Competition among mezzanine debt lenders in the UK is set to heat up this year, as international players battle against domestic banks and institutions for the most profitable opportunities, said panellists at the Loan Market Association's Real Estate Finance Conference this morning.


US bank Wells Fargo is eyeing $2bn-$3bn of new product this year alone, said Kim Torriani, the bank's vice president of European commercial real estate, speaking on a panel on trends and outlook for real estate finance which included German lender DekaBank's head of London office Mark Titcomb, and HSBC's global head of real estate Matt Webster.


"We are definitely seeing more lending appetite, especially with more interest in the market from the US and China," said Torriani.


However, this makes for a tough marketplace for lenders and is pushing returns down as borrowers seek out the least-expensive capital. This is putting pressure on those lenders whose investors are expecting to get a high yield from the property debt market, the speakers concluded.


"We've got a huge lending target but it's difficult to lend money at the moment, as a lot of players are crowding into the mezzanine space. I have lots of money to lend but deploying it will be a challenge. I suppose it's not a bad problem to have," said one banker.


"We will be busy in 2013, but I don't think we will have such a profitable year as the last due to the sheer weight of new lenders coming in to the market," said Titcomb.