Commercial Property Debt Market Bounces Back

Laxfield Capital Reveals Six-Month Increase In Loan Requests


The UK's commercial property debt market has undergone something of a recovery in the past six months, according to new research from commercial mortgage firm Laxfield Capital.

Total loan requests were up 27 per cent in the third quarter of 2014, compared with the previous six months, totalling £7.7 billion: a signifier of increased business confidence, the firm says.

The size of the average deal has also increased, with 51 loan requests in excess of £100 million in the last six months, while average loan-to-values are down from 58 per cent to 55 per cent.

The research also revealed a strong increase in demand for finance among the mixed portfolios, hotels, student housing and industrial sectors.

"The latest findings of our barometer signal a turning point in the market, with volumes at the highest we have seen for seven years and deals weighted towards the large investor," said Emma Huepfl, head of capital management at Laxfield Capital.

"Confidence in finance delivery is back, with debt terms increasingly sought during the acquisition process rather than post-completion."

Expert Opinion
It is encouraging to see the demand for commercial real estate loans increasing, especially at the larger end of the scale. This demand is being met by increasing supply as the traditional lenders are once again active in the market after sorting out many of the issues with their historic loan books.

"It is being further supplemented by the insurers entering the market and by the specialist debt funds who came to the fore in recent years. The latter will continue to have a valuable role to play, especially in relation to the higher loan to value proposals and with properties that have a significant asset management or “value add” angle."
Simon Tweedle, Partner