Secure Trust Bank launches £100m commercial to resi fund

Secure Trust Bank has launched a £100m fund to finance developers converting commercial property into residential schemes.

The AIM-listed challenger bank said the fund is aimed at boosting the level of conversion development following the government’s £1bn brownfield regeneration fund launched in April.

“With the government pledging to address the housing shortage through a number of new brownfield initiatives, the next few years will be an extremely exciting period for real estate development,” said Paul Marston, managing director at Secure Trust Bank.

“This new fund will diversify our offering and help to boost the volume of affordable and high-spec residential developments in cities and out-of-town locations across the UK.”

Secure Trust’s real estate lending arm, which launched in July last year, will manage the fund. The business provided £135m of debt in 2014 by financing residential and commercial property developments across the UK.

Deals include working with developer Grainmarket Properties on a £6.4m scheme in Slough to convert redundant office space into 54 apartments. The bank also provided £4m to York Capital Management to convert three upper floors of retail space into 28 flats.

AIM-listed Secure Trust can lend up to £25m to a single borrower but the majority of deals so far are around £4m-5m in size. Most of the lending has been on residential development outside of London. The bank has also raised a £100m fund to refinance investment portfolios at 4.74% fixed interest for five years.

The government’s £1bn brownfield regeneration fund aims to support local councils clean up previously developed land and help build 400,000 new homes across the UK.

However, its permitted development rights rule, under which no consent is needed for a change of use from office to residential, is due to end next May.