committed to providing best-in-class real estate banking services to help clients’ businesses meet their financial goals. In keeping with our main objec- tive to maintain long-term relationships with our clients, we have successfully supported and continuously support institutional, private and publicly listed real estate funds, as well as private and public companies investing in core income-producing properties across the office, logistics, multifamily, residential and retail sectors, among others.
Our variety of tailored financial products that spans from real estate financing, equity and debt capital market services to rating, payments and cash management, and advisory on mergers and acquisitions, subscription line facilities to depository, and financial market services.
Our execution and delivery timelines are also key factors for our clients to win deals. Also, being an international bank with a branch in Portugal allows ING to work as a local bank, positioning us in the lead vis-à-vis our international competitors.
Our commercial prowess and achievements are another strong addition to attracting clients. ING has been a leader in commercial real estate loans syndications for Europe, the Middle East and Africa (EMEA), and has consistently ranked in the top 3 in EMEA League Tables over the past 5 years. Over the years, ING has maintained itsposition among the top Bookrunners in Europe with real estate finance and syndications winning numerous accolades including ‘European syndication team of the year’ in 2016 and 2017 and ‘Best Bank Lender in Sothern Europe’ in 2020 and 2021 (Real Estate Capital). We have led the underwriting of big transactions thanks to oursyndication platform consisting of a committed group of professionals. Within ING we have the tools to support our clients with first-class service when it comes to big transactions and distribution capabilities.
What types of services does the firm offer?
ING is a top bank to the largest Portuguese corporates and financial institutions, actively working with much of the PSI (Portugal’s main stock market index) companies in Portugal and abroad.
ING has taken the leading role in key business areas such as renewable energy, infrastructure, transportation, telecommunications and, of course, real estate finance in Portugal for several years. These are very important areas for the bank where we are positioned for both current and future business opportunities.
A third leg of ING’s business activity in Portugal is the transactional banking made available to local subsidiaries and affiliates of international companies. Through ING Portugal’s local offering, the group deploys its network to its global clients with a footprint in the country.
And what does ING offer in terms of sustainability?
Clients are increasingly factoring sustainability in their investment decisions as several blue-chip tenants and government institutions increasingly demand more and more green building features. ING is an active player in sustainable markets. We are supporting the transformation of the real estate industry towards net-zero with different finance solutions like Green Loan, Green Bonds, Sustainable Improvement Loans and other debt and capital market products linked to sustainability ambitions of our clients. By doing this we are steering our own lending portfolio towards carbon neutrality and align with criteria of EU taxonomy.
In recent years ING has taken on a top position in sustainability in the Portuguese market, where we support some of the country’s largest companies in the creation of their sustainability frameworks and strategies and in the launching of their debut sustainable bond issues.