UK real estate debt volumes at seven-year high – study

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UK real estate debt volumes are at a seven-year high, according to a new study.

Laxfield Capital’s report found that demand for debt was increasing, with loan request volumes up 27% on the previous six months. 

The company collated active requests for real estate finance from the second and third quarters of this year for its UK CRE Debt Barometer.

Out of a pool of 496 loan requests totalling £46bn (€57.5bn), the company found £13.5bn was added in the two quarters.

Activity was, the company said, spread across sectors, with a strong increase in demand for finance on mixed portfolios, hotels, student housing and industrial.

Average loan-to-value ratios fell in the six-month period to 55% from 58% – reversing a trend noted by the company last year, when LTV ratios increased every quarter.

Emma Huepfl, head of capital management at Laxfield, said the latest findings signalled a “turning point in the market”, with volumes at their highest for seven years and deals weighted towards the large investor.

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

“Sponsors, however, remain restrained in their risk appetite, and average LTV ratios have declined, showing an enduring caution in attitude towards leverage in the wake of the recession.”

The company identified 51 debt requests in excess of £100m over the last six months, compared with 42 for the preceding six-month period.

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