Edinburgh-based investment firm Standard Life Investments (SLI) has confirmed plans to enter the commercial real estate debt market with the launch of a £250 million mandate on behalf of parent company Standard Life Assurance.
Drawing upon its 50 years of experience in Canada’s commercial lending market, SLI’s initial strategy will focus on senior secured loans in the UK. David Paine, head of real estate at SLI, told PERE that the firm will start with London’s lending market but will focus on expanding to Southeast England and other major UK cities.
Additionally, SLI may look beyond senior loans and beyond the UK within the next year. “We want to develop an expertise and then look for opportunities in other areas in Europe, which could include mezzanine funding,” said Paine. “We’ll be quite selective; it won’t become a pan-European platform.” SLI will begin making funding available for projects in the fourth quarter of this year, with plans to close its first transactions before the end of 2013.
Paine explained that growing investor appetite is the main reason why SLI decided to establish a debt platform now. “Interest from institutions in investing in real estate debt has increased significantly as they seek to diversify both their real estate and fixed income portfolios while maintaining and often enhancing yields and risk-adjusted returns,” he said in a statement. The firm studied the opportunity for two years before deciding to enter the market.
In July, SLI appointed Neil Odom-Haslett as head of commercial real estate lending, responsible for all aspects of the new platform. Odom-Haslett, who joined SLI from Deutsche Pfandbriefbank, has 31 years of experience in the sector in the UK and other European markets.
At the time of this announcement, the firm also launched a new Canadian real estate fund, which is targeting C$150 million in equity. As of June 2013, SLI had £10.6 billion in real estate assets under management, with the firm’s overall assets totaling £178.8 billion.