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Investment fund launches for London residential bridging loans

It said that the fund, OREL, has been created to capitalise on the current dislocation in the short term real estate lending sector in the UK and will provide two to three year financing to experienced property entrepreneurs and High Net Worth Individuals for financings in the London area.

Typical assets will include high end residential properties in prime locations such as Belgravia, Knightsbridge and Mayfair, which can command values of around £20 million and which have continued to show resilience throughout the economic downturn.

Aeriance is anticipating growing the unleveraged Fund to circa £200 million with commitments from a range of UK and international investors and is expecting to deliver a net return of between 10 to 12% per annum.

‘The UK residential real estate lending market is still characterized by a dislocation which has been created by a significant lack of liquidity from financial institutions. We anticipate that this environment will continue for the forseeable future as new lending volumes from banks will probably remain expensive and severely limited, driven by new capital adequacy rules,’ said Daniel Bendavid, senior investment officer, Aeriance Investments.

‘This, combined with a number of traditional lending institutions having to wrestle with ongoing legacy lending issues has provided us with a strategic opportunity to design a product aimed at top end residential which will help to facilitate transactions whilst providing an innovative vehicle for investors who are looking to obtain a risk adjusted return through property investment,’ he explained.

He added that the launch of OREL forms part of Aeriance’s three year track record in successful real estate lending, which has involved underwriting over €700 million of loans.

The other funds are: AMREF 1 and AMREF 2 (Mezzanine Real Estate Fund) which are unleveraged junior debt funds which are invested in prime European real estate; ASTREL offers Senior Tranches of real estate debt for prime European property, offering a conservative exposure to real estate lending; and ARESS, a global real estate relative value equity fund which makes long/short/neutral highly liquid and diversified trades in the main developed stock exchanges of Europe, North America and Asia.

The primary aim of Aeriance’s debt funds is to offer an attractive risk/return as well as regular and steady distributions to investors. An important portion of the funds’ returns is generated through elevated liquidity premium rather than through real risk exposure, which Aeriance believes offers very attract risk adjusted returns.