Savills’ investment arm has bought the remaining 75% stake in DRC Capital. It picked up a 25% share in the real estate debt manager in 2018.
Savills Investment Management today said it had agreed to exercise its call option to buy the remaining three-quarters of the firm, for which it will pay £31.3m.
It may need to pay as much as £33.7m more in 2024, depending on the financial performance of the business over the next three years, it added.
Founded in 2012, DRC has arranged more than £4.8bn of debt investments and currently has assets under management of £2.9bn across senior debt, high-yield and whole-loan products.
DRC chief executive and managing partner Dale Lattanzio, who has been a member of the Savills IM’s senior management committee since the initial deal, will continue to lead DRC, supported by fellow co-founders Rob Clayton and Cyrus Korat.
The company will operate under the DRC Savills Investment Management brand, and several functions of the business will be “aligned with the Savills IM platform” over the coming years.
Alex Jeffrey, chief executive at Savills Investment Management, said: “DRC continues to innovate in the real estate debt market and has rapidly built an enviable position in an increasingly competitive environment.”
Lattanzi added: “Offering a single point of access to the capital structure will continue to benefit our investors, who will be able to take advantage of the favourable market conditions for alternative lenders.”
In 2020, DRC reported profit before tax of £12.9m before member drawings; this equates to £5.9m on a pro forma basis, had the business been owned by Savills throughout the year. Gross assets of DRC at the end of December 2020 were £16.9m.
Savills chief executive Mark Ridley said: “I am delighted to welcome the DRC team into the Savills Group. Their real estate debt expertise will complement our existing equity capability and enhance the group’s services to our global investment client base.”
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