The bridging loan specialists Montello has launched a new £250m fund aimed at providing short term loans and backing for commercial development projects.
London-based Montello, which has an established track record as a real estate lender in the UK, will be teaming up with CBRE for the day-to-day running of its latest fund. CBRE will act as transaction manager, while Luxembourg Fund Partners and Apex Fund Services will assist with the operational and administrative decisions.
“The team that we have brought together for this fund is unquestionably the best team of global fund and real estate professionals in the market,” said Christian Faes, a managing partner at Montello. “Having CBRE involved is a real coup, and we look forward to working with them to build a very strong presence in this market and establishing this fund as a ‘one-stop shop’ for real estate entrepreneurs.”
Faes said the fund would be able to help finance developers from the acquisition of a property with possible bridging finance, right through to the development and completion of a project. “We have a number of joint venture projects lined up for the fund, and we expect investors to continue to achieve superior risk adjusted returns as with our other two opportunity funds,” he added.
The opportunity fund, which will be open-ended, will also be able to provide development finance and enter into joint ventures. It has so far received seed funding from three offshore institutional investors and hopes to give investors a net annual return of between six and 10 per cent. The minimum initial investment is £10,000.
The company’s two previous funds were a development finance fund, launched in January last year, and a real estate debt fund. Under the rules of its 2013 lending venture Montello loaned up to 65 per cent of the gross development value of any project.
Through most of the financial crisis the bridging finance industry represented less than one per cent of the UK mortgage market.
“There is often a perception that bridging finance is particularly risky, however this is not always the case,” explained Faes.
“Bridging is an area of finance that generally provides a win-win scenario, and it is important for the investment community to understand this. Whilst bridging finance is usually more expensive than mainstream finance, it is also funding that is provided very quickly. For some borrowers the opportunity of quick funding far outweighs the premium associated with the costs of bridging finance.”
