Starwood European Real Estate is gearing up for a “typically busy” fourth quarter with £210m to underwrite loans for the industry, according to a Q3 trading update.
The lender, which has £361.1m in investments and commitments, said it has strong a pipeline of deals for the rest of the year as pricing in the market remains steady.
However, it warned that there is increased appetite for prime lending from existing and new players in the market, citing AXA’s €1.5bn senior commercial real estate debt fund, which will create more competition.
Starwood said: “With a higher level of competition there are risks that the requirements to deploy capital affect discipline on risk appetite. This has been seen in an increase in covenant-light deals in the leveraged finance market for corporate borrowers.
“However, for the most part we are not currently seeing a deterioration in risk standards in the mainstream commercial real estate lending market.”
Starwood said its investment pipeline mirrors the geographical breakdown that it has, with the UK currently accounting for 53.3% of its investments.
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