Tony Campbell – President and CEO Anglo Irish Bank
Anglo Irish Bank, the name that has become synonymous with Boston’s biggest commercial real estate deals, is putting the brakes on lending.
“We have not shut down, but the outlook must be much more conservative until the sector stabilizes,” said Tony Campbell, the bank’s president and CEO, in a rare interview from his Boston office. “We are not immune to what’s happening in the market. The banking industry is deleveraging because banks need to have smaller balance sheets or more capital.”
Boston’s once–Teflon commercial real estate sector is showing signs of wear because too tight credit and a declining economy, which has hit commercial lending like a tsunami, bringing commercial lending to a crawl in virtually every sector.
At stake in Boston is more than $3 billion in construction deals that would add more than 3 million square feet of office space, 679 hotel rooms and 809 luxury condominiums to the downtown. Among the projects in the pipeline that have struggled to get financing are the South Station Transportation Center, One Franklin Street, Columbus Center and a glass tower at Winthrop Square.
Anglo Irish’s decision to step back from lending comes in the wake of a $700 billion emergency economic bailout bill in Congress. It has a few Boston developers nervous about financing their next project or purchase.
“I’m glad I’m not looking for financing today because the capital markets are closed,” said John Rosenthal, whose $450 million One Kenmore proposal could be approved by the Boston Redevelopment Authority as early as this year. Upon completion, the project will include five buildings ranging from 7 stories to 27 stories and feature 367,000 square feet of office space, 100,000 square feet of ground-floor retail, 330 apartments and 1,290 parking spaces.
When Irish Eyes Were Smiling
In the last few years, Anglo Irish has built a reputation as the go-to lender for high-profile deals including $275 million in loans for 15 buildings along Newbury Street, a $30 million mortgage for 45 Milk St., a 9-story office building and nearly $27 million for the 12-story office tower at 30 Winter St. Since 2005, Anglo Irish has financed nearly $1 billion for some of Boston’s most premiere office and retail properties.
When times were good in 2005, Anglo Irish lent developer Joseph Fallon $60 million for Fan Pier. Last year, builders broke ground on an 18-story office tower that will offer 500,000 square feet of Class A office space and 40,000-square-foot of retail space with underground parking. When completed, the $3 billion waterfront development will span 21-acres across nine city blocks and include 3 million square feet of residential, commercial, hotel and retail space.
Campbell put the best face on what could be a major change in financing Boston properties. While he declined to provide numbers, Campbell insisted that when the books close on 2008, the bank would have lent more money than a year ago.
“In the macro sense, you will see that our bank grew again in the U.S. in the 2008,” he said.
“But yes, Q4 ’08 compared to Q4 ’07 will be much smaller, and I’d say Q1 ’09 will be smaller than Q1 ’08.”
