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

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