Development Securities and Ellandi have bought a property loan for around £10m.
The senior loan is secured on a neighbourhood shopping centre in the south west of England and is a performing loan with interest payments being met by the borrower in full.
The vendor was a bank and the £10m paid is a significant discount to its value. The loan is subject to a loan to value covenant breach which has led the bank to sell the loan.
DevSecs funded the purchase with the proceeds of its recent equity fund raising, completed in July.
The loan offers a number of management options which DevSecs and Ellandi are exploring. Due to the discounted purchase price of the loan DevSecs will receive a yield in excess of 10% a year on the investment.
Ellandi is a specialist investment manager run by Morgan Garfield - former head of Deutsche UK Real Estate – and Mark Robinson – former managing director of Oracle Estates. Ellandi specialises in acquiring property related debt, recapitalising distressed property situations and investing in direct real estate. Subject to the future performance of the investment, Ellandi may receive a carried interest as part of the management arrangements.