Loan requests show rise in regional activity
Leverage requirements have increased to 60.1% between 2017 and 2018, according to Laxfield Capital’s latest UK CRE Debt Barometer, with the majority of loans still within the 55-65% LTV bracket.
Some 18% of loan requests last year were for LTVs above 70%. However, Laxfield said these requests tended to involve an element of asset improvement which would gradually de-gear the loan over its duration.
Leverage requirements against retail assets have increased from 60% to 65% as sponsors appear to be seeking more support from lenders to replace existing funding against deteriorating values and finance acquisitions, said Laxfield. Over a five-year period, the LTV shift has been even greater at more than 10%.
Leverage requirements have increased to 60.1% between 2017 and 2018, according to Laxfield Capital’s latest UK CRE Debt Barometer, with the majority of loans still within the 55-65% LTV bracket.
Some 18% of loan requests last year were for LTVs above 70%. However, Laxfield said these requests tended to involve an element of asset improvement which would gradually de-gear the loan over its duration.
Leverage requirements against retail assets have increased from 60% to 65% as sponsors appear to be seeking more support from lenders to replace existing funding against deteriorating values and finance acquisitions, said Laxfield. Over a five-year period, the LTV shift has been even greater at more than 10%.
Large-ticket loans, those above £50m, continue to dominate the pipeline by overall volume, although Laxfield said that jumbo loans (those for more than £100m) have trended lower.
Increased activity in the regions has meant that, while demand for finance against London assets is still the greatest, year-on-year it has shrunk.
The South West and Ireland both saw significant increases in loan requests in 2018, compared with 2017.
Emma Huepfl, co-founder and director at Laxfield Capital, said: “Over the five years since we issued our first report, we have seen substantial changes in demand for finance.
“Strong activity in the regions and mid-market show a healthy depth of activity despite the unresolved political backdrop.
“As tenants demand more differentiated property, landlords need to anticipate change and be more aware of the need for ‘space as a service’.
“Lenders need to pay close attention to the operational capabilities of their borrowers and ensure that they are capitalised to invest in their assets and maintain occupier appeal.”
The report provides an overview of the financing requirements in the UK commercial property market by collating active requests for real estate finance. It is based on a sample of 2,995 loan requests and a volume of £130bn.
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