Dutch pension asset manager APG has increased its commitment to a LaSalle residential financing fund which focuses on Greater London and student housing in the UK.

Dutch pension asset manager APG has increased its commitment to a LaSalle residential financing fund which focuses on Greater London and student housing in the UK.

APG, which manages €345 bn of pension assets, and investment manager LaSalle have backed a second tranche of commitments totalling £202 mln (€246 mln). This brings the total equity commitments for LaSalle Residential Finance I (LRF I) - which launched in May 2013 - to £440 mln (€528 mln).

The venture, which has APG as its largest investor, focuses on refurbishment and development finance on residential schemes in London and student housing developments across the UK. LaSalle said the fund is the largest discretionary capital source to offer whole loan debt finance for these two segments of the market.

Michael Zerda, fund manager of LRF I and European Director of Debt Investment and Special Situations said: 'This niche target area remains an attractive funding gap opportunity and our investors’ increased commitment is a testament to the strength of the pipeline and quality of the existing portfolio. The increased commitment was carefully considered to allow for flexibility ahead of continued credit and investment market evolution. Our focus remains on high-quality student accommodation and residential schemes across the UK, both for conversions of existing properties as well as ground-up development.'

Roland Mangelmans, senior portfolio manager at APG Asset Management, added: 'The first tranche of commitments has been successfully deployed within a short time frame. With this first tranche we have provided whole loans for high-quality project developments in strong locations.

'Although this is a very focused strategy, the pipeline of deals and the quality of the deals is large and attractive from a risk return perspective. The fact that a large number of banks have withdrawn from the project development finance market has created an opportunity for us to fill the resulting and still very much existent "gap". We are confident our increased commitment will ramp up the lending power of LRF in order to maintain its strong market position”, Mangelmans added.

The fund's original £238 mln in commitments have now been fully allocated and LaSalle expects to announce the first transaction for the increased vehicle shortly. The vehicle plans to lend at loan-to-cost ratios of up to 80% and issue loans between £15 mln to £60 mln. It offers “stretched senior” or whole loans, which make up a blend of senior and mezzanine debt in a “one-stop shop” format which the venture intends to hold to maturity.