UBS reaches final close on UK RE debt fund

UBS Asset Management has reached a final close of £241 million on its debut UK real estate debt fund.

UBS Asset Management has reached a final close of £241 million on its debut UK real estate debt fund, the fund’s portfolio manager and head of global real estate, Anthony Shalye, told Real Estate Capital sister publication Private Debt Investor.

The fund closed just before the end of the year and includes more than 50 percent European investors, including Dutch, UK and German LPs. Mitsubishi Corporation, one of the investors in the fund alongside UBS, is acting as co-general partner for UBS Participating Real Estate Mortgage Fund.


The fund was launched and held its first close in December 2013 followed by two more interim closes in early 2015 and the final quarter of last year.

The firm was seeking up to £300 million for the strategy but Shayle said he was happy with the final total as it was within the target range and gave him enough capital to play with.

The strategy combines senior and mezzanine debt into whole loans with loan-to-value ratios of up to 75 percent, with returns topped up by a share of both the rent and any capital appreciation from the underlying assets. It targets total IRRs of 8-10 percent.

The fund extends financing for both investment and development and refurbishment. Deals executed include financing for commercial offices, care homes, hotels and student accommodation.

Shalye said the pipeline for the fund looks strong in the year ahead with borrowers seeking longer-term financing, as real estate investors turn off bets on capital appreciation and focus on income generating assets.

The firm has plans to launch a European senior real estate debt fund targeting €500 million to €600 million, as reported by PDI last year.