Mera targets prime UK offices as return-to-work gains ground

B&C sat down to talk with James Fenwick, structured finance analyst at Mera, about the firm’s activities since receiving the funding in November 2024.

The real estate credit investment management firm aims to fund £250m in UK real estate over the next 18 months, not least in what James sees as the country’s return to the office.

“I’m personally certainly quite bullish around the office space,” he said. “I think there's definitely a return to work, and those that are coming back to the office are coming for the prime space. They're looking for top-quality space in the right locations.”

According to James, the office has had a tough few years, and Mera is aiming to help borrowers reset the clock, providing a stabilising facility for them to adjust business strategy before then refinancing or exiting. In particular, he sees opportunities in both acquisition and building portfolios, especially in prime, regional locations.

“There's a lot of undervalued offices that bore the brunt of the negative sentiment in the market, and I think there are gems within that that are somewhat dislocated in terms of their value,’’ he explained.

The firm has also seen opportunities across diverse price ranges and assets; not only in office space, but in rental markets such as co-living, especially in prime central London.

Many investors and developers are looking to pivot their strategy, either during the planning process or at the back end, where a development has been switched from a build-to-sell to a build-to-rent due to shifts in the market or lower than expected absorption rates. James attributed the latter to higher inflation and geopolitical factors such as war in Europe.

Regarding the co-living market, James commented: “It is a relatively new sector, but I think it's one that makes a lot of sense. It's that perfect transitionary-type property or asset that allows students or young professionals to move from what may have been their university halls previously to a similar type arrangement.

“But you have all the amazing amenity spaces without having to pay huge prices for the additional space that you perhaps don't need.”

James sees co-living as an affordable way for young professionals to live in central London, as well as a way for students and mature students to find a middle ground between halls and the post-university world.

But Mera isn’t only setting its sights on prime London locations. It has plans in place to invest in key regional locations including Manchester, Bristol, Edinburgh, and Glasgow, with one co-living deal already being supported in Reading.

While James explained the firm’s enthusiasm to help co-living schemes cater for students and graduates, he said purpose-built student accommodation (PBSA) was not at the forefront of the company’s priorities.

“We'd always be keen to assist, whether it be with the acquisition of potential PBSA sites, repositioning of an office space that they're looking to convert, or perhaps [if a borrower needs] a stabilisation facility on the back end.

“But it's often such a heavily competed-for space . . . that we tend to keep away from it,” said James.

The firm has instead been eyeing up ventures in the alternative market alongside residential and commercial opportunities, looking to capitalise on areas such as self-storage, while also focussing on the “gaps within the gaps” in the market where competition may not be as fierce, particularly within the £10m-50m space.

“That itself is a gap. And then taking the gaps within that, the likes of high-value single assets or relatively new sectors that take more of a specialist view. That's where we're really seeing the opportunities.”

According to James, the firm is looking to diversify investments by doing more on the preferred equity side towards the end of this year using its private capital. Mera has seen a noticeable uptick in US investors looking to provide capital in the private credit space or buy assets in the UK.

“We’ve since opened up the doors to multiple HNW investors who are looking to access the private credit markets and will deploy that capital into either senior debt or preferred equity,” said James.

 “We see a lot of demand for equity in the current markets — it's an interesting space for us to be getting into.”