Aeon Investments, a London-headquartered credit investment company, is aiming to capitalise on the ‘growing number’ of funding opportunities in the UK real estate sector through backing a new lending platform.
The company has entered into a £450 million (€531 million) ‘strategic loan origination agreement’ with newly-launched Waypark Capital, through which Waypark will provide loans of up to £20 million to property owners in the UK market.
Aeon said the agreement boosts its origination capabilities to more than £900 million. The company already has an agreement with UK private bank Arbuthnot Latham.
Aeon launched its commercial real estate investment programme in Q4 2021, as part of a wider mid-market lending strategy designed to build UK loan portfolios to meet institutional investor demand.
Oumar Diallo, chief executive officer of Aeon, said the Waypark agreement demonstrates the manager’s belief in the commercial real estate sector, despite the prevailing headwinds due to rising interest rates, surging inflation and the recessionary outlook.
“We firmly believe that rigorous asset selection and loans with prudent loan-to-values and conservative debt coverage ratios will ensure CRE debt remains an asset class with sound risk/reward ratios,” he said.
“There are a growing number of attractive corporate real estate funding opportunities and a growing appetite from institutional investors to increase their exposure to this market,” he added.
Waypark is led by chief executive Nicolas Vocos. According to his LinkedIn profile, Vocos became managing partner of Park Lake Capital Partners in January 2020, before which he was head of UK and Europe at investment manager H/2 Capital Partners, where he focused on real estate debt and special situations. He held previous roles at London-based alternative lender Cheyne Capital and investment bank Deutsche Bank.
Under the agreement with Aeon, Waypark will target the UK’s small and middle-market property loan market, providing borrowers with tailored loans and financial solutions of between £2 million and £20 million, at up to 75 percent LTV, for acquisition, refinancing, and asset upgrades. The company said it has a pipeline of more than £150 million in loans.
“Banks’ dominance of the UK real estate credit market has decreased considerably over the last decade,” commented Vocos. “We expect this trend to continue as the pandemic disruption contributes to tighter regulation and lowers risk tolerance from traditional providers of real estate finance.”
He added that the platform can capitalise on the opportunity, “particularly as the real estate industry looks to a net-zero carbon future that would require significant funding to upgrade the UK’s commercial property stockpile to meet current and future requirements”.
Aeon said its research supports its plans for the sector. The company commissioned a May survey of more than 100 US and European institutional investors and found that, over the next 18 months, 63 percent expect allocations to structured credit products focusing on residential real estate to increase. The same number said they expect this from those investment vehicles focusing on commercial real estate.