Sterling Global Financial targets bridge loan opportunities in European expansion

Bahamas-headquartered asset management firm Sterling Global Financial is planning to ramp up its real estate lending activity in Europe by providing bridge loans through its global Sterling Mortgage Income Fund.

The fund, which was established in 2012, is an open-ended vehicle that targets yields of over 10 percent – and has managed to maintain double digit returns since inception. Sterling was founded by real estate investment magnet David Kosoy – who from 2000 to 2007, was co-CEO and co-chairman of publicly-listed Sterling Centrecorp.

Speaking to Real Estate Capital Europe, Nick Brennan, director, UK and Europe at Sterling Global Financial, said the firm is looking to continue its European expansion with a focus on the UK and Ireland, with bridge loan products.

Through the master fund, Sterling will look to originate bridge loans of up to 45 percent loan-to-value. In Europe, it will provide loans of around €20 million for with terms of up to 364 days.

Brennan said the firm is targeting short-term loans because it is Bahamas-based, meaning loans of less than a year in duration carry different tax implications.

“If need be, we might be able to extend the term, but we largely aim for 364-day bridge loans,” Brennan said.

Sterling is aiming to raise a further $200 million to $250 million over the next few years to grow the global fund. The vehicle currently has around $210 million AUM, with further investments to be concentrated within a fluid mix of exposure to the US, Canada and the Caribbean.

“Considering Sterling Mortgage Income Fund launched in 2012, and has succeeded in delivering an average IRR of over 12 percent over that period, we think the story works for investors, and we want to provide opportunities for European investors to sign up.”

European expansion

Sterling originated two loans in the UK through the flagship fund last year. The projects were office-to-residential conversions located outside of London.

Brennan, who has investment banking experience from Morgan Stanley and Societe Generale Corporate and Investment Banking – where he was a bond syndicate manager – joined the firm in February last year.

He explained that the firm is actively looking for financing deals in “common law” jurisdictions. The firm will place most of its focus on Ireland and the UK, he added. However, Brennan said Sterling would consider transactions elsewhere in Europe in jurisdictions such as the Netherlands.

The fund, which is domiciled in Grand Cayman, has feeder funds in the US and Canada – with all the proceeds being fed into the master fund. The master fund’s portfolio consists of mezzanine loans, senior loans and construction loans. Through it, Sterling lends in regions with common law such as the Caribbean, US, Canada and the UK.

Brennan, who is the fund’s European based representative, explained that since the fund was launched in 2012, the investor base has traditionally been from Canada where all key executives at the firm have close ties. Part of his remit is to source investor capital from the UK and Switzerland, where the fund has now been registered.