The Merseyside Pension Fund has backed a £12m (€13.8m) loan secured against a development in Canary Wharf.
The £6.8bn public sector scheme has partnered with LendInvest on the deal.
The loan will help finance a planned development in London’s Docklands, which will include a 320-bedroom hotel and 199 residential units.
The developer – which was not named in the announcement of the deal – is still awaiting planning permission.
According to LendInvest’s announcement, Merseyside targeted property-related debt as the asset class was able to provide “strong relative returns”. It has completed a number of similar transactions in the past 18 months.
Rod Lockhart, managing director of LendInvest Capital, said: “Returns from short-term property debt are increasingly attractive to investors in this low interest rate environment.
“We look forward to making co-investments with Merseyside and other UK pension funds as a regular component of our funding mix.”
Chris Shorrock of CBRE Capital Advisors, which advised Merseyside on the transaction, said: “At the current time we believe that investing into the property debt space provides attractive relative returns compared to direct equity property investments.
“Having an allocation for debt funding in the property portfolio should assist us in outperforming [Merseyside’s] benchmark.
“We are pleased to have undertaken our first debt syndication with LendInvest and it demonstrates that alternative lenders and institutional investors can team up to achieve attractive returns for their investors.”
