UBS Global Asset Management’s Global Real Estate (GRE) business has announced the launch of its new UBS Participating Real Estate Mortgage Fund (UBS-PREMF, the Fund), after raising GBP 140 million for the Fund’s Initial Close from three institutional investors, including Mitsubishi Corporation.
UBS-PREMF is a new closed-ended UK debt fund seeking to take advantage of the debt financing gap arising from banks scaling back commercial real estate lending over recent years. The Fund will target a wide range of potential borrowers including those needing to refinance their maturing loans and new borrowers seeking finance to invest in the UK commercial property market.
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UBS-PREMF will target investors seeking a regular income stream, and will aim to produce a total IRR of 8-10% p.a., with total returns driven by interest from the loan portfolio, plus a share of both rent and capital appreciation from the underlying property assets.
UBS-PREMF will lend against property assets in the UK, is structured as an English Limited Partnership, and has a target lifespan of circa 9-10 years including its investment period, being up to 30 months following the Initial Close. Once fully invested, UBS-PREMF will aim for its annual income to form approximately 75% of its total return.
UBS-PREMF has raised GBP 140 million from three investors, including UBS and Mitsubishi Corporation – both acting as Co-General Partners for the new Fund – as well as a major European pension fund.
The Fund will be managed by Anthony Shayle, Head of Global Real Estate – UK Debt and Portfolio Manager for UBS-PREMF. Anthony has 22 years of real estate debt experience and has previously been involved in debt facilities totalling circa GBP 4 billion.
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By GlobalDataAnthony is supported by Lily Lin, who joined as Assistant Portfolio Manager on 1 December 2013. Lily, who previously worked within GRE’s European business for seven years and has extensive property and debt experience, will be responsible for originating, assessing and completing loan opportunities for UBS-PREMF.
In due course, two Mitsubishi Corporation employees will join the UBS-PREMF team in London on secondment to UBS.
Anthony said: "Following this solid Initial Close of UBS-REMF, the first fund in our debt platform, our efforts will now be focused on the Fund’s lending and raising additional equity for follow-on closings later this year. We are targeting borrowers looking for loans in the range of GBP 10-40 million where, according to recent research, there is a shortage of lenders willing to take on these smaller requirements. We are able to look at development and investment prospects across the UK and most sectors."
Thomas Wels, head of Global Real Estate, UBS Global Asset, said: "This new initiative follows on from our long-standing association with Mitsubishi Corporation in Japan, now in its fourteenth year. We are now very pleased to add a new UK dimension to this relationship with the launch of UBS-PREMF."
Takajiro Ishikawa, COO of Asset Management Business Division, Mitsubishi Corporation, said: "This is our firm’s first foray into the European asset management market and this will provide Japanese investors with a differentiated product."
