GCP eyes buy-to-let, water investments

The firm’s Asset Backed Income Fund is eyeing higher-yielding sectors as its traditional areas of investment see yield compression.

Gravis Capital Partners is looking to sectors such as buy-to-let housing, co-living and water-focused infrastructure. The move is part of a strategy within the firm’s Asset Backed Income Fund.

David Conlon, partner at GCP, told PDI his firm looks to emerging asset-backed sectors when loans generated by previous areas of investment begin to see a drop in yield. In the past the fund has invested in areas like student housing and solar power infrastructure.

As of June, the fund had made one loan to a buy-to-let business and two loans to the same co-living housing developer. The fund is exposed to 18 loans in total with a value of £170 million ($216 million; €193 million). It is 70 percent invested, according to its most recent fact sheet.

Co-living is the development of residential properties which combines “dorm room” style rental accommodation with a host of communal features. It is generally aimed at younger renters, Conlon told PDI.

Conlon added his firm made a loan of approximately £5 million to a co-living developer in March with another loan of approximately £10 million recently being provided to the developer. The loans are yielding just under 10 percent, Conlon said. He declined to reveal the name of the borrower.

The fund has just over £240 million in assets under management. A listed offering, it is trading at a premium net asset value. As of May 2017, the fund had generated a total return to investors of 15.9 percent since its initial public offering in 2015. Its long-term target IRR is between 8 and 9 percent.

As far as fund raising is concerned, Conlon said the firm generally seeks out deals with potential borrowers before looking to raise additional capital in the fund. “We will always build a pipeline and then go out and ask for money,” he said.

While the fund has no concrete fundraising target, Conlon did say it would likely not exceed £150 million per annum.