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U.S. private equity giant Carlyle has teamed up with residential development lending specialist Précis Capital Partners for a new strategy that will see it deploy significant amounts of development debt in the UK.
Carlyle’s credit division will deploy capital alongside Précis in sectors like build-for-sale residential, build for rent, and, to a lesser extent, student housing and senior living, Real Estate Capital reported. Précis is backed by TowerBrook Capital Partners, a private equity firm that is a B-corporation, meaning it has to adhere to certain ethical working practices.
Précis specialises in whole loans with a focus on London and the south east of England, and can lend up to 85% of the cost of a project, REC said — albeit, high leverage means a developer pays a much higher margin.
The tie-up has already provided its first two loans. The largest was a £251M, five-year whole-loan facility provided to Moda Living for Embassy Boulevard, a Nine Elms scheme comprising 467 build-to-rent homes and 103 homes for affordable rent.
In October last year, it provided a £76M three-year whole loan to CHR London for a scheme comprising 137 for-sale residential units in Chiswick, west London. Both of the first two loans were undertaken alongside Apollo Global Management.
There is no upper limit on the size of loan the tie-up will undertake or the amount of capital it can deploy.
“We will keep assessing deal flow and market movements,” Précis Chief Executive Randeesh Sandhu said.
Investors like Carlyle and Apollo have been lenders for many years, though not so much in residential development. But the market is becoming more institutional.
“The conversations we are having with Carlyle and lots of people in the market is that they are very interested in UK residential and Covid-19 has attracted a lot more additional capital to the space,” Précis Chief Operating Officer Daljit Sandhu said in a release.
“Leveraging our extensive global and regional insights, and investing experience of Carlyle’s global credit platform, we look forward to identifying further opportunities in the growing UK residential development financing market together with Précis Capital,” Carlyle Head of European Credit Opportunities Taj Sidhu added.
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