Development lender Silbury Finance launched with £500m target for 2021

Matthew Pritchard, former head of European real estate debt at Man Group, and Gavin Eustace, former head of residential development at Octopus Real Estate have co-founded the firm alongside Oaktree.

The firm has ambitious targets to reach half a billion pounds of lending in 2021 and up to £3bn of lending over the next six years.

It will be focusing on loans in the £10m to £150m range with a loan to value (LTV) of between 60 and 70 per cent.

Silbury said there was growing borrower appetite to partner with experienced property lending professionals to access flexible bespoke loans.

“Credit supply in the segments targeted is constrained in part due to the decreased capacity of UK clearing banks to lend to certain real estate sectors,” it added.

Pritchard (pictured right) and Eustace (pictured left) have more than 40 years combined real estate lending experience and have originated more than £3bn of loans.

Pritchard spent six years at Man Group before joining Oaktree as a senior adviser while Eustace was responsible for over £1bn of lending during his time at Octopus.

High street and alternative lenders retrenching

Silbury Finance founding partner Matthew Pritchard said: “Middle-market residential developers continue to be hugely underserved by the lending markets, and we expect the current uncertainty to only exacerbate this trend further.

“Swathes of UK lenders, comprising both the high street banks and alternative lenders, have retrenched due to uncertainty generated by the Covid-19 pandemic and are committed to managing their current loan books. Large debt funds continue to seek the higher returns available from the large single ticket loans.

Eustace added: “The UK residential sector, which was already benefitting from a number of favourable structural trends, has further demonstrated its defensive and countercyclical characteristics during the pandemic.

“Against a structural backdrop of undersupply of residential real estate in our target markets, the case for debt financing remains strong and we look forward to closing on our near-term pipeline of opportunities, employing a prudent and disciplined approach to lending.”

Oaktree managing director Pablo Velez said: “We view the challenging economic backdrop as a compelling entry point to the sector and plan to take full advantage of the lack of a legacy book to focus on expanding quickly.

“UK real estate, in particular senior secured lending collateralized by residential developments, offers an attractive combination of risk and returns, and we expect this to continue for the foreseeable future.”