COVID-19 Update: Three Months Into Lockdown

In this market update, we discuss below some of the developments we have seen in the real estate financing sector for the last three months, and what's likely to come.

What's happened to date

With the lockdown officially happening on 23 March, all businesses faced a hard disruption and sudden drop of business and revenue. This led to a series of discussions/negotiations between tenants and landlords regarding rent reduction or, in some cases, suspension of payment of rent and service charges.

For borrowers who had their first quarter interest payment date falling end of March or mid-April, as the lockdown occurred towards the end of March, many had sufficient headroom to wear the decrease in income and still remain in compliance with the financial covenants for that quarter and so didn't need to seek waivers from lenders. This may be a result from recent lending policies in the REF market which, of late, has leaned slightly more towards the conservative side.