FINANCE: Urban Exposure Group wants its new vehicle to enter the FTSE 100 and have a £3bn loan book within five years.
The specialist residential development lender, Urban Exposure Real Estate, will be the sole investment vehicle for UE Group when it lists later this month. UERE plans to invest the funds raised from the proposed £500m flotation into the group’s £3bn pipeline within a year.
Randeesh Sandhu, UE Group chief executive, said: “We have got £850m of deals ready to go, meaning we’ve already got one- and-a-half times the amount we are raising covered, so it could be sooner than that.”
He added that UERE had options to bring in partners or sell down loans maintaining a 25-50% stake to recycle capital or go back to the market for further fundraising in time.
“In five years we would like to be in the FTSE 100 and have a £3bn loan book,” Sandhu said.
Sandhu added that the firm pursued the option to raise money through a flotation because real estate development finance suited the public market.
“The property market is cyclical, and the beauty of permanent capital is that you can hold assets and ride out the storm. If you are a fund you become a forced seller in a downturn if you have to return money to your investors.
“We lend only to a 60% LTV and the London market has never seen more than a 20% drop, so we are two times covered.”
Bookbuilding officially starts next Monday for the global placing. Sandhu said much of the book was covered already, with strong demand from US investors.
The UERE launch has attracted US hedge fund EJF Capital as a cornerstone investor taking a £75m commitment, while the five-strong management team has committed to taking a minimum of £2m.
Sandhu added that investors in early-stage marketing had been attracted to the fact that UE Group is a technical niche specialist in the sector and that there are no legacy issues.
On 27 June Brandeaux-owned Liberty Living abandoned its plans to float its redemption-hit student accommodation vehicle on the LSE “due to adverse public market conditions”.
Deutsche Bank is sole sponsor, global coordinator and bookrunner for UERE; EY acts as independent financial adviser.
bridget.oconnell@estatesgazette.com
