Gatehouse Bank has raised $100m for mezzanine debt investment which will be lent against European real estate.
The Shariah-compliant bank will front the equity for a US-based investor and provide investment advisory, origination, arranging, structuring and loan servicing. It will consider deals in the UK, Ireland, Germany, France, Belgium, the Netherlands, Luxembourg, Italy and Spain.
The fund expects to invest in financings up to 85% loan-to-value, across three to five-year terms and is looking to achieve a net internal rate of return of 6-10%. The fund is likely to participate in between four and five deals.
The bank will be able to couple the mezzanine funds with its own on balance sheet resources to provide whole loans. Whole loans will generally be issued in ticket sizes between £40m and £60m.
Gatehouse established a lending division in November last year as it seeks to take advantage of demand for Islamic finance, poaching Natale Giostra (pictured), the former head of UK & EMEA debt advisory at CBRE to head the team. In June it recruited Nick Westoby from RBS, Arnaud Schaller from Credit Agricole and Eduardo Martin from Banco Popular Espanol.
Giostra told Real Estate Capital:
“Gatehouse will issue one loan to the borrower. In the background this loan will be split in to A/B structure, one which will go to the balance sheet of Gatehouse and the other to the fund. Effectively it is one loan from the borrower’s perspective. There will be a participation agreement between us and the fund.
“We have an advantage in that we do not need to resell in secondary market – the money is already placed so there is no syndication risk.”