London-based real estate debt specialist Octopus Real Estate is planning the launch of its fourth commercial real estate debt fund, just over a year after hitting its £500 million hard-cap on its predecessor fund.
Octopus is aiming to market the fund to potential investors during the second half of the year before launching the Octopus Commercial Real Estate Debt Fund IV in the early part of 2024, Real Estate Capital Europe understands.
The firm has not set a definitive target raise for the fund at this stage, but it is understood it will target more than the £500 million raised for CREDF III. This would be in line with the firm’s previous fundraising, with each fund substantially larger than its predecessor.
In 2014, the firm closed its first debt fund, CREDF I, on £130 million. Octopus raised a further £35 million in 2016 through a sub-vehicle called CREDF-S. The firm’s second fund in the series, closed at its hard-cap of £230 million in 2018.
The firm’s funds have a five-year life, with a three-year investment period. It is understood the current fund’s investment period runs to July 2024.
Through the fourth fund, Octopus will aim to provide bridge financing to commercial real estate borrowers in the UK, with short-term loans between one and two years up to a maximum loan-to-value of 70 percent. The loans will provide sponsors with funds for acquisitions, refinancing of existing assets, or equity release.
In June 2022, the firm held a final close for CREDF III at its hard-cap of £500 million despite the difficult real estate landscape at the time. Ludo Mackenzie, head of commercial lending at Octopus Real Estate, said at the time: “We are delighted to hold a final close at our hard-cap despite the headwinds being faced in the capital markets.”
The London business has lent more than £6.2 billion across 4,400 loans throughout the UK, with loans typically ranging from £100,000 to £50 million.