Omni hits $45m first close on second secured debt fund

The UK-focused short-term real estate lender has already fully deployed the money raised and anticipates meeting its target later this year.

London-based alternative investment manager Omni Partners has reached a first close of $45 million on its second secured lending fund which will provide short-term finance for UK real estate projects. Omni Secured Lending Fund (OSL) II is targeting $250 million and it should reach that target by the end of the third quarter, the firm’s founder Steve Clark told Private Debt Investor.

The fund, like its predecessor, the $50 million OSL I, had a one-year investment period and the $45 million raised had already been invested. The first fund launched in February last year and had funded 92 loans before it entered its harvest period in January.

All of the original OSL I investors have rolled their commitments into the new vehicle. The majority of investors are from the US with some Swiss commitments.

Deals are capped at a 70 percent loan-to-value and the net return target for both the first and second fund is around 10 percent. The first fund is on course to deliver net returns of 12 percent. It delivered a net return of 10.4 percent in its first 12 months of operation.

Clarke said that margins had compressed recently on real estate bridging facilities so the second fund may return a little less but he was confident that it would meet its target.

The average loan the firm provides is around £500,000 ($763,000; €700,000) and Omni takes personal guarantees from all its borrowers, the majority of whom are real estate professionals such as buy-to-let investors or property developers.

The firm does not lend to prime central London projects. Around 50 percent of its portfolio is linked to assets in London and the south-east.

Clark said that the second fund would be quickly followed by a third fund at which point the firm could expand its lending criteria. Last May, former GE Capital UK head John Jenkins joined Capital Bridging Finance Limited, Omni Partners’ origination platform, as its new chief executive. Clark said at the time that Jenkins would build and run Omni’s direct lending platform.

Omni sources borrowers through a network of around 40 brokers. While confident in Omni’s secured lending strategy, Clark added that the UK general election next week could be significant for the UK real estate market as the two main parties had contrasting policies and views.

Omni Partners is headquartered in London and has a second office in Irvine, California. The firm has approximately $940m in assets under management and manages four strategies: macro, equity event-driven, UK short-term secured property lending and European equity long/short.