Borrowers

Panellists at CREFC Europe’s London conference said uncertainty around interest rates and property values is making debt transactions difficult to underwrite.

Loans coming to maturity in the next two years will be hard hit by interest rate rises and decreasing loan-to-values, respondents said.

UK offices and retail are sectors of most concern as interest coverage ratios plummet.

The latest Bayes Business School report shows there was £23.7bn of origination in the first half of the year, in line with the same period in 2021.

The busy conference halls at the Munich event belied a lull in investment activity while the industry awaits stability.

While a 25% currency discount is a lure for some international bargain hunters, the institutional attitude has remained largely circumspect.

As managers shift to focus on near-term challenges, sustainability and social impact goals are at risk of being deprioritised.

With further interest rate increases expected, lenders in the UK are finding it difficult to underwrite new loans.

The manager said lower refinancing LTVs and falling capital values could cause problems for maturing loans, but described the funding gap as ‘relatively modest’ in historic terms.

A report published this week by LaSalle Investment Management and the Urban Land Institute drives home that non-uniform measuring of risks is keeping institutional real estate markets ambivalent.