Octopus launches debt fund raising £115m at first close

The Commercial Real Estate Debt Fund II (CREDF II) is an institutional debt strategy which focuses on the UK commercial property market.

The launch of the fund follows the deployment of CREDF I, a £130m fund launched three years ago, and CREDF-S, a £35m fund raised from existing investors in 2016 due to sustained institutional demand.

The two funds have completed over £420m of lending, which was secured against commercial real estate across the UK with CREDF I returning a gross IRR of 12.6% to June 2017.

CREDF II is targeting £200m at final close, which will provide sufficient lending to complete loans with a combined value in excess of £500m over the next three years.

“Repeat commitments from CREDF I investors, together with new investment, are testament to the continued strength and growth of the business as well as the successful track record of CREDF l and CREDF-S,” said Ludo Mackenzie, head of commercial property at Octopus Property and manager of commercial real estate debt funds (pictured above).

“There remains a real need for commercial property finance in the UK market, and we have built a reputation and track record of delivering bespoke solutions, quickly and efficiently.”

Simba Capital acted as placement agent and Macfarlanes provides legal support for the fund.

“CREDF II is an exciting opportunity for our commercial lending team, who have demonstrated their ability to deploy capital across a range of lending opportunities and deliver attractive returns,” said Mario Berti, CEO of Octopus Property.

Ludo added: “From a borrower’s perspective, we provide loans that are more versatile than traditional bank finance and cheaper than private equity.

“From an investor’s perspective, CREDF I has been able to deliver returns that are comparable to equity funds, but with stronger downside protection.”