30 January 2018
SPF Private Clients Commercial team breaks £1 billion barrier
Despite fears around Brexit and ongoing political concerns, the commercial property market was incredibly resilient during 2017, dispelling widespread concerns that business appetite might be stifled. The UK remains one of the most transparent and active places to do business. This, coupled with currency arbitrage, is creating opportunities for new and loftier investment, which will help drive the UK real estate market into 2018.
An outstanding 2017 saw SPF’s commercial debt department arrange more than £1 billion of loans, driven predominantly by a strong foothold in the development funding market. The development market in 2017 was certainly buoyed by a more diverse range of land buyers, including the cash-rich housing associations and small-to-medium-sized house builders. In addition, we saw an increase in regional deals with lenders feeling the apparent heat in the central London market and transferring their attentions to cities such as Guildford, Birmingham, Manchester, Bristol and Bath.
Higher leverage structures (circa 85 to 90 per cent-plus loan-to-cost ratio) were a key driver for our success in 2017, with a higher loan completion rate with more entrepreneurial debt funds than the high-street banks. Clients’ desire for mezzanine and equity funding solutions to complement existing senior debt provided us with the platform to diversify our lending base. This added real value to deals and ultimately clients’ equity returns.
SPF Private Clients expects continued, robust lending into the development sector in 2018 with a strong focus towards experienced house builders, with uncompromised sites across the UK.