The real estate blog: the growth of Linklaters’ real estate finance practice

Linklaters’ real estate finance team has undergone tremendous growth over the last five years with the volume of work it carries out increasing by 600 per cent, according to the firm.

The magic circle firm saw minimal growth last year when global revenue increased 1 per cent from £1.255bn to £1.267bn. Although corporate work remains the firm’s biggest income generator, its real estate practice now accounts for roughly 10 per cent (£126.7m) of the firm’s total revenue.

Real estate finance specifically has also grown and accounts for roughly 10 per cent of Linklaters’ London banking income.

The last few years have been ones of change for Linklaters’ real estate team, which in 2012 had undergone a period of turbulence with a number of partner departures and structural change. But real estate practice co-head Steve Smith says growth has been the theme since then – although he remains modest about his team’s growth.

“We’re doing relatively well,” says Smith. “Since I was made a partner in 2010 we’ve probably increased our revenue over that period five-fold. So it’s been a meaningful increase over a period of time.”

Smith was made up to partner in the midst of the recession, when the finance team made use of Linklaters’ restructuring practice to find work.

“A lot of the stuff we worked on was working out deals so that was great exposure to institutions and individuals throughout the market,” says Smith. “One of the things we really tried to focus on was very much a sector focus.”

Instead of carrying out real estate finance in a “narrow silo” Linklaters’ finance team works extremely closely with the other sectors within the firm. As part of this approach it has a dedicated tax lawyer who works with the real estate team as well as real estate focused M&A and private equity lawyers.

“It means that when we face clients everyone that talks to clients speaks the language of real estate,” adds Smith. “I think increasingly firms are looking to do that but I suspect we had a slight head start on some of them.”

However, the real estate team has also capitalised on the attractiveness of the UK and Europe market to foreign developers. For real estate finance partner Trevor Clark the firm’s European offices have been instrumental to the practice’s success.

“Our European network is very attractive to clients,” says Clark, “particularly where clients are investing in a market for the first time or doing a deal which involves effort across different jurisdictions.

“In conjunction with our private equity colleagues we’ve been focusing on building relationships with those investors that have come into the UK and European market. We’ve built relationships with those investors and also their lenders.”

The practice has a number of big-name clients including M&G Real Estate, LaSalle, Blackstone and Starwood Capital and a number of banks including Deutsche Bank, RBS, Lloyds and Citi Bank. However, Smith believes that the practice’s success has came about due to the relationships each lawyer creates rather than chasing these big-ticket clients.

“The property market is very individual relationship driven,” says Smith. “So we’ve really followed individuals through personal contact on deals. Rather than Linklaters institutionally chasing a certain bank or a certain fund institutionally we’ve been good at developing individual relationships.”

Smith uses his own career as an example. Having worked as a banker within JP Morgan he notes that a number of the people he worked with there have now spread through the market. Building these relationships has become integral to the way the real estate finance team does business.

“Our focus is very much not ‘let’s find profitable deals and develop relationships’, it’s very much ‘let’ find good relationships and then the deals will flow’,” he concludes.

Deals

Deal one: Howard Kennedy has advised Kitewood Estates on a joint venture with developer Crest Nicholson.

The joint venture has been set up to deliver the Cossall View Scheme in Peckham, which will create 122 apartments. The scheme will be completed in 2017 and include a mix of one, two and three bedroom apartments and 39 affordable homes.

The site was acquired by Kitewood from Southwark Council in February 2015 and successfully secured planning permission for the development of the apartments. The development will include the site’s existing Grade II listed building.

Head of corporate real estate Anthony Hunt and corporate development partner Chris Allan led the Howard Kennedy team.

Charles Russell Speechlys advised Crest Nicholson.

Deal two: Mayer Brown has advised private equity investor CIT Group on the £106m acquisition of London’s Finsbury Tower.

The 153,000sq ft property was acquired from Hermes Investment Management. The tower is primarily used for office space and is situated at the border between the City of London and Shoreditch.

Head of real estate investment Chris Harvey led the Mayer Brown team. The team also consisted of banking and finance partner Trevor Woods, corporate and securities partner Jeremy Kenley, environmental partner Michael Hutchinson and tax transaction and consulting partner Sandy Bhogal.

Hermes Investment Management was advised by Nabarro.