Oaktree Capital Management funds have backed former Man Group and Octopus Real Estate executives to launch a UK property development finance business.
Silbury Finance, founded by former Man Group head of European real estate debt Matthew Pritchard and the previous residential development head at Octopus Real Estate Gavin Eustace, is targeting up to £3bn (€3.4bn) of lending over the next six years across the UK living sector.
The development finance lender, which is targeting half a billion pounds of lending in this year, will underwrite loans typically in the £10m to £150m range with a loan-to-value of between 60 and 70%,
Silbury will initially focus on build-to-sell and build-to-rent residential developments in London and the South East.
Pablo Velez, managing director at Oaktree Capital Management, said: “We view the challenging economic backdrop as a compelling entry point to the sector and plan to take full advantage of the lack of a legacy book to focus on expanding quickly.
“UK real estate, in particular senior secured lending collateralised by residential developments, offers an attractive combination of risk and returns, and we expect this to continue for the foreseeable future.”
Pritchard said: “Middle-market residential developers continue to be hugely underserved by the lending markets, and we expect the current uncertainty to only exacerbate this trend further.
”Swathes of UK lenders, comprising both the high street banks and alternative lenders, have retrenched due to uncertainty generated by the Covid-19 pandemic and are committed to managing their current loan books. Large debt funds continue to seek the higher returns available from the large single ticket loans.”
Eustace said: “The UK residential sector, which was already benefitting from a number of favourable structural trends, has further demonstrated its defensive and countercyclical characteristics during the pandemic.
“Against a structural backdrop of undersupply of residential real estate in our target markets, the case for debt financing remains strong and we look forward to closing on our near-term pipeline of opportunities, employing a prudent and disciplined approach to lending.”
Pritchard spent six years as head of European real estate debt at Man Group, before joining Oaktree as a senior advisor. Founding partner Eustace was previously head of residential development at Octopus Real Estate.
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