Aeriance Investments, a Luxembourg-domiciled firm sponsored by property firm Aerium and a Kuwaiti sovereign wealth fund, has launched a £100 million (€119 million; $157 million) London residential property debt fund. The closed-end vehicle, OREL, is aimed at providing capital in the form of bridging loans for residential property transactions in high-end residential locations such as Belgravia, Knightsbridge and Mayfair.
The timing is designed to take advantage of what experts say is ‘dislocation’ in the UK residential property lending market because of restricted liquidity from financial institutions.
Daniel Bendavid, senior investment officer at Aeriance Investments, said his firm expected those market conditions to continue for the foreseeable future. “New lending volumes from banks will probably remain expensive and severely limited, driven by new capital adequacy rules,” he said. “This, combined with a number of traditional lending institutions having to wrestle with ongoing legacy lending issues has provided us with a strategic opportunity to design a product aimed at top end residential which will help to facilitate transactions.”
OREL will provide two- or three-year financing to experienced property entrepreneurs and high-net-worth individuals for senior and junior financings in the London area. Typical assets will include high-end residential properties in prime locations such as Belgravia, Knightsbridge and Mayfair, which can command values of around £20 million and which have continued to show resilience throughout the economic downturn.
It is not the first real estate debt fund that Aeriance has formed. Over the past three years, it has lent around €700 million via AMREF 1 and AMREF 2, which are mezzanine real estate funds invested in prime European real estate, ASTREL, which provides senior loans also for prime European property, and ARESS, a global real estate relative-value equity fund.