UK property debt specialist Laxfield Capital has added its first commingled debt fund to its longstanding lending business after raising £500 million (€568 million) of discretionary capital from institutional investors.
London-based Laxfield has established a business originating large, mid-market and small-ticket loans across various UK commercial real estate sectors on behalf of lending mandates secured from several organisations. Loans have been written on behalf of Singaporean investor GIC, US insurer MetLife and German bank MünchenerHyp in recent years.
Through its debt fund – Laxfield LLP – the firm adds significant origination capability to its lending business. The vehicle can provide loans of up to £100 million against income-producing assets, including transitional and ‘light development’ schemes, with terms between 12 months and seven years and leverage up to 75 percent.
The fund has been seeded with £250 million of loans which have already been originated, although the fund can be upsized once the initial £500 million has been invested.
Speaking to Real Estate Capital, Laxfield co-principal Emma Huepfl said the appetite of investors to access real estate debt prompted the firm to raise the fund.
“We see the market opportunity for providing loans quickly, and we focus on flexible structuring to tailor facilities around sponsors’ specific funding plans, including value-add business plans if required,” Huepfl said.
“We’ve always been lenders and have worked under mandate structures, so this is our first discretionary fund,” she added.
Huepfl said the firm is focused on investing the remaining 50 percent of its debt fund: “We have a strong pipeline and we expect it to be allocated reasonably quickly.”
Laxfield declined to comment on the make-up of the fund’s investor base or the returns being generated.
Aside from debt origination, Laxfield has established itself as a debt advisory firm, sourcing loans on behalf of borrower clients in the UK market. Laxfield keeps its lending and advisory functions separate, Huepfl explains, to avoid conflict of interest.
Laxfield is also lending through its small-ticket Laxfield National platform. In January 2017, the firm increased the allocation of the platform to allow it to provide whole loans of up to £100 million. Laxfield National was launched in August 2015, with funding allocated by two global institutional investors. The platform initially targeted small-ticket loans up to 70 percent loan-to-value to finance repositioning and operational assets, as well as income-producing property.
In 2014, Laxfield made its first loan on behalf of a lending programme backed by GIC, 18 months after the strategy was launched, with a £90 million loan for student housing firm Urbanest.