Laxfield Capital has sourced capital from the Government of Singapore Investment Corporation to kick-start a planned £1bn UK debt investment programme over the next two years to write whole loans up to £185m.
The junior component of each whole loan will be retained by GIC while the senior tranche, typically three-quarters of the total size of each whole loan, will be syndicated by Laxfield Capital to banks, senior debt funds and insurance lenders.
Laxfield will recycle the syndicated senior debt capital to drive overall return ambitions for the tie-up.
Emma Huepfl co-founder at Laxfield Capital said the syndication strategy for the senior debt component will be an effective way “to attract other senior debt providers into the market that want access to good loans and sit alongside a very solid, responsible source of capital”.
For GIC, in return for allowing Laxfield to use its capital to underwrite the whole loans, the sovereign wealth fund will get access to a much deeper pipeline of new mezzanine loans, its primary debt strategy in the UK.
Huepfl added: “GIC have picked us but they believe we can originate but also because of our contacts in the interbank market, to enable the syndication strategy to work with global sources of senior debt capital over a long period.”
Chris Morrish, regional head of Europe, GIC real Estate, said: “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 programme complements our existing direct junior debt investment strategy which we will continue to pursue.”
Laxfield will lend below prime into income-producing good secondary quality real estate, against offices, retail, industrial, residential and leisure across the UK – but not hotels. Laxfield will follow good sponsors into secondary assets if the business plan supports it.
Adam Slater, managing director of Laxfield Capital, said: “This is a good example of how alternative sources of capital are successfully entering the space traditionally dominated by banks. The investment from GIC is a strong vote of confidence in our programme and in UK commercial mortgages, and provides an ideal market entry point for other investors seeking access to quality mortgage investments. “
Laxfield existing lending business acts on behalf of a group senior debt lenders to source deals, including for MetLife, Cornerstone and Münchenerhyp.
Huepfl added: “We will continue to work with the mandates we have, which are all in separate areas of the market. This particular programme is taking our business forward, because it is a lending programme in our own name, in which GIC has invested.”