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Standard Life Investments has entered the commercial real estate debt market for the first time with a £250 million pot to invest.
The group has a segregated mandate on behalf of its parent Standard Life Assurance to spend the money on high-quality secured loans in the UK market, the company stated. The real estate and fixed income teams will work together on the venture.
The announcement comes after the appointment of Neil Odom-Haslett as Head of Commercial Real Estate Lending in August and the unveiling of plans to start making funding available for projects in Q4 2013.
The global asset manager, which had been preparing to enter the real estate debt market for two years, said it will build on over 50 years of experience in the commercial lending market in Canada to focus on senior secured loans in the UK.
According to a spokesperson the firm has around £10.9 billion invested in real estate globally. It owns a portfolio of real estate assets including offices, shopping malls and commercial space.
David Paine, Head of Real Estate at Standard Life Investments, said: “Interest from institutions in investing in real estate debt has increased significantly as they seek to diversify both their real estate and fixed income portfolios whilst maintaining and often enhancing yields and risk-adjusted returns.”
Paine said the company would in time offer real estate debt investment strategies to third-party investors, but said it was too early to confirm whether this would be in the form of separate accounts or a pooled fund.
It will start by providing senior debt on assets in the UK, but Paine did not rule out eventually widening activity to mezzanine debt and lending in Europe.
The investment manager, wholly owned by Standard Life, expects to make its first senior financing deal before the end of the year as it looks to build a debt platform for the long term.
It is possible that the first financing deal will be outside London, as Anne Breen, Head of Real Estate Research and Strategy, said the biggest opportunities for lenders were potentially outside the capital.
The commercial property recovery in the UK was no longer “London-centric” and was “moving into a new phase”.
Standard Life is the latest UK insurer to move into the commercial property lending market, joining the likes of Aviva, Legal & General and Prudential, which invests through M&G.
