Octopus Investments is continuing its expansion into real estate with the launch of a £130m debt fund.
The UK investment manager has provided equity for the Commercial Real Estate Debt Fund alongside third-party institutional investors including a European family office and pension funds.
The vehicle will provide commercial bridging loans of up to £15m focused on the “sweet spot” of £5m-£10m for borrowers looking to unlock turnaround strategies.
It will be managed by Dragonfly Property Finance, the five-year-old property bridging lender that Octopus took over in November last year.
The fund is the first institutional vehicle to be managed by Dragonfly, which has until now managed retail funds to provide mainly residential bridging finance.
Dragonfly is targeting an annualised internal rate of return of 11%–12% for the fund, which will have a three-year commitment period with full repayment expected after four-and-a-half years.
The launch follows Octopus’s purchase of UK healthcare real estate investment manager MedicX Holdings, which competed earlier this month.
