The loans were funded through the Luxembourg company’s €500m Opportunistic Real Estate Loan Fund 2, which provides senior and junior short term and development finance loans mainly in London and the south east of the UK, targeting 10%-12% returns.
Under chief executive Harin Thaker (pictured), formerly of Deutsche Pfandbriefbank, Aeriance underwrote two term loans and two bridging loans in the first half of 2014, three of them in London.
The two term loans comprised £30.1m for the residential development of Compass House in Queensway, W2 and £8.1m for York Buildings, a residential scheme in Covent Garden, WC2, both of which will be redeveloped as high end residential apartments.
Aeriance said the Compass House redevelopment will provide 31 flats, with an average gross development value (GDV) of £1,725 psf while the GDV for York Buildings’ six apartments is £1,700 psf.
It is thought the lender sees a current opportunity to follow experienced residential developers who are moving away from super-prime into ‘fringe’ central London locations such as Bayswater, Covent Garden, Marylebone and Wandsworth, and other areas that are not heavily reliant on international buyers and where there is strong demand from UK investors and owner occupiers.
OREL 2 also provided a £26.6m bridge loan for the acquisition of an office building in London’s Belgrave Square, SW1, which will be converted back into residential, plus outside the UK, a £16m bridge loan for the acquisition of two villas in Cannes, which will be refurbished and extended.
The willingness to make bridge loans for sites not yet ready for construction finance is partly a function of the competition to lend to strong residential developer sponsors.
However, Thaker said: “In London, the prime residential market continues to offer a number of interesting opportunities, and we are still seeing significant appetite from a variety of developers”.
Aeriance manages €600m of European debt fund investments across the capital structure and says last year it issued €240m of loans through its two debt funds, OREL 2 and Aeriance Mezzanine Debt Fund 3 (AMREF 3).
Thaker beefed up his team in April, taking on Stephen Penny, formerly on Deutsche Postbank’s UK lending team before the book was sold by parent Deutsche Bank to GE Capital Real Estate, and Kevin Davidson who’d worked at Nationwide, Deutsche Bank and JP Morgan.