Martley Raises £250 Million for UK Lending Strategy
Investment Firm Can Write Mezzanine and Whole Loans as Gap Financing
By Bert Erik ten Cate
CoStar News
23 April 2024 | 14:41
Martley Capital Group has raised £250 million for its UK lending strategy, said Dan Boakes, the company’s managing director of debt capital markets.
The real estate investment group, founded recently by former M7 Real Estate chairman Richard Croft and a number of fellow M7 directors, is looking to provide both mezzanine and whole loans to investors looking for gap finance. Whole loans can be anywhere between £20 million to £100 million, and price at 4.5% over SONIA, the interbank interest rate benchmark, and mezzanine loans range from £5 million to £40 or £50 million at a fixed rate of between 12% and 15%.
“[The loans] are to bridge the gap for the next two to three years,” Boakes said in an interview with CoStar News. Boakes and his colleague Tom Tunley were in charge of M7’s lending business before they moved to Martley. The two are managing 22 outstanding loans totaling £185 million that were originally provided by M7 Real Estate’s TREC II fund. There will be no new loans from the fund.
Although Martley looks at lending from a real estate angle, it does not write loans-to-own. The properties have to be income-producing, said Boakes. The company doesn’t want to wait for a sale to get paid.
“Loans coming up against maturity and where there’s still equity in play are the biggest opportunity,” said Boakes.
In November, Martley wrote its first loan, a £32.25 million mezzanine loan for Tristan Capital Partners. The loan was part of a refinancing of five retail warehouses that Tristan had bought for its EPISO 3 fund. The senior debt came from Aberdeen.
Martley wants to lend against regional offices, industrial properties, hotels and shopping centres. Boakes said Martley believes in regional offices.
“The investment market is dire, but the occupational market is quite strong,” said Boakes. “We believe in a hub-and-spoke model where you have coworking regional office space.”
That belief also comes through on the equity side. Martley recently bought a circa 3%-stake in Regional REIT, owner of 144 regional office properties across the UK valued at more than £700 million, as reported. The investment, through the company’s Real Estate Opportunities Fund, made Martley the third-biggest shareholder in the listed company. When buying the stake, Martley said it opposed Regional REIT’s planned capital hike to refinance an existing £50 million retail bond and suggested there were other ways to bridge the gap.
Martley has built up a circa £300 million pipeline for its lending business and is also looking at circa €50 million of deals on the Continent. To read the original story click here.
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