Identifying Commercial Property Finance Opportunities: A Guide for Accountants 

The commercial property lending market is changing fast. Lenders are becoming selective about property types. This creates opportunities for clients who understand the shifts. 

Reading the Market Signals 

Lenders now assess different property types more carefully. Traditional office spaces face scrutiny due to hybrid working, while prime locations with strong propositions still attract interest. 

Industrial and logistics properties remain popular with lenders. E-commerce growth drives this demand for these types of properties. Clients in these sectors have a better chance of finding competitive rates. 

Semi-commercial mixed-use properties show the highest demand for finance. These properties combine residential and commercial elements. Lenders view them as lower risk due to diversified income streams. 

Retail properties need careful evaluation. Lenders prefer convenience retail and tourist destinations. These properties show resilience against the trend towards online shopping. 

 Spotting Client Opportunities 

Watch for these indicators that suggest clients need commercial property finance advice: 

Refinancing window: 40% of UK commercial property loans mature in 2024 and 2025. Clients approaching maturity should start refinancing discussions 12-18 months early. 

Market Timing: Rate cuts totalling 175bps are expected through summer 2025. This creates opportunities for clients considering property acquisition or development. 

Cash Flow Optimisation: Clients with strong balance sheets benefit from releasing equity through refinancing. Renewed lender competition helps. 

 Red Flags to Monitor 

Several warning signs indicate clients need to be proactive when reviewing their commercial property finance. 

Loan covenants approaching breach levels can impact income cover ratios, often triggered by tenant changes or declines in market rental values. Addressing these issues early helps prevent the need for costly emergency refinancing. 

Properties needing capital expenditure for compliance or sustainability upgrades often face greater challenges, but financing these improvements through property loans is typically more cost-effective than using working capital. Clients dissatisfied with their current lender’s service or rigid terms should consider alternative options, as today’s competitive lending market offers more attractive solutions. 

 Strategic Advisory Opportunities 

Position yourself as a strategic advisor by identifying these opportunities: 

Portfolio Optimisation: Review clients’ property portfolios to identify underperforming assets suitable for disposal and reinvestment. 

ESG Considerations: Properties with sustainability features attract preferential lending terms. 

Structure Optimisation: Clients benefit from reviewing property ownership structures. Use of Special Purpose Vehicles within company structures are regularly used. 

Due Diligence Essentials 

Several factors significantly impact outcomes when clients pursue commercial property finance: 

Financial Strength: Lenders prioritise quality over quantity. Clients with robust financials and clear business plans secure better terms and faster decisions. 

Property Fundamentals: Location, tenant quality, lease terms, and property condition influence lender appetite and pricing. Properties in secondary locations require stronger financial metrics. 

Market Intelligence: Understanding which lenders actively finance specific property types enables targeted approaches and better negotiating positions. 

 Competitive Advantage Through Timing 

The current market rewards proactive advice. High street banks are competing aggressively with challenger banks, creating opportunities for clients to secure better terms by reviewing and testing their existing facilities. 

Clients who acted quickly during recent market uncertainty locked in strong positions. Those who waited for ideal conditions often missed the best financing windows, as competition for high-quality deals continues to rise. 

Keeping up with lending trends and staying close to your clients’ property finance needs allows you to deliver real value. Timely, strategic advice can have a direct impact on their profitability and growth. 

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