31 Jan 2024
Hype of new lending opportunities: Borrowers actively exploring refinancing options to enhance the performance of their property portfolios.
In recent weeks, FinLoop has experienced a notable upswing in financing requests, attracting both new and returning clients. The platform witnessed a remarkable surge in new debt requests, reaching an unprecedented €1.1 billion within the first 3-4 weeks of January 2024. This figure matches the cumulative activity observed in Q4 2023 alone, indicating a pivotal moment in the market. It reflects a shared eagerness among borrowers and lenders to navigate challenging financial landscapes and discover effective solutions.
"This is a clear sign to us that the market is at a turning point where borrowers and lenders are keen to find solutions for difficult financings. This this will soon led to sales opportunities, and long expected certainty in market valuations." said Nicole Lux, the Chief Operating Officer, at FinLoop.
What borrowers are looking for:
- Approximately 65% of loan requests revolve around loan refinancing, encompassing some short-term bridging, however, borrowers are looking predominantly for long-term solutions. Development financing claims an 18% share, leaving only 17% dedicated to new acquisition financing.
- A mere 7% of loans fall into the category of junior or mezzanine debt, with the majority of new financing requests predominantly addressing refinancing needs for senior loans. On average, borrowers seek a 68% Loan-to-Value (LTV), ranging from as low as 50% to as high as 80%, a trend consistent across both investment and development loans.
- Residential property finance commands a notable 35% share of all financing requests, closely trailed by office financing at 32%. When mixed assets with office spaces, are factored in, the overall portion for office-related financing rises further. Surprisingly, financing requests for retail and hotel assets are relatively low, standing at 5% and 7%, respectively, with logistics almost negligible. Notably, office financing opportunities are concentrated in A and good B cities.
- Geographically, loan requests predominantly focus on Western Europe, with a primary emphasis on Germany, the Netherlands, Belgium, France, and Austria.
Considering the substantial property yield increases observed in the office markets of Germany, France, and the Benelux, it comes as no surprise that the sector's repricing has prompted borrowers to step forward with their refinancing requirements. While certain assets may undergo further repricing in Q1 2024, this initial shift indicates a positive trajectory for the sector, facilitating the advancement of Environmental, Social, and Corporate (ESC) as well as carbon agendas.
Nicole Lux, said: "We believe that lenders will get more comfortable with office sector again, and we will see an increase in European office finance transactions. Although the interest in financing residential assets on the lender side is still very strong, these assets are more a mixed bag and locations need to be analysed very carefully to understand migration movement and commuter cities and suburbs."
Simultaneously, FinLoop has noted a surge in the number of lenders joining the platform. Initially reliant on lender contacts of the co-founders, the year 2023 witnessed substantial organic growth, with numerous lenders, particularly those active in specialist sectors such as development or hotel lending, being referred to the platform through word-of-mouth. In a commitment to providing borrowers with direct access to lending specialists without navigating through organizational layers, Nicole Lux states, "We encourage every lending relationship manager to maintain their individual account."
The noteworthy expansion is attributed significantly to regional lenders and debt funds, underscoring the diverse sources contributing to the platform's growth.
About FinLoop
With its variety of products, FinLoop is also an efficient tool for brand sensitive high-volume users to obtain fully tailored solutions to their specific criteria and requirements. The White Label module gives larger FinLoop users the best of both worlds by providing an independent and fully tailored software solution that is still connected to the whole CRE debt market. It is a technology set-up that is available on- or off-premises with a personal database and server provider choice.
For further information contact:
Nicole Lux, FinLoop, nicole@finloop.com