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DFT Opinion Piece: Why we’re confident about lending to the serviced apartment sector

Over the past few years, we have looked to diversify our development finance offering to burgeoning real estate sectors, such as the serviced apartment market.

Here, I highlight some of the reasons why we are confident about lending to this sector.

Weight of capital

When assessing the development loan of an operating or leased asset, one of our key underwriting criteria is to ensure there is a robust exit at practical completion. Over the past few years, the number of institutional investors interested and actively investing in serviced apartments has significantly increased with investment volumes growing more than fivefold from £89m in 2010 to £486m in 2018. The buoyant investment market gives us confidence in the asset’s liquidity and the appetite for built stock to be absorbed by the market.

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An interview with Emma Burke: the retirement housing sector is ‘underserved’ by lending industry

In an interview with Development Finance Today, Emma talks about how the retirement housing sector is being underserved and the biggest hurdles to the government’s housing targets.

 

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DFT Opinion Piece: Do headline interest rates tell the full story?

The words quoted on development lender websites read “fast, flexible, innovative, competitive, experienced, low cost” and indeed our own website here at Maslow Capital quotes words such as “transparent and consistent”.

Of course, the headline rate for a development loan facility is one of the key factors in determining which set of terms a developer should pursue, however, borrowers should appreciate that this is the beginning of a long relationship which will develop over the course of the project and which will most likely hit one or two bumps along the way, hence why several other factors should be considered.

 

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DFT Opinion Piece: Keeping discipline in the current market is key for lenders and developers alike

There has recently been some interesting headlines from trackers of commercial real estate debt activity: Cass Business School and Laxfield Capital.

While leverage levels are nowhere near the suicidal levels of the previous cycle, Laxfield reports an increasing level of enquiries for debt at higher than 65% LTV. By contrast, a study by Cass suggests that the gap is being met by specialist bridging, and stretch and mezzanine lenders that are specifically targeting higher risk and reward profiles. 

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