Dubai-based real estate manager Neo Capital is set to originate its first UK property loan, in a deal with a London-based developer. The loan, which is understood to be in the region of £30 million (€34 million), will be used by the borrower to refurbish and redevelop high-end residential assets in central London.
Speaking to Real Estate Capital Europe, Alyas Al Meftah, head of investment placement and relationship management at Neo Capital, said its Middle Eastern investors are interested in the European debt market, due to the impact of rising interest rates.
The borrower plans to use the finance to redevelop residential assets in Mayfair, Knightsbridge, Park Lane and Belgravia – with around 10 properties in the portfolio.
Al Meftah added that the the finance is for a four-year term.
“We see the challenges that [borrowers] have in securing transactions because they require finance and banks are quite reluctant,” he added.
He explained that, in the past, the waiting time for finance from traditional bank lenders was approximately six to eight weeks. However, bank hesitancy has increased this period up to 12-16 weeks. This poses an opportunity for alternative lenders to step in and act quickly to provide finance, he added.
“Where normally funds would be available to deploy in about six to eight weeks, now it’s taking up to 12-16 weeks. So, the window of opportunity to secure good assets kind of falls out [of] your hands because of the unfortunate time requirement by the lending banks. At least with private credit it is quick.”
Neo, which mainly invests in real estate equity through its flagship vehicle Income Generating Investments and International Real Estate, will package the credit allocations as a sub-strategy to its sole equity focused fund.
Al Meftah did not specify how much financing Neo intends to do in European markets. However, he said the firm remains in a nimble position where it can act quickly in agreeing pricing on undeployed funds and market potential lending deals to its investor base.
Neo was founded in 2015 and has amassed a $1.2 billion of assets under management. The firm predominantly invests in offices, multi-family residential and opportunistic assets. It is based in Dubai but is set to open its first European office, in London, pending approval from the UK’s Financial Services Authority.
The firm has a three-year plan to grow its AUM to $3 billion.
Last month, it was reported by property publication Estates Gazette that the firm was awarded planning consent by the London Borough of Hammersmith & Fulham for the refurbishment and extension of Elms House, in west London, to offer 120,000 square foot of workspace.