Maslow Capital aims to fill the debt gap for developments of industrial and logistics assets in the UK’s regional markets with the launch of a lending division targeting the sector.
The London-based real estate development finance specialist will expand its debt offering – lending against assets greater than 50,000 square feet, including refurbishment and multi-let schemes, with a focus on regional locations in the UK.
“If you step away from the prime logistics market, there’s an undersupply of debt finance in the regional markets,” senior deal originator Michael Kearney, who will run the specialist lending desk for the industrial and logistics sectors, told PERE sister publication Real Estate Capital.
“The high street banks would typically require full pre-sales to a third party or a pre-lease of at least 50 percent, if not 100 percent; but where developers are undertaking the project on a speculative basis, with less than 50 percent pre-lease or no pre-sale in place, Maslow can understand and support that request,” he added.
Maslow’s new division will provide loans for logistics developers with a minimum value of £5 million. Pricing will start from 5.65 percent over one-month Libor and the maximum loan-to-value ratio will be 65 percent.
The industrial sector is a mature investment class that is undergoing significant structural change, which is creating long-term opportunities for owners and developers to regenerate and enhance assets to meet the changing needs of occupiers. In the first quarter of 2018, more than 19 million square feet of space was under construction and 28 major logistics facilities changed hands, according to consultancy firm CBRE.
“Strong demand” from occupiers and investors for refurbishment schemes will represent an opportunity for developers to innovate that Maslow is willing to support, Kearney said.
The specialist lender will take a more personal approach to the new lending offer, on “a deal-by-deal basis”, to finance the “right sponsor and the right transaction”, Kearney said. “I think a volume approach can lead to some unnecessary risks taken. We have a very patient capital,” he noted.
Maslow has provided more than £300 million of new loans to developers so far in 2018; a 20 percent increase compared with the equivalent period last year. This increase reflects both the growing demand for alternative finance from developers in the UK and the broadening appetite for Maslow’s specialist lending approach.
“Our new offer for the industrial sector is the latest step in our plans to expand into more diverse markets, enabling us to deliver bespoke lending facilities for developers of these essential assets across England,” said Ellis Sher, co-founder of Maslow.