Office Commercial Mortgages Portsmouth

Underwriting a Portsmouth office commercial mortgage

Portsmouth office stock reflects the city's defence, naval, university and back-office economy. The occupier base is exceptionally varied, driven by the Royal Navy and BAE Systems Maritime Services at the naval base and shipyard, Portsmouth City Council at Guildhall Square, Queen Alexandra Hospital and Portsmouth Hospitals University NHS Trust, the University of Portsmouth and a multi-tenant occupier base at Lakeside North Harbour following the IBM consolidation. The commercial mortgage market splits four ways. Lakeside North Harbour (PO6) the dominant Cosham office campus, around 1.5 million sq ft of Grade B office space, multi-let after IBM consolidated, lender appetite is solid where covenants are intact and leases run beyond five years. Central Guildhall Square and Commercial Road upper floors (PO1), the £400K to £3M owner-occupier and small-investment bracket. Voyager Park (PO3) and modern industrial-park-format office, the smaller modern park-format occupiers along the Airport Service Road corridor. Old Portsmouth heritage office (PO1), listed and conservation-area office stock around the High Street and Spice Island.

Investment underwriting tests ICR at 140 to 155% on let office stock. Tenant covenant carries even more weight than on retail, a five-year unbroken lease to a defence supply-chain or professional-services firm prices materially better than the same building let on three two-year leases. Multi-let assets with rolling renewals price at the wider end. Owner-occupier office routes through the EBITDA-cover product at 1.3 to 1.5x, the marine consultancy buying its Old Portsmouth townhouse, the legal firm taking the freehold of its Guildhall Square office, the engineering practice buying a Lakeside North Harbour suite.

Lakeside North Harbour is a discrete sub-pool. The estate's Grade B vintage and the IBM legacy mean valuations sit below modern equivalents on a £/sq ft basis, but the multi-tenant occupier base post-IBM consolidation has produced steady refinance flow. Lenders read each Lakeside building on its own letting evidence rather than as a single campus story. Old Portsmouth heritage office needs heritage-comfortable lenders given the listed-building and conservation-area constraints on alteration.

Worked example: a Guildhall Square 5,600 sq ft office investment, £1.55M valuation, let on a 7-year FRI to a regional law firm at £108K passing rent. ICR at 145% sizes a £985K loan at 64% LTV; Lloyds, NatWest and Santander all price this profile at 7.5 to 8.0% pa on a five-year fix. Worked example two: an Old Portsmouth heritage office freehold purchase by a marine-services consultancy, £695K, EBITDA cover 1.4x. Owner-occupier route at 70% LTV places with Hampshire Trust Bank or Shawbrook at 7.5 to 8.25% pa.

Finance structures for Portsmouth office

Investment routes via commercial investment mortgage on ICR; owner-occupier via the EBITDA-cover route; vacant or value-add via bridge-to-let with an agreed term-out. Serviced and licence-let stock routes through specialist desks.

Lender appetite for Portsmouth office

Strong on prime let stock with national covenants and unexpired lease term over five years. Mid-strength on secondary CBD with mid-covenant tenants on shorter leases. Tighter, but still fundable, on vacant or part-let secondary office routed through bridge-to-let with a credible refurbishment story. <strong>NatWest</strong>, <strong>Lloyds</strong>, <strong>Barclays</strong> and <strong>Santander</strong> compete on prime investment at 7.0 to 7.75% pa for 65% LTV with strong covenants. Hampshire Trust Bank (locally HQ'd in Hampshire, with a strong Portsmouth book), <strong>Shawbrook</strong>, Allica Bank, HTB and Cambridge & Counties cover mid-market at 7.75 to 8.5% pa. <strong>InterBay Commercial</strong>, <strong>LendInvest</strong> and <strong>Cynergy Bank</strong> handle secondary, short-lease and refurb-to-let stories at 8.25 to 9.0% pa. Lakeside North Harbour buildings with conventional FRI lettings sit on the standard panel; Old Portsmouth heritage stock routes through heritage-comfortable lenders only.