Urban Exposure is looking to expand its lending team as it closes in on its first residential development loan for its new £2bn joint venture with hedge fund EJF Capital.
The specialist lender is hunting for up to three extra staff to join its 15-strong team as it moves to deploy the capital brought into its new Urban Exposure Finance Limited business.
The joint venture targets development projects throughout London and the South East of England. Washington-based EJF is bankrolling it with its own private equity funds as well as on behalf of other US-based investors.
“There’s so much going on and we’ve got such a big pipeline of deals that we’re actively interviewing and recruiting as well because we’re so busy,” said Randeesh Sandhu, chief executive of Urban Exposure. “We’ll close our first deal within the next week or so, and another three or four deals over the next three or four weeks.”
The new venture will lend senior, whole loans, mezzanine and bridging finance at up to 70% loan-to-value on new and refurbished residential-led projects, including mixed-use, student accommodation and private rental schemes. It will target returns of 10-15%.
Urban Exposure will own 70% of the new business with EJF owning the remainder.
Competition among lenders had increased recently but there was still plenty of scope to invest, said Sandhu.
“There are still a lot more projects than there is finance available. Once you whittle it down to which deal suits which capital provider then there actually isn’t that much competition. There’s definitely room for capital providers in this market.”
The new venture follows Urban Exposure’s aborted attempt at floating in July last year to raise £500m. EJF was backing the initial public offering.
Urban Exposure cited then “the prevailing IPO backdrop” as its reason for aborting the flotation. In addition, some targeted investors were believed to be more interested in committing equity to a private vehicle.
The company formed in 2002 and specialises in underwriting and arranging loans before syndicating them to partners such as Starwood Capital, LaSalle Investment Management and Topland. It has loaned about £1bn so far with financing coming mainly from US funds.
In 2013, it jointly funded a £169m senior loan for Wainbridge’s super-prime 11-15 Grosvenor Crescent redevelopment in Belgravia. It also provided part of a £100.3m loan with LaSalle Investment Management for an Alchemi Group office-to-residential conversion in Victoria, Great Minster North.
EJF, founded in 2005, manages private equity and hedge funds on behalf of clients and currently has around $6.5bn of assets under management.