Navigating UK loan maturities in a shifting debt landscape

A wave is coming, not of new acquisitions, but of refinancing. Across the UK commercial real estate sector, developers and landlords are approaching a critical moment: loans issued during the late-cycle optimism of 2018–2020 are beginning to mature.

In many cases, those loans were written at historically low interest rates, high leverage levels, and without the ESG expectations that now dominate lender mandates. Today’s refinancing environment looks markedly different, but there is opportunity for those prepared to navigate it.

CBRE’s European Lender Intentions Survey 2025 identifies refinancing as the primary source of demand for debt in 2025, accounting for 62% of expected loan origination activity across the continent. The appetite to lend is certainly there, but the challenge lies in matching legacy debt profiles with today’s underwriting expectations.

What has changed?

For many borrowers, the most visible shift is pricing. Interest rate volatility and base rate increases over the past two years have changed the economics of borrowing. Even as margins fall (CBRE reports a compression of 25 to 50 basis points across several sectors), the all-in cost of debt remains higher than the deals most developers secured five years ago.

Loan-to-value ratios have remained broadly stable, but lenders are now more focused on sustainability credentials, income resilience, and future refinancing viability. A 60–65% loan-to-value ratio (LTV) may still be achievable in prime multifamily or industrial deals, but assets that lack a clear ESG story, stable occupancy, or rental growth will struggle to attract favourable terms.

Lenders want to refinance

The CBRE data paints a picture of lenders actively seeking to refinance assets, but with stricter gatekeeping. While 78% of lenders plan to increase their lending activity this year, many are drawing hard lines on sustainability compliance and underwriting discipline. 71% will not lend on assets that do not either meet ESG standards or have a credible business plan to do so.

This has important implications for UK borrowers with ageing commercial stock, particularly in office and retail sectors. Refurbishment plans, EPC ratings, and net zero trajectories are no longer optional extras – they are preconditions to securing debt. Assets that cannot demonstrate a path to ESG alignment may find themselves stranded, regardless of location or tenant covenant.

The risks of standing still

Delaying action on refinancing can introduce serious legal and commercial risk. As facilities approach maturity, borrowers must engage early, not only with their existing lender but with potential alternatives, including non-bank lenders who may offer greater flexibility but come with different legal dynamics.

Where refinancing is left too late, the borrower’s position weakens. Lenders may insist on more punitive terms, require interest reserves, or seek greater control over cashflows and development milestones. Worse still, borrowers may be forced into distressed refinancing under time pressure , thus increasing the likelihood of enforcement risk or equity dilution.

Proactive refinancing strategies allow time for negotiation, covenant alignment, and where necessary, corporate restructuring or asset repositioning. Legal teams should be reviewing facility agreements now to assess trigger points, extension mechanisms, and whether the current loan structure can accommodate a more modern debt package.

Structuring for resilience

In today’s environment, refinancing is no longer a vanilla renewal. It requires careful structuring around five key themes:

1. Covenant tightness: Borrowers must be prepared for tighter financial covenants, particularly around ICR and DSCR. Some lenders are shifting towards cashflow-based metrics rather than headline yield.
2. ESG clauses: Margin ratchets linked to sustainability performance, reporting requirements tied to business plans, and penalties for failure to meet improvement targets are becoming commonplace.
3. Intercreditor complexity: Where borrowers are seeking higher leverage through mezzanine or preferred equity, the legal interfaces between senior and junior debt must be robust, especially around control rights and enforcement events.
4. Interest rate hedging: With over 80% of lenders requiring some form of hedge, and a strong preference for caps and swaps, legal documentation must clearly define the mechanics, liabilities, and break costs associated with those instruments.
5. Refinance certainty: For income-producing assets, lenders are increasingly asking how borrowers plan to refinance five years from now. If exit strategies are unclear, this can impact margin, LTV, or even deal viability.

Conclusion

2025 promises a more competitive lending environment, as lenders aim to allocate higher volumes while maintaining stricter compliance standards. Borrowers with outdated, non-compliant, or poorly capitalised assets will find themselves at a distinct disadvantage.

To make the most of this maturing debt landscape, UK landlords and developers must adopt proactive, resilient refinancing strategies. Significant preparation today could mean the difference between securing favourable terms or risking the viability of their assets.

But overall, the message is clear – the time to act is now.