UK commercial real estate investors ready for more debt as property market rebounds
Commercial real estate investors in the UK are ready to take on more debt as the commercial property market continues to rebound, a Bloomberg report said. Citing a report released today by Laxfield Capital Ltd, a mortgage company, the report said the average loan-to-value ratio that investors sought for rose to 58.3% in the third quarter. This compared with 43.6 % in the first three months of this year. The increase came as more properties got sold and confidence rose that there would be available financing.
In the Laxfield report, Laxfield Head of Capital Management Emma Huepfl wrote that there is a demand for mortgages as it spreads widely and away from safe-haven assets. Huepfl said, "We also see new lending opportunities in the regions and an overall improved confidence in the availability of real estate finance."
The report also cited last month's report from Investment Property Databank Ltd which said that commercial real estate values in the UK increased for the sixth straight month in October, spurred by the continued economic recovery in Britain. Laxfield said office building investors comprised majority of financing demand for 2013. They made up 36.8% of all requests by value. Stores and shopping mall buyers followed at 22%.
As part of its first report that tracks demand, Laxfield conducted its analysis of GBP 25 billion or USD 41 billion of commercial real estate loan requests this year. This year, it stated in the report that it was able to originate and manage over GBP 500 million worth of commercial mortgages.
Information taken from its website revealed that Laxfield Capital's current loan book under management is more than GBP 1.2 billion. It has also arranged more than GBP 8 billion of net lending for clients with no defaults on assets under management. The information also said that Laxfield has had a 20-year history of successful investment "with no defaults and no losses on Assets Under Management."