ICG-Longbow ponders strategy for 2014 sequel to senior property debt vehicle

ICG-Longbow is looking at options for raising capital for senior debt investing next year, with its £102m listed senior debt fund set to be substantially invested by the end of the year.

These options include a follow-on listed fund. It is also talking to pension fund advisers with mandates to allocate for senior debt.

Longbow currently invests through the quoted Senior Secured UK Property Debt Investments fund, which targets 6% net returns to its investors, and its £700m Real Estate Debt investments III value-added, whole-loans fund, which offers 10-12% returns.

According to the quoted senior debt fund’s half-yearly report, published on 30 September, Longbow has deployed £50.27m in three deals at an average coupon above 7% and average
59.7% loan-to-value ratios. A further five deals are at the documentation or due diligence stages, totalling £52m.

The completed deals are: an £18.07m loan to Meadow Partners, the US/UK private equity firm set up by former Westbrook European head Jeff Kaplan, for a retail warehouse
in greater London; a £14.2m loan to funds controlled by Morley Estates for five warehouses in the north-west; and an £18m loan to Mansion Student Accommodation Fund subsidiaries for blocks in Birmingham and Glasgow.

ICG-Longbow’s next senior debt focus is finding a cheaper cost of funds next year to allow it to keep pace with other senior lenders in the market.

“Senior debt is a big part of our business plan,” said Trevor Homes, responsible for senior debt.