Industrial & Logistics Real Estate Funding

Our clients are investment funds seeking Distribution Warehouses, Logistics and Manufacturing plus associated on-site offices in mainland UK to purchase new builds with yields of around 6%, pre-let, subject to the strength of the tenant's covenant.

 

The funds can deploy between £8m to £25m per project investment. 

The funds themselves have the potential capital available of £500m. 

The clients will either “forward commit” or “forward fund” and give the Developer a target price along with entering into a development agreement which includes their profit for the project. 

Our client is an investment fund that will provide equity funding. The profile of their offering is as follows:

• All sectors considered apart from, at present, hospitality unless converting the hospitality venue to other uses. 

• Minimum cash input by them is £2m and maximum is circa £20m. 

• The fund will input 90% of the equity required, so for example if the project costs £15m, and the senior debt is £10m, there is an equity shortfall of £5m which will be covered by way of £4.5m (90%) from the fund and only £0.5m (10%) from the Developer.

 

• The fund likes projects with profits of approximately 30% return on project costs.

 

• A joint venture would be set up with the developer with 50/50 voting rights.

 

• The developer would be paid a development management fee.

 

• The developer would be paid an asset management fee.

 

• The developer would receive 40% of the project profits subject to the final project IRR.

 

• The fund will take planning risk.

 

• The fund will consider distressed situations.