UK property debt specialist Laxfield Capital has upsized its real estate debt fund to £750 million (€837.4 million), after raising £250 million of new capital from institutional investors.
The fund, Laxfield LLP, was originally sized at £500 million when it was launched in January and seeded with £250 million of existing loans previously written by the firm.
“The upsize is been largely driven by borrowers’ demand, which is also happily married with investors’ appetite for debt at this point of the cycle,” Alexandra Lanni director of Laxfield, told Real Estate Capital.
“Along with the additional £250 million of new capital, we have the ability to recycle funds when loans are repaid, so we have excellent capacity for new business going into Q4 and the start of 2019,” she added.
The fund provides whole loans at a loan-to-value ratio of up to 75 percent, against income-producing and transitionary assets across almost all sectors in the UK for durations of one to seven years. It has attracted “strong” demand from borrowers seeking not just higher leverage but “flexibility” and “certainty of execution”, Lanni said.
Laxfield has fully deployed the fund’s original allocation in loans secured on offices, student accommodation, logistics, hotels, serviced apartments and specialist retail assets across the UK. Transactions completed this year have ranged in size from £7 million to £80 million, and the fund has the capacity to write up to £100 million per loan.
Financings through the fund include an £80 million loan of a mixed-use scheme in Scotland; a £20 million financing of a newly completed hotel in London; a £40 million loan against a recently launched student accommodation scheme in Glasgow; and a £35 million financing of an office asset in West London.
“We have seen demand from a mix of borrowers; from longer-term holders of assets who want a little bit more leverage, to people who are acquiring and want to execute more of a repositioning business plan,” Lanni said.
Lanni declined to comment on loan margins and returns being generated. Asked about possible concerns regarding the UK’s exit from the EU in around six months, Lanni said the firm remains selective, deploying capital carefully at this point of the cycle.