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UK pension funds back GreenOak real estate debt fund

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GreenOak has raised £138m (€165m) from 10 UK pension funds for a fund that will invest in senior debt secured against non-core real estate in the UK, according to a source close to the matter.

The strategy is to provide financing to buyers of value-added real estate, such as opportunity funds – a part of the market largely avoided by traditional lenders.

It is the first real estate debt fund to be launched by the company created in 2010 by former Morgan Stanley Real Estate professionals John Carrafiell, Sonny Kaisi and Fred Schmidt.

The fund itself is being led by Jim Blakemore, former European head of Lehman Brothers Global Real Estate Group between 2004 and 2008, having established the bank’s commercial mortgage lending business in Europe between 2000 and 2004.

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“It’s incredibly difficult getting a first-time fund off the ground these days,” the source said. “The team is the ex-Lehman Brothers lending team, so they’ve got a track record.

“Everyone recognises there is an opportunity because the banks are so much less active than they were, but, because the banks were so active before, there are not many funds out there that have a track record.”

The fund is targeting returns in the region of 8%, and most of the pension funds have invested in the fund as a “substitute to corporate bonds”, although some are treating it as a real estate allocation.

The pension funds are being advised by a combination of consultants and multi-managers, while GreenOak is being advised by placement agency Riverbridge Capital Partners, founded by Anthony Biddulph in 2012.

The fund is “fairly agnostic” on property sectors, the source said, but it will target senior debt, up to approximately 60% loan-to-value, for value-added real estate across the UK.

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