Urban Exposure and EJF Capital JV to provide residential-led development finance
Urban Exposure Limited and an affiliate of EJF Capital (EJF) have formed a joint venture to create a new company, Urban Exposure Finance Limited, to finance residential development projects throughout London and the South East of England.
Urban Exposure pioneered non-bank lending for residential-led development finance, having been one of the first companies to specialise in this sector during the financial crisis when we believe UK banks began reducing their balance sheet exposure to residential property lending.
The Group provides financing across the capital structure and, since its inception, has committed development finance to projects worth over £1bn on its and its joint venture partners’ behalf to residential-led real estate projects throughout London and the South East.
EJF is an employee-owned alternative asset management firm headquartered outside of Washington, DC. EJF manages more than USD6.6 billion in assets across a diverse group of alternative asset strategies. EJF was founded in 2005 by Manny Friedman and Neal Wilson along with a small team of professionals from Friedman, Billings, Ramsey Group, Inc. (FBR).
The Company will operate under the Urban Exposure brand name and will lend on a broad range of residential-led, new build and refurbishment projects including mixed use, student accommodation and private rental schemes. The Company will offer to experienced developers a comprehensive range of products, including Senior and Stretch Senior Debt, Mezzanine Finance and Bridge Finance. While the Company was formed to provide loans throughout the UK, in the immediate future it will focus primarily on London and the South East of England.
Stricter regulatory requirements have created an opportunity for the Company to capitalise on the financing gap resulting from the substantial reduction in lending by traditional banks. Outstanding debt secured by residential development projects has steadily declined from its peak in 2008 by approximately 57%, according to the DE Montfort University, Commercial Property Lending Market Report, 2014.
Randeesh Sandhu, CEO of Urban Exposure, said:
“This joint venture marks the culmination of the capital raising initiative Urban Exposure embarked on last year when EJF Capital became a cornerstone investor as part of that process and I’m very pleased we have established a private platform through which we can now collaborate. The venture is a testament to the track record Urban Exposure has built up over the last six years, our management, employees, best-in-class origination, underwriting and loan management processes and I am tremendously excited about the significant potential for us to provide much needed finance to UK developers.”
Urban Exposure was advised by Freshfields Bruckhaus Deringer LLP and Ernst & Young LLP, EJF was advised by Clifford Chance LLP.