FINANCE: Increasing confidence in finance availability has seen LTVs rise and acquisition finance outpace restructuring, according to a new debt barameter.
The second report by mortgage investment manager Laxfield Capital, which analysed £37bn of loan requests across 392 deals, revealed a continued gradual increase in LTVs.
For the last two quarters LTVs have stood at 58%, compared with 51.8% in the first three quarters of 2013.
Alongside this the report also found that although the market is still showing a fairly constrained approach to leverage overall, an increasing number of investors are seeking LTVs in excess of 65%.
The debt barometer also found more smaller-ticket loan requests, principally as a result of increasing activity in the regions.
Some 47.2% of requests received in Q4 2013 and Q1 2014 were for sub-£50m loans.
Added to this, the report noted a higher proportion of acquisition-related loan requests, as opposed to debt refinancings.
This reflects an active investment market that is moving on from legacy debt issues. By loan count, more than two-thirds of new requests were acquisition-related in the past six months.
Looking at activity by sector, Laxfield noted a substantial increase in demand for debt secured on retail assets, which accounted for 31.6% by loan size in the past two quarters, compared with 22% in the first three quarters of 2013. ?Emma Huepfl, co-founder and head of capital management at Laxfield, said: “The barometer paints a picture of a recovering commercial property market where confidence is improving.
“LTV ratios are creeping up but remain well below pre-2008 levels, and the increase in smaller-ticket loan requests highlights increasing activity in the regions and a broadening of investor interest beyond prime, core assets.
“In particular, a growing number of loan requests related to retail assets suggests an improvement in this sector.”
bridget.o’connell@estatesgazette.com
