Real estate private equity firm AshbyCapital is aiming to establish its presence in the property debt space this year, following its debut lending deal in December 2023.
The company, founded by Peter Ferrari in 2013, sees opportunities to provide development and mezzanine loans as it aims to fully deploy the equity in its debt platform this year.
Advising its group company, Desert View Ltd, Ashby launched its real estate credit business in May 2023 and seeded the platform with £100 million (€116 million) of equity from Desert View’s own balance sheet.
The platform is led by investment director Charles-Etienne Lawrence. Speaking to Real Estate Capital Europe, Lawrence said Ashby's intention this year is to deploy the initial capital in specific parts of the market.
“We have an active pipeline of debt deals for 2024, with a principal focus on development loans and mezzanine debt with a £10 million to £50 million ticket size and a term of between one and five years.
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In December, Ashby participated in its first loan - a £90 million facility to refinance a West Midlands, UK, retail park owned by Korean firms MDM Asset Management and Hana Securities. The financing was provided alongside German lenders pbb Deutsche Pfandbriefbank and Aareal Bank.
Ashby underwrote the mezzanine portion of the loan for the Gallagher Shopping Park near Walsall in the West Midlands, providing £20 million for three years at a fixed rate, while the incumbent lenders pbb and Aareal provided the senior loan. In total, the debt represented a loan-to-value of around 70 percent.
“The pricing for the junior loan provided was in the low teens, with a 65 percent loan-to-value at around l.50x interest coverage ratio.
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Having seeded our debt platform with an initial commitment of £100 million, the equity for this debt came from our own balance sheet. This enables us to lend at fixed rates and offer flexible solutions with no requirement for hedging.
Ashby has hitherto predominantly invested in the equity of real estate deals, but expanded into the debt market in line with market trends in 2023. The rising cost of debt meant the projected returns of credit surpassed equity in various instances and that attracted organisations to the space.
Note: In respect of the “AshbyCapital” debt platform, AshbyCapital LLP acts as investment advisor to its group company Desert View Ltd (incorporated in Jersey, registered number 113030) (“Desert View”) and Desert View’s subsidiary companies. As such, AshbyCapital LLP does not itself carry on a lending business and the lending advisory services provided by AshbyCapital LLP to Desert View as a member of its group do not require AshbyCapital LLP to be authorised by the FCA. All loans made by the “AshbyCapital” debt platform are made by Desert View or its subsidiary companies.