Octopus Real Estate, part of Octopus Group and a leading UK specialist real estate lender and investor, has agreed upon a funding partnership with affiliates of Bayview Asset Management, an investment management firm focused on investments in mortgage and consumer credit, to provide two-to-five-year senior investment debt to the UK Commercial Real Estate market. The funding partnership has an initial commitment of £450 million.
Octopus continues to attract institutional backing for its growth and commitment to the UK commercial property sector. Having identified an undersupply of loans in the smaller commercial investment debt market, the funding will target loan opportunities up to £25m. This is an area underserved by lenders and where Octopus’s debt platform has an established presence.
With over £5 billion of lending to UK assets made to date across commercial, residential and development, this will complement Octopus’ existing range of debt products. Importantly, it will increase lender choice for Octopus’ established network of borrowers and brokers.
Nick Westoby, Commercial Fund Manager, Octopus Real Estate, said: “Today’s announcement represents another exciting milestone in Octopus’ longstanding commitment to the UK commercial real estate debt market. The structural undersupply within the sub-£25m part of the market provides significant opportunity and plays to our strengths. The granularity and liquidity of smaller loan sizes have been tested over the pandemic, showing robust performance. The opportunity to partner with Bayview was compelling, given their deep understanding of commercial real estate and wider corporate values.”
Benjamin Davis, CEO of Octopus Real Estate, said: “Our partnership with Bayview further demonstrates the excellent range of opportunities available for local and international institutional investors to participate in the UK real estate market. It follows a successful period for Octopus, having recently established the £175m Greener Homes Alliance with Homes England and announced a record £462m fundraise for our UK commercial bridging strategy. With specialist expertise across the residential, commercial and development sectors, Octopus is uniquely positioned to deliver upon the demand from institutional investors for high-quality, diverse real estate assets that meet a range of investment criteria.”
Zhu Gong, European Structured Credit, Bayview Asset Management, said: “At Bayview, we continue to search for and grow strategic partnerships that offer innovative funding solutions in often under-served markets. We welcome this opportunity to work with Octopus, whose expertise will help us gain exposure to high-quality UK small-balance CRE loans.”
Pierre Lussato, Head of Bayview International, Bayview Asset Management,said: “We are very excited to partner with Octopus and help fill a financing gap in the UK real estate markets. We believe Octopus to be uniquely positioned to interact with asset owners through their entrepreneurial yet disciplined mindset. This will represent a further foray into non-bank lending for Bayview in Europe.”
PwC acted as lead adviser to Octopus on the funding agreement.
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