Martley Capital Arranges Mezzanine Loan for Leeds Industrial and Social Housing
Loans Are Second for New 'Gap Financing' Strategy
By Paul Norman
CoStar News
28 August 2024 | 9:35
Martley Capital Group, the real estate investment platform founded by real estate entrepreneur Richard Croft, has arranged for investors to provide £12.9 million of mezzanine loans secured by two industrial and social housing assets in Leeds.
The two separate loans have been advanced to companies directed by Leeds-based investor and developer Daniel Newett and sit at 44.4% to 65.1% loan to value in the capital stack.
They have been provided by the vehicle Martley Capital Gap Financing Finco II Limited. The loans will be used to refinance existing debt, fund works to accommodate new tenants and provide a cash reserve for debt servicing during rent-free periods, Martley said.
The loans are secured against two Leeds assets in the industrial and social housing sectors, with space in excess of 570,000 square feet. Martley said the business plan includes a long-term hold for the assets as they are intended to be cornerstone assets in the sponsor’s core income portfolio.
The sponsor plans to secure new leases to improve income and value in the short term while working on a longer-term strategy for change of use. Daniel Newett has 15 years’ experience operating in the UK commercial and residential real estate industry and is shareholder of Avant Homes and co-founder of Berkeley DeVeer.
Tom Tunley, director of debt capital markets, part of the Martley Capital Group, said in a statement: “The two assets are very well located and provide multiple routes for the sponsor to create value through various asset management initiatives which have been carefully structured and we believe to be are highly deliverable.”
The deals form part of the Martley Capital Group’s ‘gap financing’ strategy to provide loans to borrowers who need to refinance or who have existing loans that have suffered LTV breaches due to declining market values.
In January Martley Capital arranged a £32.25 million mezzanine loan to refinance a portfolio of five UK retail warehouse assets owned by Tristan Capital Partners’ European Property Special Opportunities 3 Fund in its first deal since launching in December 2023 with 40 staff, five offices across the UK and Europe and circa £900 million in assets under management across 19 mandates.
The business has launched several new strategies, with an opportunistic and value add focus, covering credit, equities and direct real estate, to take advantage of current dislocation in the real estate markets. In the final quarter of 2024, the Martley Capital Group is looking at the potential for launching a vehicle with an intended target size of £300 million to provide multiple gap financing-style loans to meet the burgeoning demand that the Firm is currently seeing for this type of loan.
Prior to founding the Martley Capital Group in December 2023, Croft was the founder and executive chairman of M7 Real Estate, the €7 billion pan-European real estate asset manager that was sold to Oxford Properties in 2021. To read the original news story click here.
