![Page 1: RICS Matrics Funding Finance Market Update 2015](https://reader036.vdocuments.site/reader036/viewer/2022062503/58e589941a28abdd148b45fb/html5/thumbnails/1.jpg)
RICS Matrics Series
Funding and Finance: Market Update
September 2015
Simon Wainwright BSc FRICSJ PEISER WAINWRIGHT
#CPDseries
![Page 2: RICS Matrics Funding Finance Market Update 2015](https://reader036.vdocuments.site/reader036/viewer/2022062503/58e589941a28abdd148b45fb/html5/thumbnails/2.jpg)
Funding and Finance: Market Update
• Macro-economic factors• Finance for property investment & development• Types of lending• Who is providing funding - participants• Funding terms• Current terms• Role of professionals
![Page 3: RICS Matrics Funding Finance Market Update 2015](https://reader036.vdocuments.site/reader036/viewer/2022062503/58e589941a28abdd148b45fb/html5/thumbnails/3.jpg)
Economic Background
• US Federal Reserve rate 0.25%• UK Base Rate 0.50%• UK 5-year SWAP rate 1.45% (1.79% Nov)• UK 10-year SWAP rate 2.16% (2.32% Nov)• BoE Quantitative Easing £375 bn• Outstanding property debt £244 bn• European inter-bank lending weak• Inflation RPIX 0.0% Aug 2015• Inflation CPI 0.0% Aug 2015
![Page 4: RICS Matrics Funding Finance Market Update 2015](https://reader036.vdocuments.site/reader036/viewer/2022062503/58e589941a28abdd148b45fb/html5/thumbnails/4.jpg)
One Country Two Economies
![Page 5: RICS Matrics Funding Finance Market Update 2015](https://reader036.vdocuments.site/reader036/viewer/2022062503/58e589941a28abdd148b45fb/html5/thumbnails/5.jpg)
Wealth Preservation
![Page 6: RICS Matrics Funding Finance Market Update 2015](https://reader036.vdocuments.site/reader036/viewer/2022062503/58e589941a28abdd148b45fb/html5/thumbnails/6.jpg)
Private Equity
![Page 7: RICS Matrics Funding Finance Market Update 2015](https://reader036.vdocuments.site/reader036/viewer/2022062503/58e589941a28abdd148b45fb/html5/thumbnails/7.jpg)
Market Participants
• The rise and fall of the Debt Based buyer• The return of the Institutional Investor• New lenders / investors entering the market• Foreign investors – Sovereign Wealth funds• Private Equity and Opportunity funds• Corporate buyers• Private investors, trusts and charities
![Page 8: RICS Matrics Funding Finance Market Update 2015](https://reader036.vdocuments.site/reader036/viewer/2022062503/58e589941a28abdd148b45fb/html5/thumbnails/8.jpg)
Where can you find value?
![Page 9: RICS Matrics Funding Finance Market Update 2015](https://reader036.vdocuments.site/reader036/viewer/2022062503/58e589941a28abdd148b45fb/html5/thumbnails/9.jpg)
Attracting Investment
• What is the risk profile of your investment?• Does it have intrinsic value and growth potential• Is it in the right location to attract investment?• Is it the right lot size?• Who are the obvious buyers?• Can you secure debt against any contracted
income streams?• What is the AWULT?• What is the tenant’s credit risk?
![Page 10: RICS Matrics Funding Finance Market Update 2015](https://reader036.vdocuments.site/reader036/viewer/2022062503/58e589941a28abdd148b45fb/html5/thumbnails/10.jpg)
Glossary of terms
• LTV = Loan to Value ration• CMBS = Commercial Mortgage backed securities• NAMA = National Asset Management Agency• Margins = lending margin over interest rates• Arrangement fees = charged by banks on loan origination• Income interest = ration of income to interest
Date SourceUK Commercial Property Lending SurveyDe Montfort University
![Page 11: RICS Matrics Funding Finance Market Update 2015](https://reader036.vdocuments.site/reader036/viewer/2022062503/58e589941a28abdd148b45fb/html5/thumbnails/11.jpg)
Approximate amount of debt secured by UK Commercial Property Source: De Montfort University
Source: De Montfort University
![Page 12: RICS Matrics Funding Finance Market Update 2015](https://reader036.vdocuments.site/reader036/viewer/2022062503/58e589941a28abdd148b45fb/html5/thumbnails/12.jpg)
Approximate amount of debt secured by UK Commercial Property Source: De Montfort University
![Page 13: RICS Matrics Funding Finance Market Update 2015](https://reader036.vdocuments.site/reader036/viewer/2022062503/58e589941a28abdd148b45fb/html5/thumbnails/13.jpg)
Allocation of drawn funding £179.8bn Source: De Montfort University
![Page 14: RICS Matrics Funding Finance Market Update 2015](https://reader036.vdocuments.site/reader036/viewer/2022062503/58e589941a28abdd148b45fb/html5/thumbnails/14.jpg)
Proportion of debt held by 12 largest lendersSource: De Montfort University
![Page 15: RICS Matrics Funding Finance Market Update 2015](https://reader036.vdocuments.site/reader036/viewer/2022062503/58e589941a28abdd148b45fb/html5/thumbnails/15.jpg)
Current LTV ratios by proportion and value of outstanding debt Source: De Montfort University
![Page 16: RICS Matrics Funding Finance Market Update 2015](https://reader036.vdocuments.site/reader036/viewer/2022062503/58e589941a28abdd148b45fb/html5/thumbnails/16.jpg)
Value of loan originations (£bn)Source: De Montfort University
![Page 17: RICS Matrics Funding Finance Market Update 2015](https://reader036.vdocuments.site/reader036/viewer/2022062503/58e589941a28abdd148b45fb/html5/thumbnails/17.jpg)
New loan originations (£29.9bn)Source: De Montfort University
![Page 18: RICS Matrics Funding Finance Market Update 2015](https://reader036.vdocuments.site/reader036/viewer/2022062503/58e589941a28abdd148b45fb/html5/thumbnails/18.jpg)
Proportion of lending completed by 12 most active lendersSource: De Montfort University
![Page 19: RICS Matrics Funding Finance Market Update 2015](https://reader036.vdocuments.site/reader036/viewer/2022062503/58e589941a28abdd148b45fb/html5/thumbnails/19.jpg)
No. lenders prepared to lend against varying loan sizesSource: De Montfort University
![Page 20: RICS Matrics Funding Finance Market Update 2015](https://reader036.vdocuments.site/reader036/viewer/2022062503/58e589941a28abdd148b45fb/html5/thumbnails/20.jpg)
Average interest rate marginsSource: De Montfort University
![Page 21: RICS Matrics Funding Finance Market Update 2015](https://reader036.vdocuments.site/reader036/viewer/2022062503/58e589941a28abdd148b45fb/html5/thumbnails/21.jpg)
Average interest rate margins by project typeSource: De Montfort University
![Page 22: RICS Matrics Funding Finance Market Update 2015](https://reader036.vdocuments.site/reader036/viewer/2022062503/58e589941a28abdd148b45fb/html5/thumbnails/22.jpg)
Average LTV ratios by sectorSource: De Montfort University
![Page 23: RICS Matrics Funding Finance Market Update 2015](https://reader036.vdocuments.site/reader036/viewer/2022062503/58e589941a28abdd148b45fb/html5/thumbnails/23.jpg)
Arrangement fees by sectorSource: De Montfort University
![Page 24: RICS Matrics Funding Finance Market Update 2015](https://reader036.vdocuments.site/reader036/viewer/2022062503/58e589941a28abdd148b45fb/html5/thumbnails/24.jpg)
Interest income cover by sectorSource: De Montfort University
![Page 25: RICS Matrics Funding Finance Market Update 2015](https://reader036.vdocuments.site/reader036/viewer/2022062503/58e589941a28abdd148b45fb/html5/thumbnails/25.jpg)
Lending intentionsSource: De Montfort University
![Page 26: RICS Matrics Funding Finance Market Update 2015](https://reader036.vdocuments.site/reader036/viewer/2022062503/58e589941a28abdd148b45fb/html5/thumbnails/26.jpg)
Active Lenders
• AIG • Aviva • AXA • Barclays Bank • Bayern LB • Citigroup • Deka Bank • Deutsche Bank • Deutsche Hypo • Deutsche Pfandbrief
• Deutsche Postbank• Helaba • HSBC• ING REF• Landesbank Berlin• Lloyds Banking Group• Met Life• M&G Investments• Royal Bank of Scotland• Santander
![Page 27: RICS Matrics Funding Finance Market Update 2015](https://reader036.vdocuments.site/reader036/viewer/2022062503/58e589941a28abdd148b45fb/html5/thumbnails/27.jpg)
Summary
• 2014 saw increasing capital values• Overall level of property debt continuing to
decrease• Property lending market is diversifying• There will be no return to 2007/2008 lending • Improving lending intentions• LTVs 50% - 60%• Equity seeking wealth preservation or high returns
![Page 28: RICS Matrics Funding Finance Market Update 2015](https://reader036.vdocuments.site/reader036/viewer/2022062503/58e589941a28abdd148b45fb/html5/thumbnails/28.jpg)
RICS Matrics Series
Funding & FinanceMarket Update
September 2015
Simon Wainwright BSc FRICSJ PEISER WAINWRIGHT
#CPDseries