London-based financier Montello Capital Partners has launched its second real estate debt fund.
The new Montello Development Finance LP will focus on lending to London residential property developers.
The fund, which has been seeded largely by existing Montello investors, builds on the four-year track record that Montello has established in the short term lending market in the UK. The new fund will also add to the GBP50m of funds under management for the firm.
Montello’s first fund, the Montello Income Fund, provides investors with a fixed return of 8.5 per cent pa, and is secured by short term first charge loans against London residential property.
The new Montello Development Finance LP is more tailored to high net worth, sophisticated and family office investors. It provides investors with an increased fixed return of 10 per cent pa, and lends on both a first and second charge basis against small scheme residential property developments in London. However, the new fund requires a two year commitment from investors.
Christian Faes (pictured), managing director of Montello, says: “Investing in short term loans secured against residential property in London, has understandably proved to be a very popular investment strategy in the current market. However, there are not that many operators that allow investors access to this investment opportunity in the same way that Montello does.
“We decided to launch the new development finance fund because we had a number of our existing investors that were saying to us that they were keen to go a little higher up the risk curve. We have consistently been able to construct a very conservative portfolio for our existing Montello Income Fund, with an average LTV across the book of around 60 per cent - and that is exclusively lending on a first charge basis.
“We have listened to our investors, and put together the new fund which will be an exciting addition to our existing investor offerings.”
Montello is a specialist real estate bridging finance company based in London. It funds its transactions through alternative capital sources that include its own funds, family office investors, and bank funding.