GIC backs UK real estate debt programme

The Government of Singapore Investment Corporation has agreed to underwrite £1bn of loans sourced by London-based Laxfield Capital.

The Government of Singapore Investment Corporation (GIC) is backing London-based Laxfield Capital in providing up to £1 billion (€1.1 billion; $1.6 billion) of property loans to UK real estate over the next two years.

Laxfield is sourcing deals of between £40 million and £185 million and up to 75 percent loan-to-value, before syndicating up to three-quarters of those loans to other financial institutions. GIC will retain a substantial junior piece of the debt.

Adam Slater, co-founder and managing director of Laxfield, said in a statement: “The Laxfield Capital program will fill a gap in the large-ticket commercial mortgage sector, as few lenders currently are able to provide whole loans in excess of £100 million, particularly outside core locations or prime assets. I believe the program will have a considerable impact on the UK property market with a significant injection of liquidity at a time when traditional sources of funding are contracting.”

Chris Morrish, regional head of Europe at GIC Real Estate, added: “We look forward to our partnership with Laxfield Capital, which has demonstrated strong capabilities in loan origination and has generated value for commercial mortgage investors. The program complements our existing direct junior debt investment strategy, which we will continue to pursue.”

GIC's move was flagged as early as last year at the Reading Real Estate Foundation annual lecture, when Morrish told the audience how the state fund was contemplating the senior financing opportunity. He said the sovereign fund was “finding the right home for it” and that it would invest “in due course.”

The announcement by Laxfield follows a similar one last year, in which Hartford, Connecticut real estate investment manager Cornerstone Real Estate Advisers announced it had provided an £83 million loan to a public London property company as its senior UK lending program got under way. The loan was arranged by Laxfield, which was a established by Slater and Emma Huepfl in 2008.

The pair first set up an independent company in 1995, when they left GE Capital to form Halkyn Capital. That same year, German bank Württemberger Hypo hired Halkyn to manage its £500 million portfolio of real estate loans before Halkyn went on to originate £7 billion of UK deals for it. When Württemberger Hypo merged with Hypo Real Estate in 2007, Slater and Huepfl formed Laxfield.