By Daniel Thomas, Property Correspondent
The former head of real estate banking at NM Rothschild, Andrew Radkiewicz, is launching a UK-listed investment company focused on debt finance for European property, in the latest attempt to exploit the retreat of commercial banks from the sector.
There have been a number of private equity and unlisted fund launches in recent months but Rocksburgh Capital will be the first listed vehicle focused on the mezzanine debt market since the property boom ended last summer.
The Jersey-based company is expected to raise around £125m through its flotation, and unusually is not expected to be geared. This will mean that its investments into mezzanine debt behind property transactions will be akin to a more secure form of equity, protected behind the purchaser's own equity tranche.
The company will be managed by Rocksburgh Capital Investment Management, set up by Mr Radkiewicz and a former Rothschild colleague, Andrew Macland. Mr. Rad-kiewicz led a number of high-profile debt deals for Rothschild as its former managing director of real estate banking. Oriel Securities will conduct the placing.
Rocksburgh will provide mezzanine finance to commercial property companies across Europe, focusing on markets such as the UK, Germany, France and the Nordic countries, and across most property sectors. There will also be a small allocation to development finance.
There is a shortage of money being lent to the property sector since the credit crisis caused many traditional banks to close their books, particularly for mezzanine debt finance which is perceived as among the more risky parts of the lending market.
With prices far below their peak last summer, some investors are now looking for opportunities to return to the market. However, they are being stymied by a lack of cheap debt creating the conditions for lending at profitable rates on re-priced income-producing property.
Rocksburgh is expected to see an average annual ungeared return of around 15 per cent over seven years, with a dividend yield of 7.5 per cent per year to apply from the second year.
Mezzanine finance also generally earns a cash coupon of between 2 to 6 per cent over the interbank lending rate from the date of investment, and exit fees payable of between 1 to 7 per cent of the loan. It also shares in a percentage of profit made by the investor.
Source:
http://www.ft.com/cms/s/0/6699ae9a-40ba-11dd-bd48-0000779fd2ac.html
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