Montello Launches Second Real Estate Debt Fund

Jan 8 2013 | 4:30pm ET

London-based financier Montello Capital Partners has launched its second real estate debt fund. The new vehicle, Montello Development Finance, will focus on lending to London residential property developers.

The fund, which has been seeded largely by existing Montello investors, builds on the four year track record that Montello has established in the short term lending market in the UK. The new fund will also add to the £50 million of funds under management for the firm.

Montello’s first fund, the Montello Income Fund, provides investors with a fixed return of 8.5% pa, and is secured by short term first charge loans against London residential property. The new fund is more tailored to high net worth, sophisticated and family office investors. It provides investors with an increased fixed return of 10% pa, and lends on both a first and second charge basis against small scheme residential property developments in London. The new vehicle requires a two year lockup.

Christian Faes, managing director of Montello, said, “Investing in short term loans secured against residential property in London has understandably proved to be a very popular investment strategy in the current market. However, there are not that many operators that allow investors access to this investment opportunity in the same way that Montello does.”

He added: “We decided to launch the new development finance fund because we had a number of our existing investors that were saying to us that they were keen to go a little higher up the risk curve. We have consistently been able to construct a very conservative portfolio for our existing Montello Income Fund, with an average LTV across the book of around 60% - and that is exclusively lending on a first charge basis.”

“We have listened to our investors, and put together the new fund which will be an exciting addition to our existing investor offerings,” he said.

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