LaSalle Residential Finance I (LRF I) fund commitments increased to £440 million (€535.6 million; $743 million), following a second tranche top up of £202 million (€267.8 million; $371.5 million) from existing investors, according to a statement on Friday.
Pension provider APG — the fund’s largest investor — and asset manager LaSalle committed more to the fund, as original commitments of £238 million have been fully allocated.
Launched in May 2013, LRF I offers whole loan debt finance and focuses on refurbishment and development finance in the Greater London residential and UK student housing sectors. The vehicle plans to lend at loan-to-cost ratios of up to 80 percent and issue loans between £15 million to £60 million. The “stretched senior” or whole loans are intended to make up a blend of senior and mezzanine debt, which the venture intends to hold to maturity.
Michael Zerda, fund manager of LRF I and European director of debt investment and special situations said: “This niche target area remains an attractive funding gap opportunity and our investors’ increased commitment is a testament to the strength of the pipeline and quality of the existing portfolio. The increased commitment was carefully considered to allow for flexibility ahead of continued credit and investment market evolution. Our focus remains on high quality student accommodation and residential schemes across the UK, both for conversions of existing properties as well as ground-up development.”
Roland Mangelmans, senior portfolio manager at APG Asset Management, said: “The first tranche of commitments has been successfully deployed within a short time frame. With this first tranche we have provided whole loans for high quality project developments in strong locations. Although this is a much focused strategy, the pipeline of deals and the quality of the deals is large and attractive from a risk return perspective. The fact that a large number of banks have withdrawn from the project development finance market has created an opportunity for us to fill the resulting and still very much existent ‘gap’. We are confident our increased commitment will ramp up the lending power of LRF in order to maintain its strong market position”
Typically LaSalle’s debt and special situations group targets single loan amounts of £10 million to more than £200 million for three to seven year terms. During the past two years, it has closed 25 investments across all of the capital structure, with more than £800 million of capital deployed to date against more than £3.2 billion of real estate.