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ZSL targets growth through lending to specialist ‘beds’ sectors

The London-based development finance provider is aiming to grow its loan book to more than £100m by the end of 2020.

ZSL Capital, a UK-focused residential development lender which is owned by financial advisory and investment company Zenzic, is planning to expand into alternative accommodation sectors, with a view to growing its loan book to more than £100 million (€110.6 million) in the next two years.

The specialist lender, which has already raised £25 million of capital from family offices and wealth managers, is aiming to capitalise on experience of the alternative asset class gained through the advisory mandates of Zenzic Partners Group, a merchant banking practice founded in 2014.

“Our targeted expansion will be bed sectors: student, later living, private rented sector, hotel, serviced apartments and healthcare. We are not looking at retail or office as we don’t see any value there currently,” Daryl Thorpe co-founder and principal at ZSL, told Real Estate Capital.

Since 2014, Zenzic’s real estate lending platform has invested around £20 million of in-house capital across 30 residential development-led projects. Over the next 12 months, the firm is aiming to deploy as much as £25 million of external capital. The firm expects to raise a total of £35 million in equity from investors by the end of 2019 and will also source credit to support its lending activities.

“By the end of 2019 we want to enter discussions for a senior debt credit line, so we can then expand the loan book to around £100 million by the end of 2020,” Thorpe said.

“Once we have done that, then it becomes a relatively substantial book where we can attract other institutional capital,” he added.

The lender recently closed two residential deals in Bristol and Bournemouth, having deployed almost £1 million in mezzanine positions.

“We are currently focusing primarily on junior mezzanine positions as we see this market as less congested for small sizes ranging from £500,000 to £5 million,” Thorpe said. “Our plan over the next year is to grow our loan book and then expand our senior offering so we can then do larger whole loan tickets.”

ZSL offers loans of up to £5 million and a loan-to-value ratio of up to 75 percent, with typical rates from 1.25 to 1.5 percent per month. The lender’s loan terms typically range from 18 months to two years.