Sixth Street and Lloyds Announce Co-Operative Agreement to Fund UK Commercial Real Estate Lending
LONDON — Sixth Street and Lloyds announced a co-operative agreement on Sept. 21 to channel institutional capital into the UK commercial real estate lending market, deploying Sixth Street's global Asset Based Finance platform to provide financing solutions for UK property borrowers.
The platform-level arrangement pairs Sixth Street's structuring expertise and scaled capital with Lloyds' existing UK commercial real estate origination and relationship network, which spans borrowers ranging from investment property owners to businesses with international operations.
How the Agreement Works
Under the co-operative agreement, Sixth Street's London-based Asset Based Finance team will collaborate closely with the firm's dedicated real estate team, which the company describes as bringing experience in acquiring, operating, and underwriting real estate globally. Together, the teams are expected to deliver flexible, scaled financing solutions to UK property borrowers while maintaining rigorous underwriting standards.
Sixth Street's Asset Based Finance platform focuses on asset and platform investing and origination across asset-based finance markets, drawing on the firm's structuring expertise, operational infrastructure, and risk management capabilities. The arrangement positions Sixth Street as a non-bank capital source operating through Lloyds' origination channel rather than as a direct lender launching a standalone UK platform.
Lloyds' UK Commercial Real Estate Book
The agreement arrives as Lloyds carries a substantial and growing UK commercial real estate lending portfolio. The bank's Commercial Banking UK Real Estate committed drawn lending grew by £0.7 billion to £10.0 billion in 2025, a figure reported net of £2.6 billion in exposures protected through significant risk transfer securitizations.
Lloyds' existing CRE book is weighted heavily toward investment real estate, which accounts for approximately 91% of the portfolio. The bank reports that approximately 94% of investment exposures carry loan-to-value ratios below 70%, with an average LTV of roughly 45% and an average interest cover ratio of 3.1 times. About 75% of exposures carry interest cover above 2 times. Lloyds has reported no fully speculative commercial development lending in the portfolio.
At the group level, Lloyds' total lending reached £481.1 billion in 2025, up 5% year-over-year. The bank has set targets including underlying net interest income of approximately £14.9 billion in 2026, a cost-to-income ratio below 50%, and a return on tangible equity above 16%.
Sixth Street's Scale and ABF Capabilities
Sixth Street manages more than $140 billion in assets under management and committed capital. Founded in 2009, the firm employs more than 750 people, including approximately 300 investment professionals, across a global platform. The firm's AUM calculation encompasses net asset value, outstanding leverage, undrawn asset-based financing, capital commitments, CLO debt and equity, BDC assets, and capital linked to strategic partnerships.
The firm's Asset Based Finance platform, which underpins the Lloyds agreement, is designed to operate across asset-based finance markets, applying what Sixth Street describes as deep structuring expertise and prudent risk management to optimize risk-adjusted returns.
Market Context
The agreement reflects a broader dynamic in UK commercial real estate finance, where banks face pressure to grow lending prudently while managing capital intensity and concentration in their property books. By pairing a large global credit platform with one of the UK's largest commercial real estate lenders, the arrangement creates a new capital channel for UK property borrowers at a time when the domestic CRE market continues to recover from a period of elevated interest rates and valuation pressure.
Lloyds has reported that portfolio performance in UK real estate has remained stable, with decreasing watchlist cases and limited flow into business support, providing a backdrop against which both institutions are expanding their lending capacity through the new arrangement.