Bank Won’t Lend To Malls In The U.K.


Amid a difficult year for retail in Britain, a large lender now says it won’t lend to shopping centers in the country. Deutsche Pfandbriefbank CEO Andreas Arndt said on Monday (May 14) that malls are a “no-go area” for lending, Bloomberg reported.

“You can have very nice yields on retail shopping center development in the U.K. just now, which is simply the reflection that nobody wants to go there presently,” Arndt said on an earnings call.

Though close to 16 percent of the bank’s portfolio is in Britain, only 8 percent of new real estate loans were in the country in the first quarter. This breakdown reflects the bank’s cautious attitude surrounding Brexit, as well as its decision to be more careful about real estate lending. A spokesperson for the bank told Bloomberg that eCommerce was one of the factors in its decision.

The news comes as hedge funds were not too optimistic about Britain’s high-street retailers following on on the heels of Brexit last June. As evidence of this last year, hedge funds saw shares of Debenhams decrease 3 percent, which is the lowest it has traded in eight years. Five of the 10 most shorted U.K. stocks then included these retail-sector firms: M&S, Debenhams, Pets at Home, Morrisons and Ocado.

With the soon-to-be exit from the European Union looming at the time, consumer spending was not as confident as it was in the past. This resulted in retailers like sofa company DFS putting word out that it might miss its profit expectations for the year. In turn, the stock index that tracks Britain’s retailers fell just over 4 percent, which is said to be the largest one-day decline since the Brexit vote in 2016.

Analysts and investors are expecting to see further weakness in the stock market. These concerns are directly tied to both DFS’ warning and Amazon’s Whole Foods acquisition. As retailers and investors alike fear that Amazon will push further into retail, it has left most uncertain about future profits.