Octopus Property launches next institutional real estate debt fund


Ludo Mackenzie

Octopus Property, the specialist UK property lender and part of Octopus Group, today announces a first close of £115m for its Commercial Real Estate Debt Fund II (“CREDF II” or “the Fund”), an institutional debt strategy focused on the UK commercial property market.

Octopus Property is one of the UK’s leading non-bank lenders, providing bespoke financing facilities secured on commercial, development and residential property. Since 2009, it has lent in excess of £2.6bn across c. 2,600 loans.

The launch of CREDF II follows the successful deployment of CREDF I, a £130m fund launched three years ago, and CREDF-S, a £35m fund raised from existing investors in 2016 due to sustained institutional demand. The two funds have completed over £420m of lending, secured against commercial real estate across mainland UK. CREDF I has returned a gross IRR of 12.6% to June 2017.

CREDF II is targeting £200m at final close, which will provide sufficient funding to complete loans with a combined value in excess of £500m over the next three years.

Ludo Mackenzie, pictured, Head of Commercial Property at Octopus Property and manager of the Commercial Real Estate Debt Funds, said:

“Repeat commitments from CREDF I investors, together with new investment, are testament to the continued strength and growth of the business as well as the successful track record of CREDF l and CREDF-S. There remains a real need for commercial property finance in the UK market, and we have built a reputation and track record of delivering bespoke solutions, quickly and efficiently.

“From a borrower’s perspective, we provide loans that are more versatile than traditional bank finance and cheaper than private equity. From an investor’s perspective, CREDF I has been able to deliver returns that are comparable to equity funds, but with stronger downside protection.”

Mario Berti, CEO of Octopus Property, added:

“CREDF II is an exciting opportunity for our commercial lending team, who have demonstrated their ability to deploy capital across a range of lending opportunities and deliver attractive returns.”

Simba Capital acts as Placement Agent and Macfarlanes provides legal support for the Fund.