What do Lenders know? Debt finance for Property.
Interestingly, two sources seem to show a slowdown in traditional debt finance for Property. First, Saving Stream reports that Bank Lending in the Property Development sector has dropped from £35.5bn to £14.9bn in the two years to April 2016, being replaced by debt funds and P-t-P lending as Banks become more cautious. Next, IPE reports from Laxfield of a fall in requests for acquisition finance. Can anyone hear the bubbles bursting?
Acquisition-related financing requests halved in the first quarter of this year for deals in excess of £50m (€63.6m), according to Laxfield Capital.The real estate debt investment manager’s ‘UK CRE Debt Barometer’ found that demand for long-dated finance had increased substantially, triggered by falling rates.Laxfield drew on a total sample of 1,293 loan requests totalling more than £89.1bn.Emma Huepfl, co-principal at Laxfield Capital, said the start of 2016 was “markedly different” to the final quarter of last year, with demand for acquisition finance on large deals falling. “Nevertheless,” she added, “volumes remained high, boosted by a rise in demand for long-duration loans, as borrowers sought to extend maturities and lock into the low-rate environment.”
Demand for finance on alternatives exceeded finance demand on core assets for the first time, the study found.
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