UBS Asset Management’s Global Real Estate (GRE) business announces the successful completion of four loans over the past quarter to 30 June 2016 by its UBS Participating Real Estate Mortgage Fund (UBS-PREMF, the Fund), totalling €41.7m (£34.8m). These latest transactions take total equity committed on behalf of the Fund to 66%, following its close in December 2016 with €288m (£241m) raised.
UBS-PREMF is a closed-ended UK fund which was established in December 2013, originally to take advantage of the debt financing gap arising from banks scaling back commercial real estate lending, which has once again become highly pertinent following the uncertainty caused by the recent EU Referendum outcome.
To date the Fund has been successful in targeting a wide range of borrowers, having written 12 loans totalling €190m (£159.5m) across 28 UK assets since inception. Of these, four loans were extended over the past three months, including:
- A seven-year, €19.1m (£16.0m) investment loan for a new office property located on a business park in Aberdeen, Scotland and fully let to a strong covenant through a 20-year lease agreement, commencing in May 2016
- A €12.27m (£10.25m) term loan facility for the comprehensive refurbishment of an office building located in Bristol
- A bridge loan facility of €7.78 (£6.5m) (plus funding for an arrangement fee loan of €174,743 (£146,000) to support the borrower during the planning process, in a club deal alongside another fund for the conversion of an office property into largely residential on land at Millharbour in London’s Docklands
- A €2.26m (£1.89m) additional facility to extend an existing €26.58m (£22.21m) development and investment term loan to finance the conversion of three office buildings in Newcastle into student accommodation.
With €65.2m (£54.5m) of repayments by borrowers having been made to date, UBS-PREMF’s net portfolio size currently stands at €125.7m (£105m), whilst there are projects in the pipeline totalling £86m under consideration, in the light of the potentially new market environment.
Anthony Shayle, Head of Global Real Estate – UK Debt and Portfolio Manager for UBS-PREMF commented: “In line with our objectives when launching this Fund we have completed a diverse range of interesting deals, lending against new purchases, refinancing and development finance and across a wide variety of sectors, including alternatives.
“Our team’s unrivalled expertise in debt, coupled with the exceptional access to the UK real estate market that we gain through the wider GRE business, together with the wider UBS Wealth Management and Investment Banking networks, means that we continue to see a high level of potential deals and very much remain open-for-business following the outcome of the UK's Referendum on EU membership, which we anticipate will create opportunities for alternative lenders such as UBS-PREMF. We are excited by our success to date in deploying funds into high-quality transactions and are optimistic about rolling the UBS-PREMF model out into other markets at the right time in the future.”
UBS-PREMF typically lends against property lot sizes of up to €47.8 (£40m) and up to 75% loan to value. It is distinguished from many of the real estate market’s debt funds by providing an alternative lending approach through combining senior and mezzanine debt into a single lending package. As a participating debt fund, it aims to produce a total investor level IRR of 8-10% p.a., with total returns driven by interest from the loan portfolio, plus a share of both rent and capital appreciation from the underlying property assets.
