LONDON Jan 28 Singapore's sovereign wealth fund
has backed a 1 billion pound ($1.6 billion) lending programme
for British offices, shops and warehouse property that could
bring much-needed funds into a debt-starved sector.
The Government of Singapore Investment Corporation,
one of the world's largest sovereign wealth funds, will
underwrite the loans to be issued by commercial mortgage
provider Laxfield Capital.
The programme targets lending of up to 1 billion pounds over
the next 24 months, Laxfield Capital said in a statement on
Britain's commercial property market has been forced
increasingly to find alternative sources of finance in the past
few years as banks grapple with stricter capital adequacy rules,
slashing lending to the sector.
The scheme will provide individual loans of 40-185 million
pounds with a 5 to 7 year maturity and a loan-to-value of up to
75 percent. It will issue whole loans and syndicate up to 75
percent of each mortgage to other investors, while GIC will
retain a junior investment in each loan, Laxfield Capital said.
"The programme complements our existing direct junior debt
investment strategy which we will continue to pursue," said GIC
real estate's regional Head of Europe, Chris Morrish.
New lenders to the sector have been attracted to the high
returns on offer, which can be over 7 percent for property loans
made on a 75 percent LTV basis, far outstripping yields on the
safest European government bonds.