Commercial property finance

Commercial property finance divides broadly into three categories that are underwritten quite differently. Investment finance is sized primarily on the rental income the property generates and the strength of the tenant covenant, suiting investors acquiring or refinancing let property. Owner-occupied finance is assessed on the trading performance of the business occupying the premises, since there is no third-party rent to service the debt.

Commercial bridging is a short-term structure used where speed matters more than headline cost — completing an acquisition ahead of an auction deadline, or bridging while a longer-term facility or planning consent is finalised. Selecting the correct category at the outset avoids presenting a proposal to funders who are not positioned to lend against it.

For investment property, lenders typically apply both a loan-to-value cap and a minimum rental cover ratio, meaning the loan is sized on whichever constraint binds first. A well-let property with strong tenant covenants and long unexpired lease terms will generally support higher leverage than a similar property with short leases or unlet space.

For owner-occupied lending, the assessment shifts towards the business's historic and forecast trading performance, debt service cover and the property's alternative use value should the business ever vacate. Bridging loans are structured around a clear, credible exit — sale, refinance or completion of works — rather than ongoing income, and lenders will scrutinise that exit closely before advancing funds.

Property type materially affects appetite: prime office, retail, industrial and logistics assets in established locations attract the widest range of lenders, while secondary retail, leisure and specialist assets such as hotels or care homes require more specialist funders and generally support lower leverage. Location, lease structure and tenant quality are assessed alongside the borrower's own experience and financial standing.

International and cross-border borrowers can generally access local commercial property finance markets, though this is subject to the funder's know-your-customer and source-of-funds requirements, and sometimes to structuring the ownership vehicle in a way the lender is comfortable financing. Non-resident buyers should expect a more detailed compliance process than domestic borrowers.

Indicative loan-to-value for prime investment property is typically in the region of 55–70 per cent from mainstream lenders, with mezzanine finance available to stretch total leverage further at a blended, higher cost. Pricing is generally quoted as a margin over a reference rate, with prime, well-let assets pricing more keenly than secondary or higher-risk property.

Bridging finance is priced at a premium to term lending to reflect its short tenor and the speed of underwriting involved, generally expressed as a monthly rate, alongside an arrangement fee and, in most cases, an exit fee. Valuation, legal and survey costs are additional across all structures and should be budgeted for separately from the headline facility terms.

GFG reviews the property, tenancy schedule or trading accounts, and the borrower's objectives, before identifying lenders whose current appetite matches the asset class, location and leverage sought. A valuation instructed early in the process, alongside clear title and lease information, generally shortens the overall timeline.

Straightforward investment or owner-occupied facilities typically complete within four to eight weeks from instruction, while bridging finance can complete considerably faster where documentation is ready. As with all GFG mandates, fees are success-based and paid only once the facility completes.