Specialist debt and equity advisory Arc & Co. has reported a 108% year-on-year rise in arranged lending, with volumes increasing from £332m to £690m in the 12 months to 30 June 2025.
The growth is attributed to a surge in development and commercial funding activity, alongside improving confidence across the wider real estate finance market.
The company completed 218 transactions over the period, with notable expansion in lending against office assets, which accounted for £118m across 15 deals. Development funding volumes also rose sharply, up 273%, driven by a pivot among developers to operational living sectors such as purpose-built student accommodation (PBSA), co-living and senior living.
Chief executive Andrew Robinson said the rise in average deal size and the number of transactions reflected “a more confident market”, with institutional and private lenders increasingly open to larger, more complex deals.
He added: “Development finance almost tripled over the year, largely driven by operational living sectors rather than traditional build-to-sell schemes, which have struggled amid a cooling residential sales market and the introduction of legislation such as the Building Safety Act.”
LENDING ACTIVITIES
The firm’s latest annual report breaks down lending activity across six key areas: commercial, development, bridging, buy-to-let, luxury asset, and residential mortgage. Residential remained the largest single asset class by loan volume at 35%, though this represented a fall from 48% the previous year.
London continued to dominate by deal count, representing 42% of transactions arranged by the firm, while asset classes previously under-represented in the portfolio — including hotel and serviced apartments, and PBSA — posted notable gains. PBSA, for example, made up 9% of overall activity, compared to no recorded deals in the previous financial year.
The rapid expansion of Arc & Co.’s buy-to-let lending was supported by rising rental yields and an increase in so-called ‘accidental landlords’, where developers opted to retain units for rent rather than sell into a cooling market.
MAJOR TREND
Managing director Edward Horn-Smith said one of the most significant trends over the past year had been a marked increase in available liquidity, with some banks raising maximum loan-to-value ratios from 50% to as high as 75%.
“Within commercial funding, stronger bank balance sheets and the need to deploy surplus deposits have resulted in a noticeable easing of lending conditions,” he said. “We expect banks will continue to ramp up the deployment of capital by offering higher LTVs, relaxing ICRs, and reviewing loan covenants to encourage borrowing.”
Horn-Smith also warned that the improved lending environment could prompt private funds to explore alternative strategies as traditional lenders re-enter sectors with more competitive terms.
He added that Arc & Co.’s continued success was underpinned by its ability to execute complex, multi-layered transactions, supported by both technology and a strong advisory team. While the market outlook remains optimistic, he cautioned that careful navigation will be essential to manage valuation risks, shifting investor appetite, and broader macroeconomic uncertainties.
