Investment manager, Octopus Investments, has announced the launch of the Octopus Real Estate Debt Fund IV (OREDF IV). The fund will provide senior-secured, transitional debt, unlocking depreciated real estate and development sites to create modern places to live and work in the UK.
OREDF IV, which is targeting a raise of £750million, will fund senior-secured acquisition, development and stabilisation loans across key living sectors, including student, co-living, Build-to-Rent, Build-to-Sell, retirement living and care homes, as well as an allocation to offices, industrial and retail.
As an Article 8 Fund under EU SFDR regulation, the fund aims to deliver sustainable returns by backing developers and delivering buildings that enhance the built environment and meet modern environmental targets that are fit for the future.
The launch of the fund comes at a time when the UK has a shortfall of over four million homes, with over one million households on affordable housing waiting lists. In addition, Octopus says that a significant of the commercial real estate developed during the twentieth century is no longer fit for purpose or doesn’t meet today’s environmental requirements. While many investors and developers are now targeting these transitional real estate opportunities, debt finance for such projects can often be difficult to raise.
Since 2013, Octopus has lent over £4.3billion into this strategy, which includes lending from its three previous commercial real estate debt fund vintages.
As a result, Octopus has become one of the most established non-bank real estate lenders in the UK, providing an alternative for investors and developers looking to regenerate tired and obsolete properties.
The lending team is made up of over 50 people with a breadth of experience across origination, credit and portfolio management. The team and fund will be led by Ludo Mackenzie and Andy Scott who are Co-Heads of Real Estate Debt at Octopus.
Ludo Mackenzie, co-head of Real Estate Debt at Octopus who will lead the lending team alongside co-head, Andy Scott, said: “We are committed to helping developers and investors unlock real estate value. With our focus on refurbishment, repositioning and redevelopment, we can transform underused or neglected spaces into vibrant and thriving places, creating jobs, boosting local economies, and providing much-needed homes. This is productive finance at its core; lending against depreciated properties and brownfield land, enhancing the built environment and generating good risk-adjusted returns.”
Andy Scott said: “Our Debt team offers bespoke lending solutions for our developer clients, tailored to the specific needs of each scheme. As a non-bank lender, we can be flexible and efficient in our approach, providing reliable funding throughout the UK. We work closely with clients to ensure the smooth and successful delivery of their projects.”
Ed Clough, managing director of Octopus Real Estate, said: “Building on the strong track record of our previous debt funds, the Octopus Real Estate Debt Fund is focused on delivering value for all partners. For investors, that means providing access to the real estate sector through the buffer of senior secured real estate loans. For developers, we are addressing the funding gap by providing tailored, flexible bridge and development funding solutions for transitional real estate. And for communities, we are unlocking old and unproductive real estate assets to provide modern, energy-efficient places for people to live and work.”
