AgFe has held a final close for its first real estate Floating Rate Senior Debt Fund and will begin raising capital for a follow on fund, Real Estate Capital can reveal.
The independent credit asset manager has closed its floating rate fund on £800 million, just over a year after holding a first close on £545 million.
The total capital collected is slightly lower than the original £1 billion target. Instead, AgFe plans to hold a first close in the coming months – likely in the first half of 2016 – on a second, follow on floating rate senior fund.
Since the beginning of the year, AgFe has also signed a new separate account mandate for floating rate senior debt, of several hundred million sterling.
Natalie Howard, AgFe’s head of real estate, said the firm invested £800 million into UK senior mortgages on behalf of its clients during 2015, in about 20 transactions.
As well making or participating in loans for AgFe Floating Rate Senior Debt Fund 1, her team invests in fixed-rate senior loans for a £1 billion fixed rate fund, structured for retirement fund client LV.
The floating rate fund has a seven-year life and two year investment period, while the fixed rate fund has a longer, four-year investment period.
Howard said: “We were very active in 2015, lending over £800 million, and with the new separate account for floating rate debt that we have just signed, we have £2.5 billion of assets and committed capital under management.”
She said the start to 2016 had been “very, very busy. Our new mandate means we will have the option of financing bigger deals and clubbing them. We expect to lend £1 billion over the course of this year.”
AgFe considers lending opportunities from £5 million to over £100m, including portfolios and good secondary real estate, typically at margins between 150 and 300 basis points and across the UK. The funds lend against most asset classes except care homes.
Loans last year ranged from a £7m facility on an asset in London’s Mayfair to £80m to Ashby Capital for its purchase of the Colmore Plaza office building in Birmingham and £60m to Capital Industrial for the property company’s London industrial portfolio. AgFe also financed Varde Partners’ acquisition of BizSpace Group, secured on its 6 million sq ft Project Spring portfolio.
The largest loan participation was £100 million of senior in Citibank’s underwrite for Lone Star and Ellandi’s Tiger portfolio of seven UK shopping centres.
Howard said AgFe’s fixed income investor clients, mainly UK pension funds and insurance companies, were continuing to invest to get the illiquidity premium from private real estate debt, diversifying from investment-grade corporate bonds.