Topland has refined its strategy for investing in mezzanine debt by teaming up with Dragonfly Property Finance and house builder Westcity to lend on prime central London housing. The move follows Topland’s plan last year to invest up to £200m in a mezzanine fund and reflects the fact that the greatest appetite for mezzanine debt is coming from the housing sector. But Topland has not ruled out lending on commercial property or providing preferred equity.
The Topland-led equity joint venture has already provided £20m of mezzanine debt for deals including the development of 1 Hyde Park Place by Quint & Flagship Group, for which it provided £12m. The facility partly repaid an existing loan. The joint venture also offers bridging finance and senior debt, while loan sizes can range from £500,000 to £25m.
Typically, it will look to lend a maximum 80% of total development costs, including purchase price and building costs, up to 65% against the gross development value. The term would cover the building period plus a six- to 12-month sales period. Topland has also formed a partnership with CB Equity Partners to buy as much as €2bn of German assets that provide secure income streams. The company, which is also looking for investments in the UK and Spain, has a separate allocation for buying secondary debt.