Finance

How hard will it be to access debt this year?

As the bar chart on the right shows, the most widely anticipated impacts of a restriction in the flow of debt are forced sales of property (60%), injections of additional equity, (53%) and a growth in the number of owners in distress (48%).

What are the likely consequences of current refinancing in real estate, as a result of debt issues?

Even where debt is available, businesses may struggle to find it on acceptable terms. In the current environment, the cost of borrowing will be a problem for a growing number of real estate players. Investors who enjoy access to capital at favourable rates are likely to have a significant advantage, just as they have in similar markets in the past.

When is your next significant refinancing? (UK investors and developers)

The current climate may also prove to be a fertile one for non-traditional lenders. As CMS real estate finance partner Rob Whiddett says: “The continuing uncertainty in the sector could lead to a higher cost of capital for the traditional bank lenders, which would increase margins and – when added to a lower risk appetite – may provide an opportunity for alternative lenders. We have also noticed that alternative lenders’ speed of execution gives them an advantage over banks in certain circumstances.”

A decade ago our research highlighted the growth and diversification of non-bank lending in the aftermath of the Global Financial Crisis. Some sources suggest that it now accounts for over a quarter of the UK’s commercial real estate debt market. There is every indication that it will grow still further over the next few years.