Octopus raises £130m for commercial property debt fund

The fund will be managed by Dragonfly Property Finance, the property finance arm of Octopus. Dragonfly, launched just five years ago, has already lent in excess of £1 billion.
 
Simon Rogerson, CEO of Octopus Investments, said:

“We are delighted to have been able to offer institutional investors access to this exciting asset class. There is a real demand from investors for commercial property debt while Dragonfly’s track record in providing finance to entrepreneurs and property professionals is exceptional.”
 
The £130 million will provide Dragonfly with considerable financial firepower as it continues to lend to commercial property investors. Funding has been provided by Octopus and a broad range of third-party institutional investors. These investors include a leading European family office and a number of pension funds. Simba Capital acted as placement agent for the fund.

Dragonfly is targeting an annualised internal rate of return of 11%–12% for the fund, after all fees and costs are subtracted. The fund will have a three-year commitment period with full repayment expected after approximately four-and-a-half years.
 
Jonathan Samuels, CEO at Dragonfly, said:

“The commercial property finance that we provide continues to meet a very real need in the UK market. We provide short-term finance for entrepreneurial property investors who require speed of execution and flexible finance to unlock turnaround strategies.”
 
The UK’s commercial property sector has performed increasingly well in recent months, with rental and capital growth benefiting from the wider economic recovery. However, traditional lenders have maintained the highly conservative lending policies they adopted in the wake of the financial crisis, leaving many entrepreneurs struggling to access finance.
 
Ludo Mackenzie, Dragonfly’s Head of Commercial Property:

“For investors, commercial property debt is a compelling way to access the asset class. Not only are the potential returns very attractive, but we look to manage the downside, with lenders taking first charge on the properties against which the loans are secured.”