Private Equity Lenders Make Hay As Banks Remain Cautious On Development

Debt funds run or backed by private equity firms are among the most active players in the debt market, snapping up large deals as traditional banks continue to exercise caution about lending to real estate and development.

This week, Precede Capital, the specialist residential lender backed by TowerBrook Capital Partners, teamed up with Canadian investor QuadReal to provide a £105M loan for the construction of a 462-bed co-living scheme in Acton, west London. 

The project is being developed by Outpost Management with backing from BlackRock. Off-site specialist Tide Construction is the developer and contractor, and the scheme is targeting an Energy Performance Certificate rating of A-B. 

The three-year construction loan is a green loan, which means Precede will track the environmental impact and emissions reductions of the scheme, scheduled to complete in 2025. 

Precede and QuadReal teamed up in 2022 to lend up to £1B in the UK residential development market.

In another example of private equity stepping into the breach, Cheyne Capital provided two loans totalling £400M to fund the development of two new student accommodation projects totalling nearly 1,500 beds in the City of London. 

The schemes, near Holborn and Tower Hill, are being developed by hotel and residential specialist Dominus Real Estate and have an estimated gross development value of £800M. 

“Student accommodation is in very short supply across the UK, so completing these deals is a significant milestone that will facilitate the delivery of over 1,500 units in the heart of London,” Dominus Owner and Principal Director Preet Ahluwalia said in a statement. “Importantly, 500 of said units will be available at affordable rents, enabling future generations from all backgrounds to benefit from them.”