4 things to consider now to optimise your property portfolio for the future.

As always we are proactively in discussions with our property investor clientele regarding their investment strategies and objectives. A recent example of this was when we met with a client to discuss refinancing options for their substantial mixed-use portfolio. The question we were anticipating was asked in a matter of minutes ‘Should I opt for a fixed rate or wait for potential rate decreases as I don’t want to overpay on my facility.’ In the past 15 years this question has never been so important.

Here are some of the factors to consider:

1. How many base rate reductions do we need before a variable rate truly becomes a cost-effective alternative?
2. Given prevailing Yield constraints, particularly in the southeast, does the debt service coverage stack up on variable rates?
3. To what extent must a borrower comprehend hedging options to be able to navigate them effectively?
4. What are the potential implications to the portfolio’s performance in the short, medium and long term?

We’ve witnessed ample commentary in the press regarding rates dropping, only to be swiftly followed by sudden spikes in SWAP rates and mortgage lenders promptly withdrawing fixed-rate products.

Whilst there’s no one-size-fits-all solution, it’s essential that as advisors we outline all potential outcomes both favourable and adverse and then tailor recommendations to match the borrower’s risk profile and business model.

What we can say with certainty is that it has never been a more crucial time to conduct a thorough analysis of a property portfolio and establish a model to optimise its performance over the next five years. As numerous borrowers approach the end of their low five-year fixed-rate terms in the months ahead, now is the time to act and partner with an experienced advisory firm to ensure all avenues have been thoroughly explored.

Our specialist Real Estate Debt Advisory team will conduct a meticulous analysis of your entire portfolio and tailor a bespoke strategy.

Get in touch on [email protected] or call us on 0204 553 3000.