Commercial term pricing eases as lender appetite broadens
Healthcare, leisure and semi-commercial assets are being underwritten on trade again, and the pricing gap to plain industrial is narrowing.
Colin Ness
For two years, sector was the single biggest determinant of commercial term pricing. A children’s nursery and a light industrial unit with identical covenants could be a hundred and fifty basis points apart. That gap is closing.
Lenders who retreated from trade-dependent assets in 2023 have returned with a more forensic approach: they will underwrite the trade, but they want three years of management accounts and a clear view of the operator’s track record.
Where a business occupies its own premises, gearing is now regularly higher than for an equivalent investment purchase. Owner-occupation is being treated as a credit strength rather than a complication.
Our current indicative pricing on commercial term debt starts at 6.19% to 75% loan to value, subject as always to valuation and underwriting.
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