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UK Commercial Real Estate Debt: An introduction and market opportunity

Our latest report explores the opportunities within CRE Debt, tracking its history across different jurisdictions and market cycles, and exploring the typical risks and characteristics associated with various levels of finance structuring.

Having assessed the current market opportunity, we believe that the UK presents an attractive investment destination, with a high and stable commercial real estate risk-return profile, aided by a liquid, transparent market place, a creditor-friendly jurisdiction and a well-understood legal framework.

Acknowledging that there are still headline risks, including uncertainty around economic growth, global political stability, and the timing and pace of interest rate increases; we believe that asset prices are at sustainable levels, and broad market return forecasts are favourable. Rental growth prospects for secondary assets remain muted, and prime property is more exposed to rises in base rates. With this uncertainty in mind, the appeal of core-like and higher returns available from the financing of quality secondary and regional assets, where the secured debt investor is in a priority protected position in the capital repayment order, is apparent.

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This article is intended solely for the use of professionals and is not for general public distribution. Issued by Henderson Real Estate Asset Management Limited, 201 Bishopsgate, EC2M 3BN. Authorised and regulated by the Financial Conduct Authority. TH Real Estate is a name under which Henderson Real Estate Asset Management Limited provides investment products and services. Past performance is not a guide to future returns. The value of investments and any income will fluctuate (this may be partly be the result of exchange rate fluctuation) and investors may not get back the full amount invested. Where opinions have been expressed, they are based on current market conditions and are subject to change without notice.

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