Singapore wealth fund to invest $150m in Loancore mortgage REIT

Government of Singapore Investment Corporation (GIC), through its affiliate GIC Real Estate Private Ltd, will invest $150m in the soon to-be listed mortgage REIT, LoanCore Realty Trust, according to company documents.

Formed early this year, the trust is also looking to raise an additional $345m through an initial public offering. GIC and Jefferies Group have also committed $205m — $150m from GIC (30% of the trust’s outstanding shares) and the remainder from Jefferies and its affiliates — in private placements of shares.

Connecticut-based LoanCore Capital, which is backed by Jefferies and GIC, carved out LoanCore Realty Trust from its predecessor company DivCore Subordinate Debt I Club REIT Holding in January of this year. The trust specializes in origination and investments in commercial real estate mortgages and other real estate-related assets.

“We believe there is a significant market opportunity to capitalize on the dislocation created by the constrained supply of commercial real estate debt capital from traditional real estate financing sources and the substantial demand from borrowers for new financing in the commercial real estate sector,” the REIT stated in the prospectus.

As of June 19, 2015, the trust owned a portfolio of 19 commercial mortgage loans and four ‘senior participation interests’ in commercial mortgage loans, all of which were floating rate, with an outstanding principal balance of $956.5 million and 43.5 percent of this portfolio is secured.

The portfolio has a weighted average loan-to-value ratio of 64 percent, according to the prospectus.

Higher returns over traditional asset classes and tax incentives have attracted foreign institutional capital into REITS this year, fund managers have noted.